TFSA Investors: Here’s the CRA’s Contribution Limit for 2026

A Tax-Free Savings Account (TFSA) contribution limit is important to watch every single year. Every dollar of space you lose to over-contribution penalties or unused room is a dollar that could have been growing tax-free for the rest of your life. Your limit resets each year, grows as you age, and compounds quietly in the background. This turns regular deposits into a powerful long-term wealth engine. By knowing exactly how much space you have, you can avoid costly mistakes, plan bigger investments with confidence, and make sure you’re taking full advantage. Your future self will be very thankful for it.

The new numbers

The CRA has confirmed that the annual contribution limit for a TFSA in 2026 will be $7,000. For Canadians who’ve been eligible since the TFSA launched and have never contributed, that raises the total lifetime contribution room to $109,000. This bump keeps TFSAs indexed for inflation and reinforces the value of using the account.

Each year, you get new tax-free contribution room, and any unused capacity carries forward. That’s a big deal for long-term savers. Every dollar you contribute today can grow, reinvest dividends, and compound without ever being taxed, which can dramatically boost retirement wealth over decades. So, let’s look at one exchange-traded fund (ETF) that can move that contribution even higher.

Consider XQQ

iShares NASDAQ 100 Index ETF (CAD-Hedged) (TSX:XQQ) is the Canadian-listed ETF that tracks the NASDAQ-100 Index but is hedged to Canadian dollars. This is to reduce currency risk for Canadian investors. It provides exposure to 100 of the largest U.S. non-financial companies, covering big-cap tech, consumer, and growth firms. As of late 2025, XQQ remains one of the most popular NASDAQ-100 ETFs among Canadian investors. That’s thanks to its broad diversification, strong liquidity, and appeal to those seeking long-term growth through U.S. innovation and market-leading companies.

XQQ has delivered robust returns recently. The ETF’s year-to-date return has been strong, reflecting a rebound among mega-cap tech and growth stocks under its underlying index. While XQQ doesn’t yield a large dividend since many constituent companies reinvest profits rather than pay big dividends, its value gains, driven by price appreciation, made it a compelling vehicle for capital growth.

With the new $7,000 contribution limit for 2026, XQQ makes a lot of sense as a TFSA investment. It combines tax-free growth potential with exposure to high-quality U.S. large caps. By investing in XQQ, you’re buying a diversified slice of many of the world’s leading companies, from tech giants to consumer innovators. All while hedging currency risk and keeping growth fully sheltered from Canadian taxes. Over time, compounding returns in XQQ can build substantial wealth in a tax-free shell, which is ideal for a long-term play.

Bottom line

Because XQQ tends to offer capital appreciation rather than high dividend payouts, it’s especially efficient in a TFSA. You don’t have to worry about foreign withholding taxes reducing returns, and reinvesting gains inside the TFSA means compounding happens faster. Right now, here’s what that $7,000 could bring in through dividends alone.

Given its strong recent performance and the potential for continued growth in global tech and innovation sectors, XQQ is a logical use of that fresh TFSA room. It’s a simple but powerful way to deploy your annual contribution toward long-term wealth building.