TFSA vs RRSP vs FHSA
Canada offers three powerful tax-advantaged accounts. Understanding how each one works helps you keep more of your money.
TFSA (Tax-Free Savings Account)
- Contribution room (2026): $7,000/year
- Tax treatment: Contributions are after-tax; all growth and withdrawals are tax-free
- Best for: Flexible savings goals, emergency funds, long-term investing
- Key advantage: Withdrawals don't trigger tax and contribution room is restored the following year
RRSP (Registered Retirement Savings Plan)
- Contribution room: 18% of previous year's income, up to ~$32,490 for 2026
- Tax treatment: Contributions are tax-deductible; taxed as income on withdrawal
- Best for: Retirement savings, especially in your peak earning years
- Key advantage: Immediate tax refund + tax-deferred growth
FHSA (First Home Savings Account)
- Contribution room: $8,000/year, up to $40,000 lifetime
- Tax treatment: Tax-deductible contributions AND tax-free withdrawals for a first home
- Best for: First-time home buyers
- Key advantage: Combines the best of TFSA and RRSP — deduct going in, tax-free coming out
Order of Priority
- FHSA if you're a first-time home buyer (it's the best of both worlds)
- RRSP if you're in a high tax bracket (maximize the deduction)
- TFSA for flexibility and tax-free growth
- RRSP again if you still have contribution room
Everyone's situation is different. Book a consultation to build a personalized strategy.