CRA Releases the TFSA Contribution Limit for 2025
The Tax-Free Savings Account (TFSA) is a flexible investment account available to Canadian residents, allowing them to earn tax-free income and capital gains. With a TFSA, Canadians can grow their savings without paying taxes on withdrawals, making it an ideal tool for both short-term goals and long-term financial planning.
What is the TFSA contribution limit for 2025?
The Canadian government sets a new annual contribution room for TFSAs every year. The Canada Revenue Agency confirmed to Global News that the TFSA contribution limit for 2025 will be $7,000, matching the second-largest limit ever set, which was also seen in 2024. If you have been eligible to contribute to a TFSA since its inception in 2009, your cumulative contribution limit will increase to $102,000 next year.
Check TFSA Contribution Limits 2026 here.
TFSA contribution limit by year
Here is a summary of the cumulative and annual TFSA contribution limits since the program's inception, including details on withdrawal management:
If you were 18 years old in 2009 and haven't made any contributions to your TFSA, your maximum contribution limit for 2026 would be $109,000.
If you turned 18 after 2009, your lifetime TFSA contribution limit begins from the year you turned 18, resulting in a maximum limit lower than $109,000, depending on the year you became eligible.
TFSA contribution limit calculator
You can check your current total TFSA contribution room by logging into the CRA My Account website or by contacting the Tax Information Phone Service (TIPS) at 1-800-267-6999.
Remember that if you've made contributions to your TFSA in the current tax year, those amounts may not yet be reflected in your total limit on the CRA portal. Because there are penalties for overcontributing, it's critical to monitor your TFSA contributions and withdrawals.
Now you might be wondering how to calculate TFSA contribution limit? You can easily follow these steps:
1. Check Your Annual Contribution Limit: Check the annual contribution limits set by the Canada Revenue Agency (CRA) for each year since 2009, the year the TFSA was introduced.
2. Account for Your Eligibility: If you were 18 or older in 2009, you can use the cumulative total of all annual limits since then. If you turned 18 after 2009, start from the year you became eligible.
3. Add Unused Contribution Room: If you haven't contributed the full amount in previous years, any unused contribution room can be carried forward and added to your current year's limit.
4. Consider Withdrawals: Any amounts you withdraw from your TFSA are added back to your contribution room in the following year, allowing you to re-contribute those amounts.
How to open a TFSA in Canada?
If you haven’t opened a TFSA yet, open one now and start enjoying tax-free growth on your savings and investments! For eligible Canadians, opening a TFSA is a straightforward process that involves just a few simple steps:
Step 1. Confirm eligibility: You need to be a Canadian tax resident, at least 18 years old, and have a valid Social Insurance Number (SIN).
Step 2. Select a financial institution: You can open your TFSA from authorized financial institutions such as banks, credit unions, and online brokers, like moomoo Canada. You can enjoy lower trading fees and $0 account management fee on moomoo.
Step 3. Submit your application: Personal details like your residential address, phone number, email address, and Canadian Social Insurance Number are usually required when you register an account. Prepare all the required information, then complete and submit the application. You will receive an email confirming the approval of your account application.
You may also like: Six Key Benefits of a TFSA You Should Know
Frequency Asked Questions
2. What happens if TFSA grows beyond limit?
If your TFSA grows beyond the contribution limit due to investment gains, such as interest, dividends, or capital gains, there are no penalties or taxes. The TFSA allows for tax-free growth, so any increase in the account’s value from these gains does not affect your contribution room. However, it's important to ensure that your contributions themselves do not exceed your available TFSA contribution room, as over-contributing can lead to penalties. Exceeding your contribution limit results in a tax of 1% per month on the excess amount until it's withdrawn.
3. Can I leave my TFSA to my children?
Yes, you can leave your TFSA to your children by designating them as beneficiaries, allowing the assets to pass directly to them tax-free upon your death, avoiding probate. However, it's important to note that the TFSA will be collapsed, and any growth on the assets after your death may be subject to taxes. If your child is a Canadian resident and designated as a successor holder (a role usually meant for spouses or common-law partners), they can take over the TFSA without affecting their own contribution room. If no beneficiary is named, the TFSA assets will become part of your estate, potentially incurring probate fees.
4. Can I have two TFSA accounts?
Yes, you can have multiple TFSA accounts across different financial institutions. However, it's important to remember that the total amount you contribute to all your TFSA accounts cannot exceed your available contribution room for the year.
This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. Read more
