How much does my HSA save in tax, and what could it grow to by retirement?
See the tax an HSA saves each year, what it grows to by retirement, and how it compares with a taxable account and a traditional 401(k) for the same take-home cost.
Who your high-deductible plan coversYou can only contribute in months you are covered by an HSA-eligible plan and not enrolled in Medicare.
Share of the HSA spent on medical costsWithdrawals for qualified medical costs are tax-free at any age. Other withdrawals are taxed as income, and before 65 also carry an additional 20% tax.
TAX YOUR HSA SAVES EACH YEAR
$1,234/yr
Putting $3,900 into an HSA saves $1,234 of tax a year (31.65%), so it costs $2,666 of take-home pay. Kept invested for 31 years at 3.9% a year after inflation, the $4,400 a year grows to about $260,347 in today’s dollars, $230,762 of it from your own money. The same take-home cost would be $146,462 in a taxable account and $161,876 in a traditional 401(k), both after tax.
Balance at 65
$260,347
Take-home cost
$2,666
Taxable account
$146,462
Traditional 401(k)
$161,876
UNDERSTAND YOUR RESULT
What the same take-home cost is worth at 65, after tax, in today’s dollars
HSA
$231k
Traditional 401(k)
$162k
Taxable account
$146k
$2,666 a year of take-home pay puts $3,900 in the HSA, $3,507 in a traditional 401(k) or $2,666 in a taxable account. After 31 years and tax on the way out, that is $230,762, $161,876 and $146,462.
How the HSA grows, in today’s dollars
HSA balancePut in
After 31 years $136,400 put in grows to $260,347 in today’s dollars, $123,947 of it growth that is never taxed if it is spent on medical costs.
What the tax saving is made of
| Tax | Rate | Saved a year |
|---|---|---|
| Federal income tax | 24.00% | $936 |
| Social Security and Medicare tax | 7.65% | $298 |
| Total | 31.65% | $1,234 |
Each dollar you put in saves 31.65% in tax, so $3,900 saves $1,234. Your employer’s $500 is not taxed to you and adds to the balance without costing take-home pay.
What moves the needle
Each row re-runs the calculation with one change. Click to apply.How it's computed
FORMULA
Tax saved = your contribution × (federal bracket + Social Security and Medicare rate saved + state rate)
Take-home cost = your contribution − tax saved
HSA balance = yearly amount × ((1 + monthly real rate)^months − 1) ÷ monthly real rate ÷ 12 per month, in today’s dollars
HSA value = your part of the balance × (share for medical costs + share not for medical costs × (1 − retirement tax rate))
401(k) and taxable account: the same take-home cost put in each, the 401(k) taxed at the retirement rate on the way out and the taxable account on its growth
- The 2026 limit is $4,400 for self-only coverage and $8,750 for family coverage, plus $1,000 from age 55, employer contributions included (IRS Rev. Proc. 2025-19). You must be covered by an HSA-eligible high-deductible plan and not be enrolled in Medicare to contribute.
- The HSA is invested and grows at 7% a year before inflation less 3% inflation, so every figure is in today’s dollars. That is an assumption, not a forecast; an HSA held in cash grows far less.
- Withdrawals for qualified medical expenses are tax-free at any age. Other withdrawals are taxed as income; before age 65 they also carry an additional 20% tax, which this page does not model, and from 65 they do not.
- The comparison holds the take-home cost the same: the HSA, $3,507 a year in a 401(k) (which does not save Social Security and Medicare tax) and $2,666 in a taxable account. Your employer’s HSA money is left out of it because it is free whichever account you use.
- The 22% retirement tax rate and 15% tax on a taxable account’s growth are assumptions you can change. Dividends and turnover in a taxable account would raise its tax, so its value here is on the high side.
- Fees and the account’s cash minimum are not modelled. Whether you will have enough medical costs to use the balance tax-free depends on your health; the “share spent on medical costs” choice shows what happens if you do not.
WORKED EXAMPLE · SAMPLE NUMBERS
$3,900 × (24% federal + 7.65% payroll) = $1,234 saved, so $3,900 costs $2,666 of take-home pay. $4,400 a year for 31 years at 3.9% real grows to $260,347; your $3,900 a year alone grows to $230,762, worth $230,762 after tax. The same $2,666 a year in a taxable account is $146,462 after 15% tax on growth; in a 401(k) ($3,507 a year pre-tax) $207,534, or $161,876 after 22% tax.
SOURCES
[1]Rev. Proc. 2025-19: 2026 inflation-adjusted amounts for health savings accountsInternal Revenue Service[2]Publication 969: Health Savings Accounts and Other Tax-Favored Health PlansInternal Revenue Service[3]Topic no. 751: Social Security and Medicare withholding ratesInternal Revenue ServiceHSBuilt by Hussain Sehorewala · checked against worked examples · Sep 29, 2026
Keep this number honest as your life changes.
Put it on your Money Map and it re-runs as you change the seven numbers. It stays in this browser, and the calculator stays free.
Questions about this result
Money goes in before tax (and, through payroll, before Social Security and Medicare tax too), grows without tax, and comes out tax-free for qualified medical costs. On the example on this page, $3,900 a year saves $1,234 of tax and $230,762 of your own money grows over 31 years without tax being taken out, against $146,462 for the same take-home cost in a taxable account after tax.
For 2026 the limit is $4,400 for self-only coverage and $8,750 for family coverage, plus $1,000 if you are 55 or older, and employer contributions count toward it. You need an HSA-eligible high-deductible plan and cannot be enrolled in Medicare.
Withdrawals for anything other than qualified medical expenses are taxed as income, and before age 65 they also carry an additional 20% tax. From 65 there is no additional tax, so an HSA then works much like a traditional IRA for non-medical spending, with the option of tax-free medical spending.
Because the accounts cost different amounts of take-home pay to fund. A dollar into an HSA through payroll saves income tax and Social Security and Medicare tax; a dollar into a traditional 401(k) saves income tax only; a dollar into a taxable account saves nothing. Holding the take-home cost fixed makes the values comparable.
This page assumes it is invested; the balance shown depends on that. Keeping it in cash keeps it safe for near-term medical costs but grows far less, so many people keep a cash cushion for the deductible and invest the rest. That is a decision about your own costs and risk, not something this page decides.
Account and investment fees, the additional 20% tax on non-medical withdrawals before 65, states that tax HSA contributions, and the cash you may need for medical costs before retirement. It also does not say whether you should use a high-deductible plan; the HDHP vs PPO page compares the yearly cost.
THE LEDGER · 20 minTax Loss Harvesting: Save Thousands Legally in 2026
THE LEDGER · 12 minThe $70K Tax Loophole: Mega Backdoor Roth and Advanced Retirement Strategies for 2026
GUIDE · $29Tax Moves for W-2 Earners