A Health FSA cuts your taxes, but anything you do not spend (beyond the carryover) is lost at year-end. Enter your numbers to see your true net benefit and avoid over-funding.
Sample input: Planned FSA contribution ($): 3000, Eligible spending you expect ($): 1500, Your marginal tax rate (%): 30, Carryover your plan allows ($): 680
Net FSA benefit: 80 (Your FSA pays off)
Your FSA nets about $80: $900 in tax savings, minus $820 you would forfeit. You are funding it close to what you will actually spend.
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Money left in a Health FSA at the end of the plan year is forfeited, except that employers may allow a carryover of up to $680 for 2026 or a short grace period (not both), per IRS Publication 969. Plan your contribution around what you will actually spend.
Net benefit equals your tax savings (contribution times your marginal rate) minus any forfeiture (contribution minus expected spending minus carryover, floored at zero). A negative result means the money you would lose outweighs the tax break.
The 2026 Health FSA contribution limit is $3,400. The maximum carryover to the next year is $680 if your employer offers it; otherwise unspent funds are forfeited at year-end (IRS Publication 969).
Estimate your predictable annual costs — copays, prescriptions, dental, vision, planned procedures — and contribute close to that figure rather than the maximum. You can also spend down a balance before year-end on eligible items like glasses or first-aid supplies.