On January 1, 2026, Canadians are set to see the Tax-Free Savings Account (TFSA) contribution limit increase by $7,000. While it doesn’t seem like much, any amount that can be invested and grow completely tax-free is a wonderful gift.
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$7000 of TFSA contribution room for tax-free compounding in 2026
Canadian investors who were born in 1991 or earlier (or were a resident of Canada in 2009) will be able to invest a grand total of $109,000 in theirTFSA in 2026. If you have a partner, you can invest a combined $218,000 (if your partner has the same qualifications as above)!
When you get to keep all your income (and pay no tax), you can increase your annual returns by several percentage points. If you are investing as much as $218,000, that income compounded can be worth a life-changing amount in 10, 20, or 30 years.
The good news is you don’t need hundreds of thousands of dollars to get started. Investing this year’s contribution of $7,000 is a great start. If I was thinking about some stocks to buy with that new TFSA contribution, here are two quality Canadian stocks I’d take a look at for the new year.
A leading advisory firm for long-term returns
WSP Global (TSX:WSP) has been an excellent long-term holding for Canadian investors. Its stock is up 100% in the past five years and 466% over the past 10 years.
WSP has become one of the largest engineering, design, and advisory firms in the world. Over the past few years, the company has strategically positioned itself as a key player in environmental, infrastructure, data, and power services.
It just announced the acquisition of TRC, which would position it as the largest engineering firm in the U.S. It’s a big, pricey deal, but it positions WSP very well for long-term growth.
Today, WSP is trading at its lowest valuation in the past three years. With strong organic growth and a history of smart acquisitions, this is a solid stock to hold in a TFSA in 2026.
A top tech stock for your TFSA
Descartes Systems Group (TSX:DSG) has been a good long-term performer. However, it has had a brutal year in 2025. Its stock is down 25% this year. Yet, if you look back 10 years, its stock is still up 344%.
Descartes operates a crucial global logistics network. It complements the network with a wide array of software services that help transport, logistics, and supply chain providers save money and streamline operations.
Descartes’ network is a massive differentiator over other software peers. That is why it still delivered double-digit growth and rising margins in a tough freight environment this year.
This company generates strong free cash flows, and it has an excellent balance sheet with $280 million of net cash. With many software companies floundering, it has the firepower to complete several accretive acquisitions in the year ahead.
Descartes may not be the flashiest tech company. However, it delivers consistently strong 10–15% annual growth. With its stock down and its valuation close to its lowest in five years, it is an attractive time to add it to your TFSA.
The Foolish takeaway
Plenty of high-quality Canadian stocks like WSP and Descartes are trading near multi-year low valuations. If these valuations hold, it makes for a very attractive buying opportunity for someone looking to deploy their fresh 2026 TFSA contribution.
