HSA Calculator
The HSA is the only account with a triple tax break: deductible going in, tax-free growth, tax-free withdrawals for medical costs. See exactly how much that beats a plain taxable account over time.
Your inputs
HSA vs taxable account, year by year
Year-by-year comparison
| Year | HSA value | Taxable value | HSA edge |
|---|
The triple tax advantage
An HSA (Health Savings Account) gets three tax breaks that no other account combines:
- Tax-deductible going in. Contributions reduce your taxable income (or skip income and payroll tax entirely via payroll deduction).
- Tax-free growth. Interest, dividends, and gains compound untouched, year after year.
- Tax-free going out — for qualified medical expenses, at any age. After 65, non-medical withdrawals are taxed like a Traditional IRA (no penalty), so even "misused" HSA money isn't wasted.
The classic strategy: max the HSA, invest it, pay medical bills out of pocket, save the receipts, and reimburse yourself decades later — letting the full balance compound tax-free the whole time.
The math behind this calculator
The HSA compounds the full pre-tax contribution at your expected return. The taxable account starts smaller (you've already paid income tax on the contribution) and grows slower (taxes drag on the return each year):
Taxable value = C × (1 − t) × [((1 + r(1 − t))n − 1) / (r(1 − t))]
where C = annual contribution, r = return, t = marginal tax rate, n = years.
Contributions are modeled annually at year-end. The taxable model is simplified — real tax drag depends on turnover and asset location — but it captures the direction and rough size of the advantage.
Worked example
Contribute $4,000/year for 20 years at 7% with a 24% marginal tax rate. The HSA grows to roughly $164,000, all of it available tax-free for medical costs. The same $4,000 in a taxable account — $3,040 after paying 24% tax, growing at an after-tax ~5.3% — reaches only about $104,000. The triple tax break is worth roughly $60,000 here, and the gap widens every year.
Caveats worth knowing
- You need a qualifying high-deductible health plan (HDHP) to contribute. No HDHP, no HSA.
- Annual contribution limits apply (set by the IRS each year, higher for family coverage, plus a catch-up contribution at 55+). Staying under the limit is on you.
- Non-medical withdrawals before 65 are taxed as income plus a 20% penalty — the triple advantage only survives if you use it right.
- State taxes vary. A few states don't recognize HSAs, so the state-level deduction may not exist where you live.
- Invest it. An HSA left in cash earns ~nothing; the whole point of this calculator assumes you invest the balance like a retirement account.
HSA rules: IRS Publication 969 (Health Savings Accounts). Contribution limits and HDHP definitions are updated annually by the IRS.