● Money & small business
How much to put in your FSA: a worked example with the 2026 limit and carryover
A health FSA saves tax on medical costs, but money you don't spend by the end of the plan year is forfeited, apart from any carryover your plan allows. So the question at open enrollment is how much to put in. Here's one example, from the sample file of our FSA election planner; every figure comes from the same calculation, checked claim by claim. The costs are examples: use your own.
The costs, by how sure they are
| How sure | Costs | For the year |
|---|---|---|
| Certain | Contact lenses $360, eye exam $20, a $25 monthly prescription, two $60 dental cleanings | $800 |
| Likely | $40 therapy copay monthly, four $30 doctor visits, $15 of first aid six times | $690 |
| Maybe | A $250 filling, a $150 urgent care visit | $400 |
The tax rate here is 30% (federal, state and payroll taxes together). The 2026 FSA limit is $3,400, and this plan allows the maximum $680 carryover.
What each election is worth
Net benefit = tax saved − money forfeited, depending on what actually happens:
| Elect | Only the certain costs happen | Certain + likely happen | Everything happens |
|---|---|---|---|
| Certain costs: $800 | $240 | $240 | $240 |
| Certain + likely: $1,490 | $437 | $447 | $447 |
| Everything: $1,890 | $157 | $567 | $567 |
| The limit: $3,400 | −$900 | −$210 | $190 |
Electing $1,490, $57.31 a paycheck over 26 paychecks, saves $447 in tax if it's all spent. If only the certain costs happen, $690 is left: $680 carries over and $10 is lost, so the year still comes out $437 ahead. Electing the full $3,400 loses money unless every cost happens, and even then it only saves $190, because $1,510 of it is never needed and only $680 of that can carry over.
Without a carryover, the same elections are riskier
| Elect | Only the certain costs happen | Certain + likely happen | Everything happens |
|---|---|---|---|
| Certain costs: $800 | $240 | $240 | $240 |
| Certain + likely: $1,490 | −$243 | $447 | $447 |
| Everything: $1,890 | −$523 | $167 | $567 |
| The limit: $3,400 | −$1,580 | −$890 | −$490 |
With no carryover, the $1,490 election loses $243 if the likely costs don't happen. Only the certain costs are safe.
The rule behind the tables
Each dollar you elect and spend saves your tax rate: 30 cents here. Each dollar you elect and forfeit costs you what it would have been worth in take-home pay: 70 cents. So, beyond any carryover, a cost is worth including only if you're more than 70% sure it will happen, or more generally, more sure than 1 − your tax rate. At a 22% tax rate the bar is 78%.
That's why the certain costs always go in, the likely ones go in when there's a carryover to catch a shortfall or when they really are more likely than not by a wide margin, and the maybes usually stay out.
Choosing your own election
- List next year's costs you can predict: prescriptions, glasses or contacts, cleanings, regular copays. Last year's claims and receipts are the best guide.
- Mark each one certain, likely or maybe, and add up each group.
- Check your plan's rules: carryover (up to $680 for 2026), or a grace period instead, and the deadline for claims.
- Elect the certain costs, plus as much of the likely ones as your carryover or your confidence covers. Divide by your paychecks to see the deduction.
To run your own costs now, the free FSA calculator builds the same table. Every figure above is from the sample file of our FSA election planner and the same calculation, checked by paying each claim from the FSA balance one by one. It's an illustration, not tax advice.