If you are in the 20% 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

Allocating $200 per month to a flexible spending account saves you taxes on that amount. The annual contribution is $2,400 ($200 x 12 months). The tax savings is 25% (20% federal + 5% state) of $2,400, which equals $600.

If You Are in the 20% Federal and 5% State