The example below shows how a participant in FSA saved $602 in taxes in one year.

 

Without FSA

With FSA

FSA Benefit

Gross Income
$45,000
$45,000
 

Expenses run through FSA

0

($2,000)

 

Taxable Income
$45,000
$43,000
 
Federal Tax*
(3,563)
(3,238)
325
State Income Tax*
(1,848)
(1,723)
125
FICA
(3,442)
(3,290)
152
Income After Taxes
$36,147
$34,749
 
Expenses not run through FSA
(2,000)
0
 
Your Spendable Income
$34,147
$34,749
$602
This employee could reduce taxes by $602 by using the Flexible Spending benefit!

*Assumes married with 2 allowances.