RRSP vs TFSA Calculator Canada 2026
Compare the same contribution in an RRSP versus a TFSA: immediate tax savings, net cash cost today, and after-tax nest egg at your assumed retirement tax rate.
By Sammy S. · Founder · AuthorUpdated for 2026
Compare RRSP vs TFSA
Enter salary, province, contribution, horizon, and retirement tax rate. Results update live.
RRSP vs TFSA inputs
Federal + provincial · Canada 2026
Close call
RRSP ahead by $184
Close call on equal cash: RRSP $22,634 vs TFSA $22,450. Flexibility, OAS/GIS, and room limits may tip the decision.
Equal-cash RRSP nest egg
$22,634
Puts $10,082 in RRSP
Equal-cash TFSA nest egg
$22,450
Puts $7,000 in TFSA
RRSP tax savings (equal $)
$2,169
~31% on $7,000
Net cost if both get $7,000
RRSP $4,831 · TFSA $7,000
Verdict uses equal after-tax cash: RRSP contribution is grossed up by the estimated tax refund so both options cost about the same today.
Projection assumes a single lump-sum contribution, constant annual return, and a flat retirement tax rate on the full RRSP balance — not bracketed withdrawals, withholding, or fees.
Side-by-side results use the same Canada tax engine as our RRSP calculator for immediate tax savings, then a simplified nest-egg projection. The headline verdict compares equal after-tax cash: we gross up the RRSP contribution by the estimated refund so both options cost about the same today. We also show equal-dollar contributions for transparency. Education model only—not personalized advice.
Worked example — $100,000 Ontario
| Annual salary | $100,000 |
| Cash budget / equal contribution | $7,000 |
| Province | Ontario |
| RRSP tax savings (equal $) | $2,169 |
| Equal-cash RRSP contribution | $10,082 |
| Equal-cash RRSP nest egg | $22,634 |
| Equal-cash TFSA nest egg | $22,450 |
At $100,000 Ontario income, $7,000 into an RRSP saves about $2,169 in tax (31% effective). On equal cash, RRSP can hold $10,082; after 20 years @ 6%, after-tax nest egg is $22,634 (RRSP) vs $22,450 (TFSA).
Formulas
- RRSP tax savingsTax(salary) − Tax(salary − contribution)
- RRSP net cost todayContribution − RRSP tax savings
- Equal-cash RRSP contributionCash budget ÷ (1 − current marginal rate)
- Future valuePrincipal × (1 + return)^years
- RRSP after-tax nest eggFuture value × (1 − retirement tax rate)
- TFSA after-tax nest eggFuture value (withdrawals tax-free)
- Estimate RRSP tax savings — Run federal + provincial tax (with CPP/EI) at full salary and again with taxable income reduced by the contribution. The difference is estimated tax savings.
- Gross up RRSP for equal cash — For the same after-tax dollars as a TFSA contribution, increase the RRSP deposit by 1 ÷ (1 − marginal rate) so the net cost matches.
- Project growth — Apply the same compound return and horizon to both accounts (lump-sum model, no fees).
- Apply retirement tax on RRSP only — Multiply RRSP future value by (1 − retirement rate). TFSA stays whole. Compare equal-cash after-tax nest eggs for the verdict.
| Constant | Value |
|---|---|
| Tax year | 2026 |
| RRSP dollar limit | $33,810 |
| TFSA annual limit | $7,000 |
| Default horizon | 20 years |
| Default return | 6% |
| Default retirement tax rate | 30% |
Not included
- Personal RRSP/TFSA room, pension adjustments, and over-contribution penalties
- Employer RRSP matching, Home Buyers' Plan, Lifelong Learning Plan
- Bracketed RRSP withdrawals, withholding tax, RRIF minimums
- Investment fees, sequence-of-returns risk, and inflation
- Income splitting, spousal RRSP, or provincial tax credits beyond the paycheck engine
Official sources
Key takeaways — RRSP vs TFSA
- RRSP contributions reduce taxable income now (CRA 2026 dollar limit $33,810; lesser of 18% of prior-year earned income). Withdrawals are taxable later.
- TFSA contributions are after-tax; growth and qualified withdrawals are tax-free. Annual dollar limit is $7,000 for 2026 (CRA).
- On equal after-tax cash, RRSP usually wins when your current marginal rate exceeds your expected retirement rate; TFSA wins when you need flexibility or expect higher tax later.
- TFSA withdrawals are not taxable income and do not count toward OAS recovery tax or GIS income tests; RRSP/RRIF withdrawals do. OAS recovery for 2025 income starts at $93,454 (canada.ca).
RRSP vs TFSA at a glance
| Feature | RRSP | TFSA |
|---|---|---|
| Tax deduction on contribution | Yes — reduces taxable income | No |
| Growth inside account | Tax-deferred | Tax-free |
| Withdrawal tax | Fully taxable as income | Tax-free (qualified) |
| 2026 annual limit | $33,810 | $7,000 |
| Unused room | Carries forward forever | Carries forward forever |
| Best when | Higher tax rate now than in retirement | Want flexibility / expect higher rate later |
| Income-tested benefits | Withdrawals can raise taxable income | Withdrawals do not count as income |
CRA limits and rules we cite
Figures below match CRA published tables and guidance. Your personal RRSP deduction limit and TFSA room still come from CRA My Account.
| Item | Value | Source |
|---|---|---|
| RRSP dollar limit | $33,810 | CRA MP/RRSP/TFSA limits table |
| RRSP room formula | Lesser of 18% of prior-year earned income or $33,810 | CRA — how contributions affect your limit |
| Earned income for full RRSP max | About $187,833 | $33,810 ÷ 18% |
| TFSA dollar limit | $7,000 | CRA TFSA dollar limits 2024–2026 |
| TFSA cumulative if eligible 2009–2026 | $109,000 | Sum of published annual limits |
| TFSA over-contribution tax | 1% per month on excess | CRA — if you over-contribute |
| RRSP over-contribution tax | 1% per month on excess over $2,000 lifetime cushion | CRA — excess contributions |
| OAS recovery threshold (2025 income) | $93,454 | canada.ca OAS repayment |
TFSA annual dollar limits (CRA)
| Years | Dollar limit |
|---|---|
| 2009–2012 | $5,000 |
| 2013–2014 | $5,500 |
| 2015 | $10,000 |
| 2016–2018 | $5,500 |
| 2019–2022 | $6,000 |
| 2023 | $6,500 |
| 2024–2026 | $7,000 |
How RRSPs and TFSAs differ under CRA rules
An RRSP contribution is generally deductible: it reduces the income you report for the year (up to your personal deduction limit). The CRA 2026 RRSP dollar limit is $33,810 — the maximum new room created for the year before unused room and pension adjustments. Your personal limit is the lesser of 18% of prior-year earned income and that dollar limit, plus unused room, and appears on your Notice of Assessment or Form T1028.
A TFSA contribution is not deductible. You contribute after-tax dollars; qualified withdrawals of contributions and growth are tax-free and do not appear as income on your return. The CRA TFSA dollar limit for 2026 is $7,000. Room starts the year you turn 18 and are a resident; unused room carries forward forever; withdrawals add back room on January 1 of the following year.
Why this calculator uses equal after-tax cash
If you put the same dollar amount into both accounts, the TFSA almost always shows a larger after-tax nest egg whenever retirement tax is above zero — because the RRSP balance is taxed on withdrawal while the TFSA is not. That comparison ignores the RRSP tax refund.
The fair textbook comparison holds after-tax cash constant: if you can afford $7,000 after tax for a TFSA, the RRSP refund lets you contribute roughly $7,000 ÷ (1 − current marginal rate). Growth is then applied to that larger RRSP principal, and the future balance is taxed at your assumed retirement rate. When current rate > retirement rate, the RRSP usually wins on that equal-cash basis.
OAS, GIS, and which account protects benefits
Old Age Security recovery tax (the “clawback”) is based on net income before adjustments (line 23400). RRSP and RRIF withdrawals increase that income. TFSA withdrawals do not. For 2025 income, canada.ca states repayment may apply if income exceeds $93,454; the threshold is indexed each year.
The Guaranteed Income Supplement is also income-tested. Taxable RRSP/RRIF withdrawals can reduce or eliminate GIS; TFSA withdrawals generally do not. Near-retirement Canadians who expect GIS or OAS clawback often prioritize TFSA room for that reason alone — even if the pure tax-rate comparison is close.
Deadlines, room, and over-contribution
RRSP contributions in the first 60 days of a calendar year can usually be claimed for the prior tax year (for example, contributions by early March for the prior year’s return). Check the CRA deadline for the year you are filing. You must convert an RRSP to a RRIF or annuity by December 31 of the year you turn 71.
TFSA room is calendar-year based. Over-contributing to a TFSA generally triggers a 1% per month tax on the excess. RRSP excess contributions above a $2,000 lifetime cushion also face a 1% per month tax. Always confirm personal room in CRA My Account and with your issuer statements.
Using both accounts — and the FHSA
You can contribute to an RRSP and a TFSA in the same year if you have room in each. A common pattern is RRSP when income (and tax rate) is high or when an employer matches contributions, and TFSA for emergency funds, shorter-term goals, or years when taxable income is low.
The First Home Savings Account (FHSA) adds a third registered option for first-time home buyers: deductible contributions like an RRSP, tax-free qualifying withdrawals like a TFSA. Compare FHSA tax savings on our FHSA calculator when buying a first home is the goal.
When each account usually wins
- You earn more now than in retirement (saves tax at higher rate today)
- You want to reduce taxable income this year
- You plan to use the Home Buyers' Plan or LLP
- Your employer offers RRSP matching
- You're in a high tax bracket and expect a lower one in retirement
- You expect a higher income in retirement than now
- You want flexibility — no tax on withdrawal ever
- You're in a low tax bracket now (small upfront deduction benefit)
- You receive income-tested benefits (GIS, OAS clawback concerns)
- You want to withdraw without affecting OAS or GIS
Worked examples from this engine
RRSP looks stronger on equal cash ($7,000 out of pocket): after-tax nest egg $27,196 vs TFSA $22,450 (20 yrs @ 6%).
Equal-cash RRSP $27,196 · TFSA $22,450 · tax savings on equal $ deposit $2,816
TFSA looks stronger on equal cash ($5,000 out of pocket): after-tax nest egg $16,036 vs RRSP $13,570 (20 yrs @ 6%).
Equal-cash RRSP $13,570 · TFSA $16,036 · tax savings on equal $ deposit $1,377
TFSA looks stronger on equal cash ($7,000 out of pocket): after-tax nest egg $22,450 vs RRSP $19,714 (20 yrs @ 6%).
Equal-cash RRSP $19,714 · TFSA $22,450 · tax savings on equal $ deposit $2,156
Myths vs facts
“Same dollar into both accounts is a fair comparison.”
That ignores the RRSP tax refund. Equal after-tax cash (this calculator’s verdict) or reinvesting the refund is the fair test.
“TFSA withdrawals restore contribution room immediately.”
Withdrawals add room back on January 1 of the following year. Replacing funds in the same year can over-contribute.
“I can move an RRSP into a TFSA tax-free.”
CRA treats an RRSP-to-TFSA transfer as a taxable withdrawal at fair market value. There is no tax-free rollover between those plans.
“TFSA and RRSP withdrawals are taxed the same for OAS.”
RRSP/RRIF withdrawals raise net income for OAS recovery tax and GIS tests. Qualified TFSA withdrawals do not.
Glossary
- RRSP deduction limit
- Your personal room for deductible contributions — lesser of 18% of prior-year earned income and the annual dollar limit, plus unused room, minus pension adjustments.
- TFSA contribution room
- Unused annual limits plus room restored from prior-year withdrawals (added January 1). Confirmed in CRA My Account.
- Equal after-tax cash
- Comparing accounts so both cost the same dollars out of pocket today — RRSP contribution is grossed up by the estimated refund.
- OAS recovery tax
- Clawback of Old Age Security when net income exceeds the annual threshold; RRSP/RRIF withdrawals count, TFSA withdrawals do not.
- RRIF
- Registered Retirement Income Fund — the account an RRSP must convert to by the end of the year you turn 71 (or buy an annuity).
- FHSA
- First Home Savings Account — deductible contributions like an RRSP and tax-free qualifying withdrawals like a TFSA for first-time home buyers.
Common mistakes
Who this comparison helps
Before you contribute — checklist
- Check personal RRSP deduction limit on your Notice of Assessment or Form T1028
- Confirm TFSA available room in CRA My Account and issuer records (especially after April when prior-year TFSA slips are processed)
- Compare current combined marginal rate vs expected retirement rate
- Ask whether withdrawals could affect OAS recovery tax or GIS
- If buying a first home, compare FHSA before draining RRSP via HBP
- Stay under room — TFSA and RRSP excess contributions face 1% monthly tax
RRSP vs TFSA FAQ
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