Check out our contribution room calculator to see where you stand with your TFSA contributions:
What is a TFSA?
A TFSA is a savings account that acts like an investment account, which generates tax-free income. Qualified investments include cash, guaranteed investment certificates (GICs), mutual funds, exchange-traded funds (ETFs), bonds, and stocks. The government oversees TFSAs, but banks and financial institutions administer them.
There are three types of TFSAs you can open:
- Deposit TFSA: This is what most people think of when they consider a TFSA. A bank or credit union holds the savings account or GIC and you make deposits.
- Annuity contract: You set up an arrangement with an insurance provider and provide a lump sum investment in exchange for guaranteed payments over a set period of time.
- Arrangement in trust: You arrange for a financial institution to hold your investments in a mutual fund account or a trading account.
Although there are differences between these accounts, you fund them with money you’ve already paid taxes on, which is why the funds you withdraw aren’t taxed.
How much can you contribute to a TFSA each year?
The government places limits on how much you can contribute, and this limitation is called your contribution room. Any Canadian resident aged 18 or older with a valid Social Insurance Number can open a TFSA.
While you do have to abide by the set amount of contribution room each year, any growth you earn on those investments won’t affect your contribution room for the current year or years to come.
How a TFSA contribution room works
Your contribution room is specific to you and your situation; it changes every year and depends on whether or not you’ve made contributions or withdrawals. Note that if you have more than one TFSA, your contribution room is the total you can contribute across all your accounts.
Let’s take a look at how funding a TFSA works. First, you’d use the calculator to find your TFSA room. For instance, say you were a resident of Canada before 2010 and were born in 1975. If you haven’t made any contributions, your room is $102,000. That’s the total amount you could contribute this year.
Now, say you have similar demographics, but you’ve contributed $50,000 to the TFSA over the last few years and haven’t withdrawn any funds. Your current room would be $52,000.
If you’ve been steadily contributing to your TFSA, you’ll have to closely watch your annual contribution limit. For example, if you started funding your TFSA as soon as you turned 18 and always contributed the limit, you’d only be able to fund $7,000 for 2025.
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TFSA contribution limits by year
Below, you’ll find the annual contribution limit for each year since the inception of the TFSA in 2009. Each year, the new annual limit is indexed to inflation and rounded to the nearest $500. There’s one exception: in 2015, the limit increased from $5,500 to $10,000; it was lowered to $5,500 again the following year.
| Year | TFSA annual limit | TFSA cumulative limit |
|---|---|---|
| 2009 | $5,000 | $5,000 |
| 2010 | $5,000 | $10,000 |
| 2011 | $5,000 | $15,000 |
| 2012 | $5,000 | $20,000 |
| 2013 | $5,500 | $25,500 |
| 2014 | $5,500 | $31,000 |
| 2015 | $10,000 | $41,000 |
| 2016 | $5,500 | $46,500 |
| 2017 | $5,500 | $52,000 |
| 2018 | $5,500 | $57,500 |
| 2019 | $6,000 | $63,500 |
| 2020 | $6,000 | $69,500 |
| 2021 | $6,000 | $75,500 |
| 2022 | $6,000 | $81,500 |
| 2023 | $6,500 | $88,000 |
| 2024 | $7,000 | $95,000 |
| 2025 | $7,000 | $102,000 |
| 2026 | $7,000 | $109,000 |
What happens if you over-contribute to your TFSA?
If you accidentally overcontribute, withdraw the excess funds as soon as you realize. The Canada Revenue Agency will inform you if you overcontribute, but the excess amount is taxed at 1% per month until you remove it. If you overcontributed on purpose, you may face additional taxes or fees.
Once you remove the extra funds, report the excess amount to the CRA by filing a TFSA Return form. There’s no need to call the CRA since your bank will send them proof of the withdrawal.
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