RRSP vs TFSA Calculator: Which Is Better in 2026?
Compare RRSP vs TFSA on equal terms. Enter what you can save each year, your expected return, and your marginal tax rate now and in retirement to see which account leaves more after tax, with the RRSP refund either reinvested or spent. Everything runs privately in your browser.
RRSP vs TFSA comes down to when you pay tax. An RRSP contribution is deducted from income now and taxed when withdrawn; a TFSA contribution is made from after-tax income and withdrawn tax free. With the same take-home cost, the RRSP leaves more if your tax rate is lower in retirement, and the TFSA leaves more if it is higher.
RRSP vs TFSA: Key Differences
The Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings Account (TFSA) both shelter investment growth from tax, but they work in opposite directions. The figures below are the Canada Revenue Agency's limits for 2026.
| RRSP | TFSA | |
|---|---|---|
| Contributions | Deducted from taxable income | Not deductible |
| Growth inside the account | Not taxed while it stays in the plan | Tax free |
| Withdrawals | Taxed as income | Tax free |
| 2026 contribution limit | 18% of 2025 earned income, up to $33,810, less any pension adjustment, plus unused room | $7,000, plus unused room |
| Room after a withdrawal | Not added back to your deduction limit | Added back on January 1 of the following year |
| Federal income-tested benefits | Withdrawals count as income | Not affected |
The TFSA annual limits published by the CRA for 2009 to 2026 add up to $109,000, which is the total room for someone who has been eligible every year and has never contributed. The last day you can contribute to your own RRSP is December 31 of the year you turn 71, and the CRA explains the RRSP deduction limit formula in full. RRSP withdrawals can also trigger the Old Age Security recovery tax, which applies above $95,323 of net income for 2026. TFSA withdrawals do not.
How the RRSP vs TFSA Calculator Works
You enter the amount of take-home pay you can save each year. That full amount goes into the TFSA. What goes into the RRSP depends on what you do with the tax refund.
Formulas
Growth factor F = ((1 + r)^n - 1) / r
TFSA after tax = C × F
RRSP, refund reinvested = C / (1 - tax rate now) × F × (1 - retirement tax rate)
RRSP, refund spent = C × F × (1 - retirement tax rate)
Where C = yearly savings (deposited at year end), r = annual return, n = years.
Reinvesting the refund means contributing C ÷ (1 − tax rate now), so that the cost after the refund is the same C you would put in a TFSA. On those equal terms the RRSP wins only when the retirement tax rate is lower than the rate now. If the refund is spent, the same dollars go into each account and the TFSA ends ahead, because only the RRSP is taxed on the way out.
Worked Example: When the Answer Flips
A saver puts aside $6,000 of take-home pay a year for 25 years at a 6% return. Their marginal rate now is 29.65%, the 2026 federal 20.5% bracket plus Ontario's 9.15% bracket. With the refund reinvested, the RRSP contribution is $6,000 ÷ 0.7035 = $8,529 a year.
| Retirement tax rate | RRSP after tax | TFSA after tax | Result |
|---|---|---|---|
| 19.05% (lower than now) | $378,787 | $329,187 | RRSP ahead by $49,600 |
| 29.65% (same as now) | $329,187 | $329,187 | Tie |
| 37.16% (higher than now) | $294,046 | $329,187 | TFSA ahead by $35,141 |
| 19.05%, refund spent | $266,477 | $329,187 | TFSA ahead by $62,710 |
In the last row the saver put only $6,000 a year into the RRSP and spent $44,475 of refunds over the 25 years, so the RRSP's smaller balance reflects money already enjoyed. Use Load Example above to reproduce the first row.
Finding Your Marginal Tax Rate for 2026
Your marginal rate is the federal bracket rate plus your provincial or territorial bracket rate on your next dollar of income. These are the 2026 federal rates; the lowest rate is 14% for 2026, down from 14.5% for 2025.
| 2026 taxable income | Federal rate |
|---|---|
| Up to $58,523 | 14% |
| $58,523 to $117,045 | 20.5% |
| $117,045 to $181,440 | 26% |
| $181,440 to $258,482 | 29% |
| Over $258,482 | 33% |
Add your province's rate from the same CRA page, or use the Canada income tax calculator. Bracket rates ignore surtaxes, credits and benefit clawbacks, which can push the true marginal rate higher.
When to Choose RRSP Over TFSA
Choose the RRSP first when your marginal tax rate today is clearly higher than the rate you expect to pay on withdrawals, and you will reinvest the refund. This is typical in high-earning years followed by a lower retirement income. Choose the TFSA first when your rate today is the same or lower than it will be in retirement, when you may need the money before retirement, or when extra taxable income in retirement would reduce income-tested benefits such as Old Age Security.
You can use both. The limits are separate, so many savers use the RRSP for income taxed in a high bracket and the TFSA for the rest. To check your room, see the RRSP contribution calculator and the TFSA growth calculator. This tool gives general information, not personal tax advice.
Last updated: October 2026. Sources: Canada Revenue Agency (canada.ca) pages on RRSP and TFSA limits, TFSA rules, RRSP deduction limit and 2026 tax rates; Government of Canada page on the Old Age Security recovery tax.
Frequently Asked Questions
When is RRSP better than TFSA?
An RRSP is better than a TFSA when your marginal tax rate now is higher than the rate you expect to pay in retirement, and you reinvest the tax refund. The deduction saves tax at today's higher rate and withdrawals are taxed at the lower retirement rate. The bigger the gap between the two rates, the greater the RRSP advantage.
Can I contribute to both RRSP and TFSA?
Yes, you can contribute to both an RRSP and a TFSA in the same year. They have separate contribution limits that do not affect each other. A common approach is to use the RRSP for income taxed in a high bracket and the TFSA for the rest.
What is the TFSA contribution limit for 2026?
The TFSA annual dollar limit for 2026 is $7,000, the same as in 2024 and 2025. The annual limits for 2009 to 2026 add up to $109,000 for someone who has been eligible every year and has never contributed. Unused room carries forward, and amounts you withdraw are added back to your room on January 1 of the following year.
What is the RRSP contribution limit for 2026?
For 2026 you can contribute 18% of your 2025 earned income, up to a maximum of $33,810, less any pension adjustment, plus unused room carried forward from earlier years. Your exact deduction limit is shown on your CRA notice of assessment and in CRA My Account.
Does RRSP withdrawal count as income?
Yes. RRSP withdrawals are taxable income in the year you take them, and the contribution room is not restored. Because they raise your net income they can also reduce income-tested benefits such as Old Age Security. TFSA withdrawals are tax free and do not affect federal income-tested benefits.
Is it better to max out RRSP or TFSA first?
Compare your marginal tax rate now with the rate you expect in retirement. If your rate now is higher, the RRSP generally comes first, as long as you reinvest the refund. If it is the same or lower, the TFSA generally comes first, because withdrawals are tax free, do not reduce income-tested benefits, and the room comes back the following year.
What happens if I spend my RRSP tax refund?
The RRSP loses its advantage. The same dollars then go into each account, but only the RRSP is taxed on withdrawal, so the TFSA ends with more unless your retirement tax rate is zero. To compare the two on equal terms you need to reinvest the refund, which is what this calculator assumes by default.