Tax-advantaged accounts like TFSAs and RRSPs are some of the best tools Canadians can use to build long-term wealth. For the 2025 tax year, new contribution limits offer even more opportunities to grow your savings. In this post, we’ll explain the updated TFSA limit, show you how to determine your maximum RRSP deduction amount, and share how Luminus Financial’s RRSP loans can help you maximize your retirement savings.
TFSA Contribution Limits for 2025
What is a TFSA?
A Tax-Free Savings Account (TFSA) allows you to save and invest money without paying taxes on the growth or withdrawals. It’s a flexible option for both short-term and long-term savings, whether you’re planning for a vacation, building an emergency fund, or setting yourself up financially for retirement.
TFSA Contribution Limit for 2025
For the 2025 tax year, the Canada Revenue Agency (CRA) has announced that the annual TFSA contribution limit is $7,000. If you haven’t maximized your contributions in previous years, unused room carries forward, giving you even more space to grow your money tax-free.
How to Check Your TFSA Contribution Room
To find out how much contribution room you have, you can:
- Log in to your CRA My Account
- Use the CRA’s Tax Information Phone Service (TIPS)
It pays to have a good understanding of your TFSA contribution room to help avoid over-contributing to your account. TFSA over-contributions can result in penalties of 1% per month on the excess amount until corrected.
Determining Your RRSP Deduction Limits for 2025
What is an RRSP?
A Registered Retirement Savings Plan (RRSP) is designed to help you save for retirement. Contributions are tax-deductible, and any growth is tax-deferred until withdrawal, typically during retirement when your income may be lower.
How to Find Your 2025 RRSP Deduction Limit
Your RRSP deduction limit is the maximum amount you can contribute to your RRSP in a tax year and is based on a few variables. Here’s how to find it:
- Form T1028: The CRA may send you this form if there are updates to your RRSP deduction limit.
- CRA My Account: Access your account online for real-time information.
- Tax Information Phone Service (TIPS): Call the CRA for assistance.
- Notice of Assessment or Reassessment: Check the RRSP Deduction Limit Statement included with your latest notice.
Example: If your 2025 earned income is $75,000 and you haven’t contributed to your RRSP in previous years, your limit will generally be 18% of your earned income ($13,500), plus any unused room from prior years. Always confirm exact amounts with the CRA to be sure.
Special Considerations
If you’ve participated in the Home Buyer’s Plan (HBP) or Lifelong Learning Plan (LLP), remember to account for repayments when calculating your deduction room.
Leveraging RRSP Loans to Maximize Savings
Why Maximize Your RRSP Contributions?
Contributing the maximum to your RRSP provides two key benefits:
- Tax Savings: Contributions reduce your annual taxable income, often resulting in a refund
- Long-Term Growth: Funds grow tax-deferred, allowing for significant compounding over time
How Luminus Financial’s RRSP Loan Can Help
If you don’t have the cash to maximize your RRSP contributions, Luminus Financial’s RRSP Loan can help. Here’s how it works:
- Borrow funds to make a full or partial RRSP contribution.
- Enjoy flexible repayment options that fit your budget.
- Use the potential tax refund to repay part of the loan.
By borrowing to invest in your RRSP now, you can maximize your tax refund and give your retirement savings a boost.
Conclusion: Plan Your 2025 Financial Goals Today
TFSA | RRSP | |
---|---|---|
2025 Tax Year Contribution Deadline | December 31, 2025 | March 1, 2026 |
2025 Tax Year Contribution Limit | $7,000 | Find Your RRSP Contribution Limit |
Interest Rate | 1.75% | 0.05% – 0.35% variable** |
Tax Benefits | Tax-Free | Tax-Deferred & Tax-Deductible |
Useful for… | Vacation, an emergency fund, large purchases… | Retirement |
Tax Free Savings Account (TFSA) | RRSP |
With a $7,000 TFSA contribution limit and tax-saving opportunities through RRSPs, 2025 is a great year to grow your savings. Take the first step by checking your TFSA and RRSP contribution room today. If you’re ready to maximize your RRSP contributions but need extra funds, Luminus Financial’s RRSP Loan can help you get there.
Start planning for your future today. If you have any questions, we encourage you to get in touch with our Member Relations team. Luminus Financial is here to help you achieve your financial goals.