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TFSA Contribution Limit Increased Again

TFSA limit rises to $7,000 for 2024

TFSA-Limit-Increased

Tax-Free Savings Account (TFSA)

TFSA stands for Tax-Free Savings Account. It is a type of account that allows individuals to save and invest money without paying taxes on the income generated within the account.

Key features of a TFSA:

  • Any income earned within the TFSA, such as interest, dividends, and capital gains, are not subject to taxation.
  • For Canadian citizens who are 18 years of age or older, tax-free savings accounts are one kind of tax-advantaged account.
  • Withdrawals from TFSAs are tax-free and gains on assets in the account are not taxed, they allow you to save money on taxes.
  • TFSAs have annual contribution limits called contribution rooms. If a contribution is made below the annual limit, there is a carryover amount that can be used for the allowed contribution for the following year.

How Tax-Free Savings Accounts Work?

In Canada, tax-free savings accounts were introduced in 2009. They were designed to support Canadians in their lifetime financial planning and investing. People can save money for any purpose, not just retirement, with a TFSA account.

 

You can save, for instance, for a down payment on a house, a car, schooling, extra living expenses, or retirement. Furthermore, you can contribute without having a source of income. The money received from investments made in a TFSA is typically not taxed, though there are certain exceptions.

TFSA Contribution Room Amounts

The annual limits in Canadian dollars since and including 2009 are:

2009-2012: $5,000

2013-2014: $5,500

2015: $10,000

2016-2018: $5,500

2019-2022: $6,000

2023: $6500

2024: $7000

“The Canada Revenue Agency (CRA) confirmed that limit is $7,000 in 2024, up from $6,500 in 2023 and $6,000 in 2022”

TFSA Contribution Limit Increased for 2024

For the first time in the registered account’s history, the yearly TFSA maximum has increased for two years in consecutive years. The annual contribution limit is set and is raised by inflation. The maximum sum for 2024 has been determined to be $7,000, which is rounded to the closest $500 and reflects the limit’s index to inflation. Any money taken out in the current year can only be refunded in the next year, and unused TFSA contribution room can be carried forward.

Federal tax bracket thresholds for 2024

The 33.0% tax rate begins at a taxable income of over $246,752, up from $235,675 in 2023

The 29.0% tax rate begins at taxable income of over $173,205, up from $165,430 in 2023.

The 26.0% tax rate begins at taxable income of over $111.733, up from $106,717 in 2023.

The 20.5% tax rate begins at a taxable income of over $55,867 up from $53,359 in 2023.

Income below $55,867 is taxed at 15.0%.

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