RRSP vs TFSA Comparator
An honest, apples-to-apples comparison built on equal after-tax dollars, with the RRSP refund reinvested. The winner comes down to one thing: your tax rate today versus in retirement.
Rates & rules verified · July 2026Primary sources: CRA – RRSPs and related plans · CRA – Tax-Free Savings Account (TFSA) · CRA – Tax rates and income brackets
The crossover: RRSP vs TFSA by retirement tax rate
Each bar is your RRSP's after-tax value at a different withdrawal tax rate. The flat line is the TFSA, it doesn't change. Where they cross is your break-even.
Growth over time
After-tax value of each account, year by year, at your chosen rates. The RRSP line is already net of withdrawal tax.
Year-by-year comparison
After-tax values assuming you stop and withdraw at the end of each year.
| Year | RRSP contributed | RRSP gross | RRSP net | TFSA (net) | Advantage |
|---|
How this is calculated
Equal after-tax dollars, the only fair comparison
Contributing the same face amount to each account isn't equal, because an RRSP takes pre-tax dollars and a TFSA takes after-tax dollars. We start from the same gross income X you direct to savings each year:
RRSP: the full X goes in (the tax refund is assumed reinvested). It grows, then is taxed once on withdrawal:
RRSP net = FV(X) × (1 − t_ret)
TFSA: only the after-tax amount can go in, and it's never taxed again:
TFSA net = FV(X × (1 − t_now))
where FV(C) is the future value of contributing C at the start of each year for n years at return r: FV(C) = C × ((1 + r)ⁿ − 1) ÷ r × (1 + r).
The winner is decided by your tax rates, not the return
Divide the two: RRSP net ÷ TFSA net = (1 − t_ret) ÷ (1 − t_now). The return and the number of years cancel out completely. So the RRSP wins whenever your withdrawal rate t_ret is below your current rate t_now, the TFSA wins when it's higher, and they tie when the rates match. That tie point, where they break even, is exactly your current marginal rate.
The refund myth
The RRSP's advantage lives entirely in the refund. Contribute $10,000 at a 30% rate and you get $3,000 back. Spend it, and your RRSP was really only funded with $7,000 of your own after-tax money, it collapses to a worse-than-TFSA outcome. This tool assumes you reinvest the refund; if you won't, choose the TFSA.
2026 contribution room
The TFSA limit is $7,000 for 2026 ($109,000 cumulative for anyone eligible since 2009). The RRSP limit is the lesser of 18% of prior-year earned income or $33,810, less any pension adjustment. Unused room carries forward in both; TFSA withdrawals restore room the next calendar year. Check yours with the TFSA room calculator.
OAS and GIS clawback (why low incomes lean TFSA)
RRSP and RRIF withdrawals are taxable income. They can trigger the OAS recovery tax (15% of income above $93,454 in 2026) and can slash the Guaranteed Income Supplement (about 50¢ per dollar of other income) for lower-income retirees, an effective tax far above the headline rate. TFSA withdrawals count as neither, so they never touch these benefits. If your income is below roughly $55,000, fill the TFSA first.
What this doesn't model
Contribution-limit enforcement, the mandatory RRIF conversion and minimum withdrawals at 71, employer RRSP matching (free money, always take it first), spousal RRSPs, the Home Buyers' Plan, or the FHSA (which beats both for a first home). It also assumes one flat withdrawal tax rate; real retirement income is taxed progressively. Plan the whole picture with the retirement calculator.
Common questions
Is an RRSP or a TFSA better in 2026?
For an apples-to-apples comparison of equal after-tax savings, the winner is decided by your marginal tax rate today versus in retirement. If your tax rate at withdrawal is lower than it is now, the RRSP wins; if it is higher, the TFSA wins; if they are equal, the two are identical. The return you earn and the number of years do not change which account wins, they only scale the size of the advantage.
Why is comparing a $10,000 RRSP to a $6,000 TFSA misleading?
An RRSP contribution is made with pre-tax dollars and a TFSA with after-tax dollars, so contributing the same face amount to each is not an equal sacrifice. A fair comparison starts from the same gross income: the full amount goes into the RRSP (with the refund reinvested), while only the after-tax portion can go into the TFSA. This tool equalizes the after-tax out-of-pocket cost so the result reflects tax mechanics, not the size of the deposit.
What is the RRSP refund myth?
The RRSP's tax advantage depends entirely on reinvesting the refund it generates. If you contribute $10,000 and spend the $3,000 refund, your RRSP is no longer funded with the full pre-tax amount and it loses its edge over a TFSA. To capture the RRSP benefit you must contribute the refund back or gross up your contribution. This calculator assumes the refund is reinvested.
How can RRSP withdrawals trigger the OAS or GIS clawback?
RRSP and RRIF withdrawals count as taxable income, which can push you past the 2026 OAS recovery threshold of $93,454 (15% is clawed back above it) and can sharply reduce the Guaranteed Income Supplement for lower-income retirees (roughly 50 cents lost per dollar of other income). TFSA withdrawals are not taxable income and never affect these benefits, which often makes the TFSA the better choice for modest incomes.
What are the RRSP and TFSA contribution limits for 2026?
The 2026 TFSA annual limit is $7,000. The 2026 RRSP limit is the lesser of 18% of your prior-year earned income or $33,810, minus any pension adjustment. Unused room in both accounts carries forward, and TFSA withdrawals restore room the following calendar year.