The TFSA contribution limit for 2025 is $7,000 – the same as 2024. The contribution window for 2024 has closed as of February 28th, 2025, but if you’ve never contributed to a TFSA before, you can still contribute up to a total of $102,000, depending on how many years you’ve been eligible.
This guide will walk you through the current and previous TFSA contribution limits, discuss how these limits are set, and offer investment suggestions for your own TFSA. Let's get started.
Key Takeaways
- The TFSA contribution limit for 2025 is $7,000.
- The CRA determines the TFSA contribution limit each year by indexing for inflation and rounding to the nearest $500.
- Your personal contribution room includes the current year's contribution limit, unused contribution room from previous eligible years, and any withdrawals made within the last year.
- Exceeding the TFSA contribution limit results in a 1% penalty tax for each month you're over the limit.
TFSA contribution limit for 2025
The 2025 TFSA contribution limit is $7,000. If you meet the eligibility criteria, you can open a TFSA and contribute up to $7,000 this year. If you qualified in previous years but didn't take action, you can still contribute up to the max limit for each year you were eligible, including this year.
Here is a look at how the contribution limits have changed since Canadian TFSAs were introduced in 2009:
| Year | TFSA Limit |
|---|---|
| 2009 - 2012 | $5,000 |
| 2013 - 2014 | $5,500 |
| 2015 | $10,000 |
| 2016 - 2018 | $5,500 |
| 2019 - 2022 | $6,000 |
| 2023 | $6,500 |
| 2024 | $7,000 |
| 2025 | $7,000 |
When TFSAs were first introduced, the annual contribution limit was set at $5,000 with the provision of being indexed for inflation. As you can see, this was raised to $10,000 in 2015 – but this caused a bit of backlash as many Canadians felt that this type of limit was only beneffiting those the rich.
Since TFSAs are meant to benefit everyone, not just the rich, the limit was lowered back to $5,500 the following year.
How these contribution limits are decided
The federal government sets annual TFSA contribution limits. Each year, this limit is indexed for inflation and rounded to the nearest $500 – this process was introduced in 2016 after some wild fluctuations in previous years.
Last time, the CRA used a 4.7% indexation factor to set the 2024 limit. This factor was 6.3% in 2023, which shows that inflation has cooled down a bit.
Contribution limits vs. personal contribution room
It's important to note the distinct difference between the TFSA contribution limit and your own TFSA contribution room. Your contribution limit actually accumulates from year to year – so if you don’t contribute one year, that amount gets added to your limit for the next year.
But there are 3 different factors that contribute to the amount of personal contribution room you have:
- the contribution limit for the current year,
- any unused contribution room left from previous years, and
- any TFSA withdrawals you made within the last year.
As an example, let's say that Nikki turned 35 years old in 2024 but hasn't opened a TFSA yet. Her age indicates that she would have been eligible in 2009 when these accounts were first introduced, so if she chooses to start investing with a TFSA now, her total contribution room is $102,000.
On the other hand, if Nikki opened her TFSA back in 2009, things would look different. If she makes the full contribution each year, she'd only have $7,000 of contribution room for 2025.
And if she made any withdrawals, any amount she withdrew would go to her contribution limit for the following year. If she made the full $6,500 contribution in 2023 but then withdrew $4,000, her contribution room becomes $11,000 for 2024. That's quite a different number from both of our previous scenarios.
Either way, the best route for both ease-of-use and convenience is to register and check your CRA MyAccount, either through the web page or the MyCRA app. You can check your contribution limits there.
What happens if you over-contribute and exceed the limit?
If you go over the TFSA contribution limit for a set year, you’ll have to pay a penalty tax of 1% for each month that you exceed the allowable TFSA amount.
While it’s your own responsibility to know the contribution limits and stay within them, the CRA sends an "excess amount letter" to those who over-contribute. If you receive such a letter, the best solution is to withdraw the excess amount as soon as possible to avoid further penalties.
Example TFSA penalty
Let’s consider an example, using our friend Nikki again. Nikki opened her TFSA in 2009 and has contributed the maximum amount every year since then. By the end of 2021, she’d contributed a total of $75,500 and hadn’t made any withdrawals. She then deposited $6,000 in January of 2022 – the 2022 TFSA contribution limit.
In March of 2022, a minor emergency unfolds, and Nikki needs some extra cash. So she withdraws $10,000 from the TFSA. And later, in June of 2022, she replenishes the TFSA by depositing $10,000. Unfortunately, withdrawals do not create TFSA room until the following year.
She realizes her mistake in July of 2022 and withdraws the $10,000. The penalty payable will be $200 – 1% of the excess amount of $10,000 for each of the 2 months Nikki exceeded the TFSA contribution limits (June and July).
As you can see, it’s a good idea to track your contributions, so you don’t go over the limit. But if you need assistance, the CRA's "RC343 Worksheet - TFSA contribution room" can be very helpful.
Your TFSA investment options
There are a few different types of investments that can be used to grow your TFSA, including cash, stocks, and GICs. And because this is a tax-free account, you won't face a tax deduction when using any type of investment to contribute to your TFSA.
Here's an overview of the main investment types alongside their benefits and downsides:
| Investment type | Pros | Cons |
|---|---|---|
| Cash | * No fees * Can start with a small amount | * Limited grown potential * Risk of not outpacing inflation |
| GICs | * Steady returns * Very low risk | * You can't withdraw without penalty * Taxed on withdrawal |
| Bonds | * Steady returns * Well-rounded diversification | * Sensitive to interest rate changes * Lack of liquidity |
| Mutual funds | * Flexibility and liquidity * High accessibility | * Management fees * Tax considerations |
| ETFs | * Low expense ratios * Well-rounded diversification | * Trading costs * Complexity |
| Stocks | * High growth potential * Tax benefits | * Volatile * Risk of capital loss |
How to maximize your TFSA contributions
The key to a TFSA is maxing out your contributions every year to grow your savings tax-free. It can be challenging for the average Canadian to max out their TFSA. Here are some strategies to help you keep on track:
- Contribute early in the year: One of the best ways to max out your TFSA is to ensure you’re putting money in as fast as possible. The earlier in the year, the more time your investment has to grow. Even if you can’t contribute the full amount immediately, try to deposit as much as possible early on.
- Contribute as much as possible: The annual contribution limit for your TFSA is set each year, and it’s important to get as close to the maximum limit as possible. If you’re eligible for previous years’ contribution room, you can carry that forward, so don’t hesitate to catch up on any missed amounts from past years.
- Track your contributions regularly: It’s crucial to stay on top of your contributions so you can avoid the penalties for exceeding your limits. If you want to put any money into a TFSA, store it in a savings account until you have more wiggle room to work with.
- Consider a TFSA investment: To make the most of your TFSA, consider pairing your account with an investment to unlock higher growth potential, such as exchange-traded funds (ETFs) or stocks. While these options may come with higher risk, they offer the possibility of greater returns, which are tax-free when paired with a TFSA. That said, a GIC or a mutual fund are both great options if you prefer to have more security.
- Automate your contributions: Setting up automatic monthly contributions to your TFSA can help you stay on track and ensure you’re regularly funding your account. Even small, consistent contributions can add up over time.
FAQ
What is the TFSA contribution limit for 2025?
The TFSA contribution limit for 2025 is $7,000, which is the same limit as 2024. This amount can change with each passing year, so be sure to check this detail in the future and avoid penalties.
Can I contribute more than $7,000 to TFSA in a year?
Yes, if you’ve made withdrawals, you can then add this extra room to the maximum contribution limit. Or, if you haven’t contributed the maximum eligible amount in past years, you can also add those amounts to this year’s maximum.
Where can I find a TFSA contribution limit calculator?
There are a few of these calculators available online. MoneySense, WOWA (real estate), and TD bank all have simple, user-friendly online calculators on their sites. You can also use the CRA's RC343 Worksheet to help determine your contribution room.
What kinds of investments can I have in a TFSA?
TFSAs can hold a variety of investment types, including cash, GICs, bonds, mutual funds, securities listed on a designated stock exchange, and certain shares of small business corporations. There are, of course, pros and cons for each investment type.
Can I have more than one TFSA?
Yes, individuals can hold more than one such savings account. However, your total contributions can’t exceed annual TFSA contribution limits. This includes the total of all funds deposited into all accounts, not just each account’s individual total.
What is the lifetime limit for TFSA?
There’s no lifetime limit for TFSAs. However, if you’ve never had a TFSA but were eligible to contribute each year since 2009, this can add to your contribution limit – in this case, you now have $102,000 of contribution room.
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