Investment · TFSA
TFSA interest calculator.
Enter a balance, a monthly deposit, an interest rate and how it compounds. See the interest you earn each year, and what the same money would keep in a taxable account.
Interest in a TFSA is generally tax-free, so the whole balance is yours. Example: $10,000 at 5% compounded monthly for 10 years grows to $16,470.09 with no deposits. Add $250 a month and it reaches $55,290.66, of which $15,290.66 is interest.
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How TFSA interest is calculated
Each compounding period adds interest to the balance, and the next period earns interest on the larger balance. The effective annual rate is (1 + rate ÷ n)n − 1, where n is the number of periods in a year. Monthly compounding at 5% is an effective 5.116% a year. This tool converts that to a monthly growth rate and adds your deposit at each month end.
Worked example. $10,000 at 5% compounded monthly for 10 years: 10,000 × (1 + 0.05 ÷ 12)120 = $16,470.09. With $250 deposited every month, the balance is $55,290.66 on $40,000 put in, so $15,290.66 is interest.
Why a TFSA keeps more
The CRA says that income earned through interest, dividends or capital gains in a TFSA is generally tax-free, and that withdrawals are tax-free. In a taxable account the interest is added to your income each year. The comparison above assumes interest is taxed at your marginal rate every year and the rest keeps compounding: at 30% that leaves $50,120.17 instead of $55,290.66, a difference of $5,170.50.
The calculator does not enforce your room. Contributions (not interest) use TFSA room, so check your contribution room before depositing, and see the TFSA growth and limit calculator for a market-return projection.
Frequently asked questions
Is interest earned in a TFSA taxable?
Generally no. The CRA states that income you earn through interest, dividends or capital gains in a TFSA is generally tax-free. Interest paid into a TFSA savings account or GIC is not added to your taxable income.
Does the interest I earn use up my TFSA room?
No. The CRA’s room formula is the year’s dollar limit, unused room from earlier years and amounts withdrawn in earlier years. Only contributions and withdrawals move your room; interest that stays in the account does not.
Which compounding option should I pick?
Use the one your institution states for the account. Daily compounding on the same quoted rate earns slightly more than monthly or annual. If the product quotes an annual percentage yield, enter it with annual compounding.
How does the taxable-account comparison work?
It taxes the interest each year at the marginal rate you enter and lets the after-tax amount keep compounding. Real taxable accounts vary with your income, your province and when interest is paid, so treat it as an estimate.
Sources
Checked
Runs entirely in your browser. Nothing you type is sent or stored. This is an independent guide, not the CRA; confirm your own room in CRA My Account or your institution's records.
Not advice
Illustration only. Rates and returns are assumptions you set, never guarantees. Not financial, tax or investment advice.