HSA Growth & Tax Calculator
Estimate your future Health Savings Account balance and immediate tax advantages.
Projection Summary
*Calculations assume annual compounding and consistent contributions. Tax savings include the reduction in taxable income based on your entered rate.
Maximizing Wealth with a Health Savings Account (HSA)
A Health Savings Account (HSA) is often called the "ultimate retirement account" because of its unique triple-tax advantage. Unlike a Flexible Spending Account (FSA), the funds in an HSA do not expire at the end of the year; they roll over and can be invested in the stock market to grow over decades.
The Triple Tax Advantage Explained
- Tax-Deductible Contributions: Money goes into the HSA pre-tax, reducing your taxable income for the year. If done via payroll, you also avoid the 7.65% FICA tax.
- Tax-Free Growth: Any interest or investment gains earned within the account are not subject to capital gains taxes.
- Tax-Free Withdrawals: As long as the funds are used for "qualified medical expenses," you pay zero tax when you take the money out.
HSA Contribution Limits for 2024 and 2025
The IRS adjusts the contribution limits annually for inflation. To be eligible, you must be enrolled in a High Deductible Health Plan (HDHP).
- 2024 Limits: $4,150 for individual coverage; $8,300 for family coverage.
- 2025 Limits: $4,300 for individual coverage; $8,550 for family coverage.
- Catch-up Contribution: Those aged 55 or older can contribute an additional $1,000 per year.
Strategic Use: The "Shoebox" Method
Because there is no deadline to reimburse yourself for a medical expense, many savvy investors pay for healthcare out-of-pocket today, keep the receipts (in a "shoebox"), and let the HSA money stay invested in the market. Years later, they can withdraw that money tax-free for any reason, up to the value of their accumulated receipts.
Example Calculation
If you start with $5,000, contribute $4,150 annually, and achieve a 7% return over 20 years:
- Your total contributions would be $83,000.
- At a 25% tax rate, you would save $20,750 in taxes immediately.
- Your final balance could grow to over $190,000, with more than $100,000 of that coming from tax-free investment growth.