Estimate HSA tax savings.
A health savings account is the rare triple-tax-advantaged vehicle: contributions reduce taxable income, growth is untaxed, and qualified medical withdrawals are untaxed. The size of the first advantage is simply your contribution multiplied by your marginal rates. Routing contributions through payroll adds a fourth saving, because the money also escapes the 7.65 percent Social Security and Medicare payroll tax that a direct personal contribution still pays.
Income tax saved
Income tax saved = contribution x (federal marginal rate + state rate)
Payroll tax saved
Payroll tax saved = contribution x 7.65% when contributed by payroll deduction
Estimate only, not tax advice. Contribution limits and tax treatment change annually and vary by jurisdiction — confirm with a tax professional.
Payroll contributions are excluded from wages for Social Security and Medicare purposes as well as income tax. Contributions you make directly and deduct on your return only avoid income tax.
Most follow the federal treatment but a few do not. Set the state rate to zero if yours taxes HSA contributions.
Non-qualified withdrawals are taxed as income and, before age 65, carry an additional penalty. That reverses the saving shown here.