RRSP or TFSA: what decides it
Both accounts let your savings grow without yearly tax on interest, dividends or gains. The difference is when the tax is paid. An RRSP contribution is deducted from your income now, and every dollar you take out later is taxed as income. A TFSA gets no deduction, but withdrawals, including all the growth, are tax-free.
Because of that, the comparison comes down to two numbers: your marginal tax rate today and the rate you expect when you withdraw.
- If your rate at withdrawal is lower than today, the RRSP leaves you with more.
- If it is higher, the TFSA leaves you with more.
- If both rates are the same, the two give the same result, as long as you invest the RRSP tax refund.
Enter an amount of pre-tax income, how many years it stays invested, the yearly return and both tax rates. The calculator shows what each account is worth after tax at the end. For 2026, RRSP room is 18 % of last year's earned income up to 33,810 dollars, and the TFSA limit is 7,000 dollars. RRSP withdrawals in retirement can also reduce income-tested benefits such as the Guaranteed Income Supplement or Old Age Security; this calculator does not include that, so treat a low expected rate with care.