TFSA, RRSP or FHSA? Where your next dollar should go in 2026

Canada gives you three powerful savings accounts — the TFSA, RRSP and FHSA. Each one saves tax in a different way. Here are the 2026 limits and a simple way to decide where your next dollar should go.

2026 at a glance

• TFSA: the 2026 annual limit is $7,000. If you've been eligible since 2009 (age 18+ and a Canadian resident) and have never contributed, your total room in 2026 is $109,000.
• RRSP: you can contribute 18% of last year's earned income, up to a 2026 maximum of $33,810, minus any pension adjustment. Unused room carries forward.
• FHSA: first-time home buyers can contribute $8,000 a year, up to $40,000 in total. Up to $8,000 of unused room can be carried forward to the next year.

Your exact room is shown in your CRA My Account and on your Notice of Assessment. Over-contributing to any of these accounts triggers a penalty tax, so check before you deposit.

TFSA — tax-free growth, total flexibility

You don't get a tax deduction when you put money in, but everything it earns — interest, dividends, growth — is tax-free, and so are withdrawals. Money you take out is added back to your room on January 1 of the following year.

Best for: emergency funds, medium-term goals, and anyone in a lower tax bracket today.

RRSP — a tax refund now, tax later

Contributions are deducted from your income, which can mean a refund. Investments grow tax-sheltered, but withdrawals are taxed as income — ideally in retirement, when your tax rate may be lower. Contributions made in the first 60 days of a year can count for the previous tax year.

Best for: higher earners saving for retirement. The Home Buyers' Plan also lets you borrow from your RRSP for a first home.

FHSA — the best of both, for your first home

The FHSA combines the two: contributions are tax-deductible like an RRSP, and a qualifying withdrawal to buy your first home is tax-free like a TFSA. Room only starts building once you open the account, so it pays to open one early even if you can't contribute much yet. If you don't buy a home, the money can usually be moved to your RRSP without using RRSP room.

Best for: anyone who hasn't owned a home recently and may buy one in the next 15 years.

So where should your next dollar go?

1. Planning to buy a first home? Start with the FHSA.
2. Higher income and saving for retirement? The RRSP refund is hard to beat — consider putting the refund into your TFSA.
3. Lower income, or you may need the money before retirement? The TFSA usually wins.

Many families use all three. The right mix depends on your income, timeline and goals — and on the investments you hold inside the account.

Official details: TFSA (CRA) · RRSP (CRA) · FHSA (CRA). You can also read our TFSA, RRSP and FHSA pages, or book a free review.

Jagmeet Singh, BBA, LLQP · MDRT member Founder of Policy Place. Licensed for life and accident & sickness insurance (LLQP) in BC, AB, SK, MB and ON. In the insurance industry since 2006 (India); licensed in Canada since 2022.

This article is general information, not personal financial, tax, legal or immigration advice. Rules and limits change — confirm details with an advisor or the official source before you decide.