Canadians will be able to benefit from a new increase in the contribution limit for Tax-Free Savings Accounts (TFSA) for 2025, allowing them to save more money without paying taxes on the returns. The annual increase in the available contribution room for the TFSA is based on the inflation rate recorded in the previous year.

The available contribution room for the TFSA starts to increase annually once an individual turns 18. The increase is typically calculated based on a baseline of $5,000, which is then adjusted according to the inflation rate, and this amount is rounded to the nearest $500. For example, if the inflation rate is high, the increase may be greater, allowing retirees and investors to save more over time.

The annual increase in the available contribution room will be officially announced at the end of the year or the beginning of the new year. Therefore, Canadian citizens can follow these updates through the official website of the Canada Revenue Agency (CRA).