RRSP vs TFSA vs FHSA vs RESP: Limits and Rules for 2025 and 2026

RRSP vs TFSA vs FHSA is the first savings decision most newcomers face, and RESP often follows once children arrive. Each account shelters savings differently: the RRSP gives a deduction now and taxes withdrawals later, the TFSA taxes nothing on growth or withdrawals, the FHSA combines a deduction with tax-free withdrawals for a first home, and the RESP adds government grants for a child's education. This guide sets out the 2025 and 2026 limits, the deadlines, how newcomers and non-residents are treated, and the traps for Americans and Indian-origin savers.

RRSP vs TFSA vs FHSA: which account first?

One common sequence for a newcomer in Toronto or Brampton is the TFSA for flexibility, the FHSA if a home purchase is planned, the RRSP when the marginal tax rate is high, and an RESP once a child has a SIN. The right order depends on income, plans and the tax treatment in every country where you file, so treat this as an illustration.

How do RRSP limits work for 2025 and 2026?

The CRA calculates your RRSP deduction limit as unused room from the prior year, plus the lesser of 18% of last year's earned income and the annual limit, minus any pension adjustment, plus adjustments such as a pension adjustment reversal. The limit for 2025 is $32,490 and for 2026 is $33,810. You find your limit on your latest notice of assessment, in your CRA account or on Form T1028 if the CRA sends one.

• Deadline. The deadline to contribute and deduct on the 2025 return was March 2, 2026. For 2026, the window runs through the first 60 days of 2027. You can contribute to your own RRSP until December 31 of the year you turn 71.
• Over-contribution. You can exceed your limit by $2,000 without penalty (if you were 18 or older in the prior year). Above that, a tax of 1% per month applies and you file Form T1-OVP within 90 days after the year-end.
• Home Buyers' Plan. The withdrawal limit is $60,000. For withdrawals made from 2026 through 2028, the 15-year repayment period starts in the fifth year after the first withdrawal. Use Form T1036 and Schedule 7.
• Withholding on withdrawals. Outside Quebec, 10% on amounts up to $5,000, 20% from $5,000 to $15,000 and 30% above $15,000; for non-residents the withholding is 25% unless a treaty reduces it.

TFSA rules: room, residency and non-resident traps

Your TFSA room equals the year's dollar limit, plus unused room from earlier years, plus last year's withdrawals, minus contributions already made. Withdrawals restore room on January 1 of the next year. The dollar limit applies for years in which you were a resident of Canada at any time, so a newcomer's room starts in the year of arrival, not before.

Non-residents may keep an existing TFSA and its Canadian tax exemption, but only residents may contribute tax-free. A non-resident contribution is taxed at 1% for each month it stays in the account, and withdrawals made while non-resident restore room only when you become a resident again. TFSA tax owing is filed and paid by June 30 of the following year.

FHSA rules: who qualifies and how long it lasts

To open an FHSA you must be a Canadian resident, 18 or older (the CRA notes that some provinces set the age of contract at 19) and 71 or younger at the end of the year you open it. You are a first-time buyer if you did not live in a qualifying home that you or your spouse or common-law partner owned in the current calendar year or the previous four. The first-year room is $8,000, up to $8,000 of unused room carries forward, and the lifetime limit is $40,000. The qualifying home must be in Canada. The account ends on December 31 of the earliest of the 15th anniversary of opening, the year you turn 71 or the year after your first qualifying withdrawal. FHSA contributions are generally deductible, and a transfer from an RRSP is not.

RESP rules: grants and limits

The Canada Education Savings Grant pays 20% on the first $2,500 contributed each year, up to $500, until the end of the year the child turns 17. Lifetime grant: $7,200 per beneficiary. Lower-income families can get an additional amount (for 2026, family income under $58,523 or between $58,523 and $117,045 sets the tier). The child needs a SIN, must be named as beneficiary and must be a Canadian resident when the contribution is made. Unused grant room carries forward, allowing up to $1,000 of grant in a year. British Columbia and Quebec add provincial benefits.

Worked example: a Mississauga newcomer

Kavya moves to Mississauga in 2026 on a work permit and earns $80,000 of Canadian-source income. She files her 2026 return in 2027. Her RRSP room for 2027 will be 18% of 2026 earned income, $14,400, below the annual limit. A contribution in her first year of filing generally cannot be deducted, so she starts with the TFSA ($7,000 for 2026, since she is a resident at some point in the year) and opens an FHSA with $8,000 of room if she meets the first-time buyer test. If she leaves Canada later, she can keep the TFSA but a non-resident contribution would face the 1% monthly tax.

If you also file in the U.S. or India

The IRS does not generally recognize the TFSA, FHSA or RESP tax exemptions, so income inside them can be taxable to a U.S. citizen, green card holder or U.S. resident and can create extra reporting questions, including foreign trust forms in some cases. The RRSP and RRIF are treated differently under the Canada-U.S. treaty. The details are in our guides to RRSP, RRIF, TFSA and RESP U.S. tax treatment, U.S. treatment of foreign retirement and savings and Forms 3520 and 3520-A. If you also hold Indian provident funds, see cross-border retirement planning for 401(k), RRSP and EPF and the retirement account comparison.

Documents you need

• SIN for you and your child, a recent notice of assessment and your CRA account.
• Contribution receipts and the T4RSP, T4RIF or FHSA statements issued by your institution.
• Prior-year TFSA and FHSA statements to track room.
• Proof you are a first-time buyer for the FHSA.

Mistakes to avoid

• Contributing to a TFSA while a non-resident.
• Assuming all TFSA room accumulates from 2009. Room starts only in years you are a resident.
• Using the RRSP before checking your deduction limit, then paying 1% a month on excess above the $2,000 buffer.
• Treating Canadian tax-free status as automatic in the U.S.
• Missing the 60-day RRSP window.

How we can help

We are a U.S. CPA firm in Aurora, Illinois. For clients with Canadian registered accounts, we review the U.S. reporting and treaty position, including foreign trust questions and foreign tax credits, and coordinate with your Canadian CPA, who confirms Canadian room and limits. See foreign account and asset reporting and relocation and immigration tax planning. More Canadian guides are on the Canada hub.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.