The TFSA dollar limit will be $7,000 in 2025, matching the 2024 amount.
That means the total contribution room available next year for someone who has never contributed to a TFSA and has been eligible to do so since its introduction in 2009 is set to be $102,000, up from $95,000 this year.
The Canada Revenue Agency (CRA) will officially announce the 2024 indexation rate for personal income tax and government benefits in the coming weeks. That indexation rate applies to the annual TFSA dollar amount as well as tax brackets.
However, the TFSA dollar limit for 2025 can be calculated using the consumer price index (CPI) published by Statistics Canada on Tuesday, which came in at 1.6% for September 2024.
The federal indexation factor for the coming year is calculated as the average of the monthly CPI for the 12-month period ended Sept. 30 of this year divided by the average CPI for the 12-month period ended Sept. 30 of the previous year.
According to calculations provided by Dany Provost, director of financial planning and tax optimization with SFL Expertise in Quebec, the indexation factor for 2025 will be 2.7%. (By comparison, the indexation factor for 2024 was 4.7%.)
The annual TFSA dollar limit is fixed at a base amount of $5,000, indexed to inflation for each year after 2009 and rounded to the nearest $500. According to Provost, the underlying TFSA dollar limit by indexation for 2025 is $7,044, compared to $6,859 for 2024. That underlying limit is then rounded to the closest $500 increment, or $7,000.
TFSA contribution room starts accumulating in the year a Canadian turns 18, regardless of whether they open an account. For example, someone who turned 18 in 2023 and who has never contributed to a TFSA has $13,500 in TFSA contribution room this year. If that person doesn’t contribute to a TFSA in 2024, they will have $20,500 in TFSA contribution room in 2025.
Aurèle Courcelles, assistant vice-president, tax and estate planning, with IG Wealth Management in Winnipeg, says clients use TFSAs for a variety of purposes, including holding emergency savings, saving for a large purchase or setting aside funds for retirement.
“If you could afford to leave your money [in a TFSA] without pulling it out, it’s a great source of retirement income,” Courcelles said.
While contributions to a TFSA are not tax deductible, withdrawals of contributions and growth from the account are tax-free. That means a retiree could withdraw from their TFSA without increasing their taxable income for the year, which might otherwise affect their access to benefits such as old age security, Courcelles said.
However, TFSA holders should track their contributions and withdrawals so as not to overcontribute, Courcelles said.
When a TFSA holder makes a withdrawal, they receive an equal amount in TFSA contribution room in the following year, in addition to the new contribution room for that year.
If a TFSA holder withdraws and recontributes to their TFSA in the same year without having contribution room available, they face a tax of 1% a month on the amount of the overcontribution.
TFSA holders can track their total TFSA contribution room using the CRA’s My Account service. However, the agency’s TFSA contribution limit information may not be up to date if the TFSA holder has made recent contributions or withdrawals.
Here are the TFSA dollar limits by year:
- 2024–2025: $7,000
- 2023: $6,500
- 2019–2022: $6,000
- 2016–2018: $5,500
- 2015: $10,000
- 2013–2014: $5,500
- 2009–2012: $5,000