If you are in the 22% federal and 5% state income tax brackets, how much do you save each year by allocating $200 per month to your flexible spending account assuming you have zero funds left over at the end of the year?

Question

Quizplus · Accepted Answer

By allocating $200 per month to a flexible spending account, you save on both federal and state taxes for that amount. Annually, this is $200 * 12 = $2,400. The total tax rate is 22% + 5% = 27%. Savings are $2,400 * 27% = $648 annually.

If You Are in the 22% Federal and 5% State