How Much Should You Put in Your FSA for 2027?

Every dollar you put in a flexible spending account (FSA) (opens in a new tab) skips income and payroll taxes, which makes this tax-advantaged account one of the simplest ways to stretch your healthcare budget. FSAs are fantastic tools for saving money on health purchases, but the major tradeoff is that unspent money left at your plan's year end is forfeited. So when you're asking "how much should I put in my FSA for 2027?", the right answer isn't always the highest number you're allowed to elect but rather the amount you're confident you'll spend on eligible expenses.

This guide covers how FSA contributions work, the 2027 limits (opens in a new tab), a simple way to calculate your number, and which expenses belong in your estimate.

Your FSA election is the annual amount you choose to contribute for the plan year. Your employer deducts it from your salary in equal amounts each paycheck, before taxes. With a healthcare FSA, your full annual election is available on the first day of the plan year, which is a big benefit if you have a large expense early on.

Once open enrollment ends, your election is generally locked for the year unless you have a qualifying life event that your plan lists as a permitted reason to change it. (For details, see Can You Change Your FSA Contribution? What to Know Before 2027 (opens in a new tab).) This is why it pays to get the number right up front.

Any money left in your FSA after your plan's deadline is forfeited unless your plan offers one of two relief options:

• Carryover: Also called an FSA carryover or rollover, this lets you roll up to $700 of unused 2027 funds into 2028.
• Grace period: Gives you up to 2½ extra months to incur expenses and spend the remaining balance.

A plan can offer one of these, but not both, and some plans offer neither. Learn more in What Happens to Unused FSA Funds? (opens in a new tab)

This forfeiture rule is why overestimating has a real cost. If you overshoot by $300 in a plan with strict use-it-or-lose-it rules and no carryover, you lose that $300, which wipes out the tax savings on roughly $1,000 of contributions. If you're new to FSAs, aim for a realistic estimate, track what you actually spend in 2027, and adjust next year.

The IRS set the 2027 health FSA contribution limit at $3,500, up from $3,400 in 2026. Here are the key 2027 numbers, including the distinction between health and dependent care accounts:

The health FSA limit applies to your own pre-tax salary contributions, per employee, per employer. A few things don't count toward it:

• Employer contributions: Money your employer adds generally doesn't count against your $3,500, so your total available balance can be higher.
• Carryover funds: Up to $680 carried over from 2026 sits on top of your 2027 election.
• Your spouse's FSA: The health FSA limit isn't a household cap. If your spouse has an FSA through their own employer, they can elect up to $3,500 too.

Your employer can also set a lower limit than the IRS cap, so check your plan materials before you enroll.

FSA contributions lower your taxable income, so they skip federal income tax, Social Security and Medicare taxes (FICA taxes, 7.65% combined), and in most states, state income tax. If you're in the 22% federal tax bracket, that's a savings rate of roughly 30 cents on every dollar. A $1,500 election would save you about $445.

But those savings only apply to money you actually spend. Forfeited dollars are lost entirely, tax savings and all. Tax savings are a good reason to contribute for costs you expect, not a reason to pad your estimate.

Use this simple four-step estimate:

• List your predictable recurring costs: Prescriptions, copays, therapy sessions, and other medical expenses you pay every year.
• Add planned expenses: Include procedures, dental work, or new contacts, glasses, monthly recurring health costs like a gym membership (opens in a new tab) if you have approval to spend your FSA on that service, or other items you already know about.
• Trim for uncertainty: Count only expenses you're reasonably sure about. If your plan has a carryover, it gives you a small buffer for error.
• Check your plan rules: Confirm your employer's limit and whether you have a carryover, grace period, or neither.

Here's what that looks like in practice:

In this example, a "maybe" expense like new glasses stays off the list. A $1,600 election covers known costs and saves roughly $475 in taxes, with little risk of forfeiting money.

Only if your eligible spending supports it. Maxing out at $3,500 can make sense if you:

• Have a large planned expense, such as orthodontia, LASIK, or a scheduled procedure
• Are expecting a baby in 2027
• Have spent $3,500 or more on eligible costs in past years
• Cover a family with ongoing prescriptions, therapy, or specialist visits
• Know yourself to invest out of pocket in potentially eligible health interventions like supplements (opens in a new tab), gym memberships, specialty apparel or adaptive footwear (opens in a new tab), etc. and plan to go through the qualification process in 2027 to determine FSA eligibility.

Because your full election is available on day one, maxing out is especially useful for big expenses early in the year. If none of these apply, a lower, well-supported number is the safer choice. And if you plan to contribute to a health savings account (HSA), keep in mind that a general-purpose healthcare FSA makes you HSA-ineligible, so a limited purpose FSA may be the better fit.

Curious about the difference between an HSA and an FSA? Check out our article, HSA vs. FSA: How to Choose the Best Account Type for You (opens in a new tab).

Start with what you spent in the past 12 months. Pull your claims history from your insurer's portal, your FSA reimbursement statements, and your pharmacy records. Then review your 2027 health plan's deductible, copays, and coinsurance, since those can change at open enrollment and affect what you'll pay out of pocket.

Common eligible expenses include:

• Eligible medical costs: Copays, deductibles, coinsurance, and prescriptions
• Dental and vision care: Cleanings, fillings, orthodontia, glasses, contacts, and LASIK
• Over-the-counter products: Pain relievers, allergy medicine, first-aid supplies, menstrual products, and sunscreen
• Mental health care: Therapy and counseling copays
• Planned procedures: Surgeries, physical therapy, and other treatment
• Dual-purpose health products: Things like your daily multivitamin, a red light therapy mask, or a class pack to a local fitness studio may be FSA eligible for qualified customers when the purchase is substantiated by a Letter of Medical Necessity (LMN) (opens in a new tab).

For a full rundown, see The Ultimate Guide to HSA/FSA Eligible Expenses & Savings Strategies (opens in a new tab).

Think about what might change next year. A new baby, a planned surgery, a child who needs braces, or switching to a health plan with a higher deductible can all raise your eligible costs. Factor in changes you know about, but don't pad your election for ones that may never happen.

You don't need a perfect number to make your FSA worthwhile. A reasonable estimate based on real spending will capture most of the tax savings while keeping your forfeiture risk low. Start with your recurring costs, add what you know is coming, and trim what you're unsure about. For more ways to stretch your pre-tax dollars, see Maximize Your HSA and FSA: A Guide to Eligible Health Expenses (opens in a new tab). For questions about your individual tax or benefits situation, including how state income tax applies to you, talk with a qualified tax professional or your HR benefits team.