Investment · Canada
RRSP vs TFSA, head to head.
Same out-of-pocket cash in each account. The only question is whether your tax rate is higher now or in retirement, and whether you reinvest the RRSP refund.
If your marginal rate now equals your rate in retirement and the refund is reinvested, an RRSP and a TFSA end up with the same after-tax money. The RRSP wins when your rate now is higher than later; the TFSA wins when it is lower. 2026 limits: RRSP $33,810, TFSA $7,000 (CRA).
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Result
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Worked example
You put $10,000 of cash in either account, live in Ontario, earn $100,000 now (31.48% marginal rate) and expect $50,000 of taxable income in retirement (19.05%). Money grows 5% a year for 25 years, a growth factor of 3.3864.
- TFSA: $10,000 × 3.3864 = $33,864, tax free.
- RRSP: $33,864 less 19.05% tax ($6,451) = $27,413, plus the $3,148 refund invested in a TFSA, which grows to $10,660. Total $38,073.
- The RRSP comes out $4,209 ahead because your rate now (31.48%) is higher than your rate later (19.05%). If the refund is spent instead, the RRSP side is $27,413 + $3,148 = $30,561 and the TFSA wins.
Formula and sources
With cash X, growth factor g = (1 + return)years, marginal rate now t0 and in retirement t1:
- TFSA = X × g
- RRSP, after tax = X × g × (1 − t1), plus the refund X × t0 (times g if reinvested)
- With the refund reinvested, RRSP minus TFSA = X × g × (t0 − t1), so it is zero when the rates are equal.
Marginal rates come from the same 2026 federal and provincial bracket tables as our RRSP tax savings calculator (income tax only; basic personal amount; no credits, OAS recovery tax, GIS or Ontario Health Premium). Contribution limits: CRA, MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE, page dated 2025-12-01, read 1 October 2026.
| Limit | 2026 | 2027 (CRA) |
|---|---|---|
| RRSP dollar limit | $33,810 | $35,390 |
| TFSA annual limit | $7,000 | not yet listed |
What this does not model
It ignores the RRSP's 18% of earned income cap and your carry-forward room, TFSA room you may not have, the TFSA's $7,000 annual limit versus a larger RRSP deduction, OAS and GIS interactions, withholding tax on withdrawals, spousal plans and the Home Buyers' Plan. A bigger refund than you can fit in your TFSA room changes the reinvested case. General information, not tax advice.
Frequently asked questions
Why does the RRSP tie the TFSA when my rates are equal?
An RRSP contribution of $X costs you X(1 - t) after the refund and is taxed at t on the way out, so you keep (1 - t) of the growth. A TFSA dollar is already after tax and is never taxed again. With the same rate on both sides the two factors cancel exactly. This is arithmetic, not a market forecast.
What if I spend the RRSP refund?
Then the RRSP only compares fairly when its refund is invested somewhere that earns the same return. Untick the reinvest box to see the refund counted as cash that does not grow. Spending it usually tips the result to the TFSA unless your rate now is well above your rate later.
Which marginal rate do I use in retirement?
Your marginal rate on the extra RRSP or RRIF income you expect to withdraw, which depends on your other taxable retirement income (CPP, OAS, pensions, RRIF minimums). Enter that expected income and the tool looks the rate up, or type a rate yourself.
Does this include OAS clawback or GIS loss?
No. The site's marginal rate covers federal and provincial income tax only. High retirement income can trigger the OAS recovery tax, and RRSP withdrawals reduce the Guaranteed Income Supplement, which makes RRSP withdrawals costlier than the rate shown. Use the manual rate field to add that in.
Are the 2026 limits correct?
The 2026 RRSP dollar limit is $33,810 and the 2026 TFSA dollar limit is $7,000, both read from the CRA table dated 2025-12-01. Your personal RRSP deduction limit (18% of prior-year earned income, less pension adjustments, plus carry-forward) is on your Notice of Assessment, and your TFSA room is in CRA My Account.
General information, not tax advice
Estimates for educational purposes only. Confirm your RRSP deduction limit on your Notice of Assessment and your TFSA room in CRA My Account before contributing.