HSA Triple-Tax Lifetime Value Calculator
Example: Annual HSA contribution: 4400 $ · Federal marginal tax rate: 22 % · State income tax rate: 5 % · Years to let HSA grow: 25 · Expected annual investment return: 7 % · Annual qualified medical withdrawals: 500 $
| HSA advantage over taxable account | $125,807 |
| Projected HSA balance (tax-free) | $263,938 |
| Equivalent taxable account balance (after taxes) | $138,132 |
| Tax saved on contributions each year | $1,188 |
Worked example
Contributing $4,400/year (2026 self-only limit) at a 22% federal + 5% state rate for 25 years at 7% return, with $500/year in medical withdrawals: the HSA grows to roughly $264,000 tax-free. A taxable account funded with the same money after 27% tax — and paying that 27% on its growth every year, so it compounds at 5.11% rather than 7% — reaches about $138,000. The triple-tax advantage: roughly $126,000, purely from the tax structure. Contributions are assumed at the start of each year and the withdrawal is taken before growth, matching the calculator above.
Frequently asked questions
What are the 2026 HSA contribution limits?
The IRS set the 2026 HSA limit at $4,400 for self-only HDHP coverage and $8,750 for family coverage (IRS Rev. Proc. 2025-19). Those age 55+ — not 50+, the HSA catch-up starts five years later than the retirement-plan one — can add a $1,000 catch-up contribution, which is fixed by statute and never inflation-adjusted. You must be enrolled in a High Deductible Health Plan (HDHP) to contribute.
Can I invest my HSA or does it just sit in a savings account?
Most HSA custodians allow investing after a minimum cash threshold (often $1,000–$2,500). Providers like Fidelity and Lively offer HSAs with brokerage-level investment options and low or no fees. The investment advantage is the heart of the triple-tax strategy.
What happens to HSA funds after age 65?
After age 65, HSA funds can be withdrawn for any purpose — not just medical — without the 20% penalty. Non-medical withdrawals are taxed as ordinary income, making the HSA function like a traditional IRA. For medical expenses, withdrawals remain tax-free for life.