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RRSP vs TFSA calculator

Which account leaves more after tax, counting the RRSP refund as invested money rather than pretending it vanishes.

Covers 2026 tax year · rates as at 2026-01-01

2026 tax year
$
%
%

The input that decides the answer.

$

Sets your 18% RRSP room.

25 years

RRSP ends ahead by

Estimate

$4,120.00

37% now against 29% on withdrawal

RRSP after tax
$55,623
TFSA after tax
$51,502
Tax refund generated
$4,440.00
After-tax value — RRSP: $55,623After-tax value — TFSA: $51,502
After-tax value
Breakdown of RRSP ends ahead by
Contribution$12,000
RRSP room this year$17,100
Refund at your marginal rate$4,440.00
RRSP after tax on withdrawal$55,623
TFSA after tax$51,502
RRSP ahead by$4,120.00
  • The refund is counted as invested. Spending it instead removes the RRSP advantage entirely.
  • RRSP room carries forward, so unused room from earlier years may allow more than this.

At a 37% rate now against 29% on withdrawal, a $12,000 RRSP contribution generates a $4,440 refund — invested, that is what puts the RRSP ahead.

Export your real numbers to Sheetsretirement

Side by side

How this is calculated

The refund is the whole argument

A $12,000 RRSP contribution at 37% produces a $4,440 refund. Ignore it and the TFSA wins every time; invest it and the RRSP wins whenever your withdrawal rate is lower than your contribution rate.

RRSP total = balance × (1 − retirement rate) + refund grown

Room is 18% of earned income, capped

RRSP room is 18% of the prior year’s earned income up to the annual dollar limit — $17,100 on $95,000. Unused room carries forward, and over-contributing beyond a $2,000 buffer costs 1% a month.

room = min(18% × earned income, dollar limit)

Withdrawals interact with benefits

RRSP and RRIF withdrawals are taxable income and count towards the Old Age Security clawback, which recovers 15 cents per dollar above the threshold. TFSA withdrawals count for nothing, which is worth more than the raw arithmetic suggests.

Worked example: $12,000 contributed, 37% now and 29% on withdrawal, 25 years at 6%
Inputs
Contribution$12,000
Rate now37%
Rate later29%
Earned income$95,000
Result
RRSP room$17,100
Refund$4,440
Decided byThe 8-point rate gap

Reverse the rates — 29% now, 37% later — and the TFSA wins by a similar margin. Someone early in their career is usually in the second case.

What this assumes
  • A constant return and constant marginal rates.
  • The refund is invested, not spent.
  • No withholding on early withdrawal.
  • Contribution stays within available room.
Where this commonly goes wrong
  • Withdrawing from an RRSP early triggers withholding of 10% to 30% and the room is gone permanently, unlike TFSA room which is restored the following calendar year.
  • RRSP withdrawals raise net income for the Old Age Security clawback, which takes back 15 cents on the dollar above the threshold.
  • Over-contributing beyond the $2,000 lifetime buffer is penalised 1% a month until withdrawn, which is easy to trigger with employer plan contributions.

Questions

Should I contribute to an RRSP or a TFSA?

RRSP if your marginal rate now is higher than it will be on withdrawal, TFSA if lower. At 37% now against 29% later the RRSP wins — but only if the $4,440 refund is invested rather than spent.

How much RRSP room do I have?

18% of the previous year’s earned income up to the annual dollar limit, so $17,100 on $95,000. Unused room carries forward indefinitely, and your notice of assessment shows the exact figure including any pension adjustment.

What happens if I over-contribute?

There is a $2,000 lifetime buffer, and beyond that the penalty is 1% a month on the excess until it is withdrawn. Employer group RRSP contributions count towards your room, which is how most people trip over the limit.

Does a TFSA withdrawal cost me room?

Only temporarily. Whatever you withdraw is added back to your room on 1 January the following year. Re-contributing in the same calendar year without room is the most common TFSA penalty.

Do RRSP withdrawals affect Old Age Security?

Yes. RRSP and RRIF withdrawals are taxable income and count towards the OAS clawback, which recovers 15 cents per dollar above the threshold. TFSA withdrawals do not count at all.

Can I use both?

Yes, and most people should. Filling the TFSA first is common for lower earners, while higher earners generally get more from the RRSP deduction — then redirect the refund into the TFSA.

Related tools

Sources

General estimate based on published CRA rates for 2026 tax year. Not tax advice. Confirm your position with the CRA or a qualified adviser.

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