FSA Contribution Calculator (Healthcare & Dependent Care Tax Savings)

A Flexible Spending Account (FSA) lets you set aside money from your paycheck before federal income tax and FICA payroll tax are calculated, then use it tax-free for eligible expenses during the plan year. This calculator supports the two most common FSA types:

• Healthcare FSA: reimburses eligible out-of-pocket medical, dental, and vision expenses (copays, prescriptions, eyeglasses, and similar costs not covered by insurance).
• Dependent Care FSA (DCFSA): reimburses eligible child or dependent care expenses (daycare, before/after-school care, summer day camp) that let you, and your spouse if married, work or look for work.

Both are governed by IRS rules under a "cafeteria plan" (Internal Revenue Code Section 125), and both carry the same core trade-off: the tax savings are attractive, but unlike a 401(k) or HSA, unused Healthcare FSA money is subject to a strict "use it or lose it" rule at the end of the plan year, softened only by whatever carryover or grace period your specific employer plan offers.

Federal income tax savings compares your total federal tax with and without the contribution excluded from taxable income, correctly accounting for bracket-straddling rather than just multiplying by a flat rate:

$$\text{Federal Savings} = \text{Tax}(\text{Income}) - \text{Tax}(\text{Income} - \text{Contribution})$$

FICA payroll tax savings works the same way, using the actual 2026 Social Security wage base and Additional Medicare threshold, since FSA contributions are excluded from FICA wages too, a real advantage a 401(k) does not offer:

$$\text{FICA Savings} = \text{FICA}(\text{Income}) - \text{FICA}(\text{Income} - \text{Contribution})$$

$$\text{Total Tax Savings} = \text{Federal Savings} + \text{FICA Savings}$$

Forfeiture risk compares your contribution against your expected eligible expenses. Any unused amount, up to the carryover limit (Healthcare FSA only, if your plan offers one), rolls to next year; anything beyond that is forfeited under the use-it-or-lose-it rule:

$$\text{Unused} = \max(0, \text{Contribution} - \text{Expected Expenses})$$

$$\text{Forfeited} = \max(0, \text{Unused} - \text{Carryover Limit})$$

$$\text{Net Value After Forfeiture} = \text{Total Tax Savings} - \text{Forfeited Amount}$$

Because the tax exclusion applies to the whole contribution regardless of whether it is ultimately spent, overcontributing relative to your actual expected expenses can turn a positive tax benefit into a net loss once forfeiture is netted out, which is exactly what the "Net Value After Forfeiture Risk" output is built to surface.

Healthcare FSA, single filer, $90,000 household taxable income, $3,400 contribution (the 2026 max), $3,000 in expected eligible expenses:

1. Federal tax without the FSA deduction: $14,512. With it (on $86,600): $13,764. Federal savings: $748
2. FICA tax without: $6,885 ($90,000 × 7.65%). With (on $86,600): $6,624.90. FICA savings: $260.10
3. Total tax savings: $748 + $260.10 = $1,008.10
4. Unused contribution: $3,400 − $3,000 = $400, fully covered by the 2026 $680 carryover limit. Forfeited: $0
5. Net value after forfeiture: $1,008.10

Dependent Care FSA, married filing jointly, $120,000 income, $7,500 contribution (the 2026 max), only $5,000 in expected expenses:

1. Federal savings: $1,650. FICA savings: $573.75. Total tax savings: $2,223.75
2. Unused contribution: $7,500 − $5,000 = $2,500. Dependent Care FSAs do not qualify for the IRS carryover provision, so the full $2,500 is forfeited.
3. Net value after forfeiture: $2,223.75 − $2,500 = -$276.25

The second example is a deliberately cautionary one: contributing more than you will realistically spend can produce a net loss even though the contribution itself was tax-advantaged, which is the central risk this calculator is built to make visible before open enrollment, not after the plan year ends.

The use-it-or-lose-it rule (formalized in Treasury regulations and IRS Notice 2013-71) exists because FSAs are technically employer-sponsored benefit plans, not personal savings accounts, and the IRS requires a genuine risk of forfeiture for the pre-tax treatment to apply in the first place. Employers are allowed, but not required, to soften this in one of two ways for a given plan year, never both:

• Carryover: up to $680 (2026) of unused Healthcare FSA funds can roll into the next plan year, on top of whatever you contribute that next year.
• Grace period: instead of a carryover, some plans give you an extra 2.5 months after the plan year ends to incur and submit new eligible expenses against the prior year's unused balance.

Dependent Care FSAs are generally excluded from the carryover provision under IRS guidance; a Dependent Care FSA plan may offer a grace period instead, but this calculator does not separately model grace-period timing, only the carryover-versus-forfeit calculation, since grace period rules vary considerably by employer and this calculator treats any amount not carried over as effectively at risk unless spent by the plan's actual deadline.

Check your own Summary Plan Description before enrolling. Some employer plans offer neither a carryover nor a grace period, in which case every unused dollar above zero is forfeited at year-end.

• State income tax. Most states follow the federal pre-tax treatment of FSA contributions, but not universally; this calculator computes federal income tax and FICA savings only.
• Employer plan specifics. Whether your plan offers a carryover, a grace period, or neither is set by your employer, not the IRS uniformly; this calculator assumes the maximum IRS-allowed carryover ($680) is available for Healthcare FSAs and models no rescue mechanism for Dependent Care FSAs.
• Mid-year eligibility changes. A new job, marriage, divorce, or the birth of a child can trigger a qualifying life event that lets you change your election mid-year; this calculator models a single static annual election.
• Dependent Care FSA earned-income and care-provider rules. Eligibility for the Dependent Care FSA also requires both spouses (if married) to have earned income (with narrow exceptions) and the dependent care must enable work; this calculator does not verify your eligibility, only the tax-savings math once you are eligible.
• HSA interaction. You generally cannot contribute to a Healthcare FSA and a Health Savings Account (HSA) in the same year unless the FSA is a Limited-Purpose FSA; this calculator does not check for that conflict.

• Setting the contribution from memory instead of a real expense estimate. Overestimating a "typical year" of medical or dependent care costs is the single most common cause of forfeited FSA money.
• Forgetting that Dependent Care FSA money is generally not carried over. Unlike a Healthcare FSA, most Dependent Care FSA plans offer no rescue mechanism at all for an overestimate.
• Ignoring the FICA savings entirely. Because FSA contributions also avoid Social Security and Medicare tax, the real tax savings rate (commonly a combined ~30%-ish for many households) is meaningfully higher than federal income tax savings alone.
• Not checking your plan's actual carryover or grace-period policy. The IRS sets a maximum allowed carryover; your employer's plan document sets what you actually get, which can be $0.
• Missing the claims deadline. Even a Healthcare FSA with a generous carryover or grace period still has a hard submission deadline; expenses incurred within the window but never filed as claims are forfeited just the same as if they were never eligible.

• IRS Revenue Procedure 2025-32: 2026 Healthcare FSA contribution limit ($3,400) and carryover limit ($680).
• IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans: general FSA eligibility and use-it-or-lose-it framework.
• IRS Notice 2013-71: Healthcare FSA carryover provision.
• Internal Revenue Code Section 129 and the One, Big, Beautiful Bill Act: 2026 Dependent Care FSA limit increase to $7,500 ($3,750 married filing separately).
• engine/tables/2026/federal-tax.json and engine/tables/2026/fica.json: 2026 federal income tax brackets and FICA rates/thresholds used in this calculator.