A Tax-Free Savings Account (TFSA) works differently from an FHSA or an RRSP. A contribution does not reduce your taxable income, so it does not produce a refund. This guide covers what that means in numbers, the 2026 limit and how withdrawals are treated. It is general information, not tax or investment advice.
Who can open one
The CRA lists these conditions: you are a resident of Canada for income tax purposes, you are 18 or older, and you have a valid Social Insurance Number. In some provinces and territories the age to enter a contract is 19.
No deduction, so no refund
An FHSA or RRSP contribution is deducted from taxable income. A TFSA contribution is not. That makes the first-year picture look quite different, even though the money goes in the same way.
Take Ontario, $70,000 of taxable income and a $5,000 contribution, using 2026 tax rates:
- FHSA or RRSP: an estimated refund of about $1,482.50, so the net cost is about $3,517.50
- TFSA: no refund, so the net cost is the full $5,000
Looking only at this first-year refund would leave out the other half of the comparison, which is what happens when the money comes out.
Withdrawals
Contributions to a TFSA, and income earned in it through interest, dividends or capital gains, are generally tax-free, even when you make a withdrawal. An FHSA withdrawal is not taxed when it is used for a qualifying first home purchase. An RRSP withdrawal is taxed as income.
So the three accounts differ at both ends:
- FHSA: deduction going in, no tax on a qualifying withdrawal
- RRSP: deduction going in, tax on the way out
- TFSA: no deduction going in, no tax on the way out
Which of these matters more depends on your income, your home-buying plans and your tax rate in retirement. This site shows the differences and does not say which account is better for you. The FHSA vs TFSA and RRSP vs TFSA pages lay them out side by side, with examples at three income levels.
The 2026 limit
The TFSA limit for 2026 is $7,000. New room for the next year starts on January 1, 2027. This is different from the other two accounts: the FHSA limit for 2026 is $8,000 with a deadline of December 31, 2026, and the RRSP limit is 18% of prior-year earned income up to $33,810, with a deadline of March 1, 2027. The deadlines page shows all of them in one table.
Your available room is the current year’s limit, plus unused room from earlier years, plus withdrawals made in the previous year, minus contributions already made this year. A withdrawal does not create new room right away: it is added back on January 1 of the next year. Putting money back too soon can be an over-contribution, which is taxed at 1% per month for as long as the excess stays in the account.
A note on the calculator
The calculator on this site estimates the refund from FHSA and RRSP contributions, so it has no TFSA field. The comparison table below it shows the TFSA with a refund of zero for the same amount. That amount can be above the TFSA annual limit, because the table keeps the same number across all three accounts to make the comparison easy to read.
Where to check
The limit is published on the CRA contribution limits page, and the rules are on the CRA TFSA pages. The 2027 limit was not listed there when this guide was updated.