FHSA vs TFSA: Differences, Limits and Tax Refund (2026)
An FHSA contribution reduces taxable income and a TFSA contribution does not, so only the FHSA produces a refund. A qualifying FHSA withdrawal and a TFSA withdrawal are not taxed. Annual limits also differ.
This page shows how FHSA and TFSA differ. It does not say which account is better for you.
Differences
| Item | FHSA | TFSA |
|---|---|---|
| Tax deduction | Yes | No |
| Tax on qualified withdrawal | None (if requirements are met) | None |
| Annual limit | $8,000 | $7,000 |
| Lifetime limit | $40,000 | No set lifetime amount. Room is added each year. |
| Carry-forward | Unused room, up to $8,000 | Unused room carries forward. Withdrawals are added back the next calendar year. |
| Deadline | Dec 31, 2026 | New room on Jan 1, 2027 |
| Purpose requirement | A qualifying first home purchase | Savings and investments, with no required purpose |
Source: www.canada.ca · As of: Oct 2026 Estimate
Numbers example
| Taxable income | FHSA: Estimated refund | FHSA: Net cost | TFSA: Estimated refund | TFSA: Net cost |
|---|---|---|---|---|
| $60,000 | $1,832.01 | $6,168.00 | $0.00 | $8,000.00 |
| $85,000 | $2,256.00 | $5,744.00 | $0.00 | $8,000.00 |
| $120,000 | $2,720.43 | $5,279.57 | $0.00 | $8,000.00 |
It depends on your income, home-buying plans and tax rate in retirement.
Federal brackets · Source: www.canada.ca · As of: Oct 2026 Estimate
Provincial or territorial brackets · Source: www.canada.ca · As of: Oct 2026 Estimate
Basic personal amount · Source: www.canada.ca · As of: Oct 2026 Estimate
What the difference depends on
- When you plan to buy a home
- Your tax rate now and in retirement
- Your contribution room
Home-buying plans. An FHSA withdrawal is not taxed when it is used for a qualifying first home purchase. A TFSA withdrawal is not taxed either.
Tax rates. An FHSA contribution lowers taxable income, so the refund depends on your marginal rate. A TFSA contribution does not, so your rate does not change the first-year result.
Contribution room. The 2026 limits are $8,000 for the FHSA and $7,000 for the TFSA. The deadlines also work differently, as the table above shows.
Estimate for information only, not tax or investment advice. Based on 2026 tax rates. Excludes the Ontario Health Premium, CPP/EI and other credits.