TFSA or RRSP? Compare them with your own numbers.
Enter what you can set aside each month and your tax rate now and later. You'll see what each account leaves you with after tax, and why. It all runs in your browser.
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The one question that decides it
Will your tax rate be higher now, or when you take the money out?
An RRSP gives you a deduction today and taxes the withdrawal later. A TFSA gives you nothing today and never taxes the withdrawal. If the rate you save at today matches the rate you pay later, the two come out exactly even. The calculator above shows that: set both rates to the same number and the bars line up.
So the choice mostly comes down to where your income sits now compared with where it will sit when you withdraw. Everything else is a tiebreaker.
When each one tends to win
The TFSA usually wins when
- Your income is modest today, or you expect it to rise.
- You may need the money before retirement. TFSA withdrawals are tax-free, and the room comes back on January 1 of the next year.
- You expect to rely on income-tested benefits in retirement. TFSA withdrawals don't count as income, so they don't reduce OAS or GIS.
The RRSP usually wins when
- You're in a high bracket now and expect a lower one in retirement.
- Your employer matches contributions to a group RRSP. A match is extra money you only get by contributing.
- You want to use the Home Buyers' Plan or Lifelong Learning Plan, which let you borrow from your own RRSP.
Buying a first home? The FHSA gives you an RRSP-style deduction going in and a tax-free withdrawal coming out, which usually beats either account for that goal.
RRSP vs TFSA in 2026, side by side
| TFSA | RRSP | |
|---|---|---|
| 2026 limit | $7,000, plus unused room from earlier years | 18% of 2025 earned income, up to $33,810, plus unused room |
| Going in | No deduction | Deducted from your income, so you get a refund |
| Growth | Tax-free | Tax-deferred |
| Coming out | Tax-free, any time | Taxed as income, with tax withheld up front |
| Room after a withdrawal | Comes back on January 1 of the next year | Gone for good, except the Home Buyers' Plan and Lifelong Learning Plan |
| Effect on OAS and GIS | None | Withdrawals count as income and can reduce them |
| Age limits | Room starts at 18, no upper limit | Must convert to a RRIF or annuity by the end of the year you turn 71 |
| Contribution deadline | None, room carries forward | March 1, 2027 to deduct on your 2026 return |
Four worked examples
Each one saves $500 a month for 25 years at 5% a year, the same defaults as the calculator. Only the tax rates and what happens to the refund change.
| Situation | Rate now | Rate later | TFSA after tax | RRSP after tax | Comes out ahead |
|---|---|---|---|---|---|
| Mid-career, expects a lower rate in retirement | 30% | 20% | $292,900 | $334,700 | RRSP |
| Same rate now and later | 30% | 30% | $292,900 | $292,900 | About even |
| Early career, expects a higher rate later | 20% | 30% | $292,900 | $256,300 | TFSA |
| Lower rate later, but spends the refund | 30% | 20% | $292,900 | $234,300 | TFSA |
The last row is the one people miss. The RRSP only wins on a lower retirement rate if the refund goes back in. Spend it, and the TFSA catches up or pulls ahead.
2026 limits at a glance
| Account | 2026 limit | Good to know |
|---|---|---|
| TFSA | $7,000 | Unused room carries forward. Up to $109,000 if you've been eligible since 2009. |
| RRSP | 18% up to $33,810 | Based on last year's earned income, less any pension adjustment. Contribute by March 1, 2027 to deduct on your 2026 return. |
| FHSA | $8,000 | $40,000 lifetime, for first-time home buyers. Room starts the year you open it. |
Your personal room is on your notice of assessment and in CRA My Account. Going over the limit costs 1% a month on the excess, so it's worth checking before a big deposit.
Make the monthly amount a budget line
The number in the first box matters more than which account wins. A TFSA you fund every month will beat an RRSP you mean to top up in February.
In a zero-based budget, that amount gets its own category and is assigned the day you're paid, before groceries and before the fun money. If you're paid every two weeks, the savings per paycheque calculator turns a yearly target into a per-payday amount.
Questions
Is a TFSA or an RRSP better?
It mostly comes down to your marginal tax rate now compared with your rate when you take the money out. If your rate today is higher, the RRSP usually leaves you with more. If it is lower, the TFSA usually does. If the two rates match, they come out the same.
What are the 2026 TFSA and RRSP limits?
The TFSA dollar limit for 2026 is $7,000, and someone who has been eligible since 2009 and never contributed has $109,000 of room. The RRSP limit is 18% of last year's earned income, up to $33,810, minus any pension adjustment. Your exact numbers are in CRA My Account and on your notice of assessment.
What is a marginal tax rate?
It is the combined federal and provincial rate on your next dollar of income. An RRSP deduction saves tax at that rate, so it is the right number to use here, not your average rate. Many Canadians with employment income land somewhere between 20% and 45%, depending on income and province.
Why does reinvesting the refund matter?
An RRSP contribution is made with pre-tax dollars. To compare fairly with a TFSA, the tax refund has to go back into the RRSP too. If the refund gets spent instead, the RRSP starts behind, which is why the calculator lets you choose.
Can I use both?
Yes, and many people do. A common pattern is the RRSP for retirement savings while your income is high, and the TFSA for everything else, including goals you may want to reach before retirement. A first home has its own account, the FHSA.
Should I max out my TFSA or RRSP first?
Take any employer RRSP match first, since it is extra money you only get by contributing. After that, compare your tax rate now with your expected rate in retirement: if today is higher, lean RRSP; if it is lower or you may need the money sooner, lean TFSA. Saving for a first home? Fill the FHSA before either.
What happens to an RRSP when you turn 71?
By December 31 of the year you turn 71, an RRSP has to be converted to a RRIF or an annuity, or cashed out. A RRIF has minimum yearly withdrawals, and each withdrawal is taxed as income. A TFSA has no age limit, so you can keep contributing and leave it untouched as long as you like.
Can I take money out early?
From a TFSA, yes, tax-free at any time, and the amount you took out is added back to your room on January 1 of the next year. From an RRSP, a withdrawal is taxed as income, the bank withholds tax up front, and the contribution room is gone for good. The Home Buyers' Plan and Lifelong Learning Plan are the exceptions.
Is this tax advice?
No. It is a simplified comparison to help you think it through. Taxes, benefits, and pensions interact in ways a short calculator cannot capture, so for a decision with real money on the line, talk to a qualified advisor.
Pick the account, then fund it on purpose.
Whichever wins, it only works if the money actually goes in. CalmDollar gives your TFSA or RRSP its own line in a zero-based budget, in Canadian dollars, so it gets funded at the start of the month. Free to start.
