# Tax-Free Savings Account (TFSA)

> A TFSA is a Canadian account where investments grow tax-free and withdrawals are never taxed, though contributions aren't tax-deductible.

Canonical page: https://find.wellspent.co/glossary/tfsa/
Also called: TFSA, tax-free savings account

The 2026 dollar limit is C$7,000. Room builds each year from the year you turn 18 as a Canadian resident, and unused room carries forward with no time limit. Someone eligible since TFSAs began in 2009 who has never contributed has C$109,000 of room in 2026, the sum of every year's published limit.

Anything you withdraw is added back to your room on January 1 of the next year. Putting it back in the same year can create an overcontribution, taxed at 1% a month on the highest excess, with none of the C$2,000 cushion RRSPs allow.

TFSA income and withdrawals don't count toward federal income-tested benefits such as Old Age Security and the Guaranteed Income Supplement. That makes a TFSA a useful source of retirement cash for anyone near the OAS clawback threshold.

## How to check

The CRA shows your TFSA room in My Account, but it's updated only once a year from the previous year's records. Check your own statements for this year's contributions and withdrawals before adding money.

## Sources

- [Canada Revenue Agency, Calculate your TFSA contribution room (page modified February 20, 2026)](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/contributing/calculate-room.html)
- [Canada Revenue Agency, MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE (page modified October 28, 2026)](https://www.canada.ca/en/revenue-agency/services/tax/registered-plans-administrators/pspa/mp-rrsp-dpsp-tfsa-limits-ympe.html)
- [Canada Revenue Agency, If you owe tax on excess TFSA amounts](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/owing-tax/excess.html)
- [Canada Revenue Agency, What is a TFSA](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/what.html)

## Related terms

- [Registered Retirement Savings Plan (RRSP)](https://find.wellspent.co/glossary/rrsp.md)
- [First Home Savings Account (FHSA)](https://find.wellspent.co/glossary/fhsa.md)
- [OAS clawback (OAS recovery tax)](https://find.wellspent.co/glossary/oas-clawback.md)
- [Registered Retirement Income Fund (RRIF)](https://find.wellspent.co/glossary/rrif.md)