Canadians can contribute an additional $7,000 to their TFSA starting January 1, 2025
The Canada Revenue Agency (CRA) has announced that Canadians will be able to contribute an additional $7,000 to their Tax-Free Savings Account (TFSA) starting January 1, 2025.
According to BNN Bloomberg, this increase matches the allowance for 2024, which had risen from $6,500 in 2023 and $6,000 in the three preceding years. The additional contribution room is indexed to inflation.
Canadians who have maximized their TFSA contributions by the end of 2024 will be eligible to add another $7,000 in 2025.
For those with unused contribution room, the TFSA allows carry-forwards starting from 2009, when the program was introduced, or from the year they turned 18 if it was later.
With the 2025 increase, the total contribution room for someone who has never contributed to a TFSA and was at least 18 years old when the program launched will reach $102,000, up from $95,000 in 2024.
This substantial room makes the TFSA a versatile option for Canadians with varying savings goals.
A TFSA is a tax-sheltered account where funds and investment returns can be withdrawn without incurring taxes.
As the CRA explains, “In comparison, half of capital gains on equities in non-registered accounts are taxed and income is fully taxed. Dividends are also subject to full taxation with the exception of a tax credit on eligible payouts.”
The CRA also highlighted the popularity of TFSAs, stating that they are widely used for short-term savings needs, including education, vacations, and even day trading.
With the total allowable contribution now reaching six figures for eligible Canadians, TFSAs are also positioned as an effective
