Tools · Retirement

TFSA vs RRSP: which comes first?

Answer six questions and compare your tax rate today with your rate in retirement. The tool gives a clear verdict on where your next dollar fits better, shows the after-tax dollars in each account side by side, and names what would flip the answer.

Last reviewed: Six questions, one verdictA planning estimate, not financial advice.

Three quick questions
1. Does your employer match RRSP contributions?
2. Is this money for a first home within ~15 years?
3. Might you need this money before retirement?
The other three questions (peak earning years, higher income in retirement, retirement income above ~$95,000) are answered from your numbers below.
Your income, now and later
The money you are deciding on
Anything else? (optional)New room in 2026: TFSA $7,000; RRSP 18% of last year's earned income, up to $33,810. Your exact room is in CRA My Account.

Our read of your numbers

Put it in your RRSP

Your marginal rate today (31.5%) is 8.3 points higher than the rate expected on withdrawal (23.2%). The RRSP deduction saves tax at the higher rate and you repay it at the lower one.

Same pre-tax dollars, after tax in 30 years: RRSP $16,607, TFSA $14,807.

Your two tax rates

Today, on $95,000

31.5%

What an RRSP deduction saves on each dollar

In retirement, on $55,000

23.2%

What each RRSP withdrawal costs in tax

The anchor fact: if these two rates are equal, the RRSP and the TFSA leave exactly the same amount after tax. The account with the better rate wins, and the gap between the rates sets the size of the win. Rates are for Ontario, 2026 brackets, on the next dollar.

$5,000 of pre-tax income, after tax in 30 years

RRSP

$16,607

All $5,000 goes in (the refund covers the tax), grows to $21,610, then is taxed at 23.2% on the way out.

TFSA

$14,807

Tax at 31.5% comes off first, so $3,426 goes in, then grows and comes out tax-free.

The RRSP leaves about $1,800 more after tax, roughly the gap in rates times the amount.

Both use the same 5% yearly return, an illustration you can change, not a forecast. Because the return is the same in both accounts, it changes the dollar amounts but never which account wins. The RRSP side assumes the tax refund is reinvested; spending the refund shrinks the RRSP result.

The six questions

  1. Does your employer match RRSP contributions? No
  2. Is this money for a first home within ~15 years? No
  3. Might you need this money before retirement? No
  4. Is your income today in your peak-earning years? Yes (from your numbers) settled it
  5. Is your income likely to be higher in retirement than today? No (from your numbers)
  6. Will your retirement income exceed ~$95,000? No (from your numbers)

Worked top to bottom; the first that applies ends the quiz. A match is captured first, and a first home points to the FHSA, whatever the rest says.

What would flip this

  • If your retirement income rose to about $59,000, the rates would tie, and the TFSA would win on flexibility.
  • Retirement income above $95,323 adds the 15% OAS recovery tax to every RRSP or RRIF dollar withdrawn, which often flips an RRSP answer to the TFSA.
  • Needing the money before retirement flips the answer to the TFSA.
  • An employer match puts the matched dollars in the RRSP first, whatever the rates say.

A planning estimate, not financial advice. Brackets and limits change annually; figures are 2026. Room limits come from CRA My Account.

How the math works

  • It compares two tax rates. An RRSP deduction saves tax at your marginal rate today; the withdrawal is taxed at your marginal rate in retirement. A TFSA is the reverse: tax now, nothing later. Whichever rate is lower is the one you would rather pay.
  • Marginal rates come from the 2026 federal and provincial brackets for all 13 provinces and territories, the same engine as our income tax calculator, including Ontario's surtax. Credits other than the basic personal amount are left out.
  • OAS recovery tax: if your retirement income is above $95,323, 15% of each extra dollar is clawed back from Old Age Security, so the tool adds 15 points to your retirement rate.
  • Within 3 points it is a tie, and the TFSA comes first for flexibility: tax-free withdrawals at any time, the room back next January 1, and no effect on income-tested benefits.
  • The rates are on the next dollar. A large RRSP deduction that drops you into a lower bracket saves a little less than shown, and large withdrawals can be taxed a little more.
  • Withholding is not the final tax. Banks hold back 10% on RRSP withdrawals up to $5,000, 20% from $5,000.01 to $15,000 and 30% above (Quebec differs). Your real tax is settled on your return; this tool models that final tax.
  • Not modelled: CPP, OAS or GIS amounts (you supply retirement income), spousal planning, non-resident tax, and Quebec-specific rules. The projection is an illustration at the return you pick, not a forecast.

This tool is a planning estimate, not financial advice. It answers which account fits your numbers, not which investments to hold.

Sources and dates

Figures checked 2026-09-26 to 2026-09-28 against CRA/canada.ca and the other sources listed below.

  • 2026 federal income tax brackets, by upper threshold (upper null = no limit): www.canada.ca, checked 2026-09-27
  • 2026 federal basic personal amount (maximum): www.canada.ca, checked 2026-09-27
  • 2026 federal basic personal amount (high-income base): www.canada.ca, checked 2026-09-27
  • 2026 provincial/territorial brackets, by upper threshold (upper null = no limit): assets.kpmg.com, checked 2026-09-27
  • 2026 provincial/territorial basic personal amounts: assets.kpmg.com, checked 2026-09-30
  • Quebec federal tax abatement: www.canada.ca, checked 2026-09-27
  • Ontario 2026 surtax tiers (on basic provincial tax): www.rcgt.com, checked 2026-09-27
  • 2026 CPP Year's Maximum Pensionable Earnings (YMPE): www.canada.ca, checked 2026-09-27
  • 2026 CPP basic exemption (year's basic exemption): www.canada.ca, checked 2026-09-27
  • 2026 CPP employee/employer contribution rate (base + enhancement): www.canada.ca, checked 2026-09-27
  • 2026 CPP maximum employee contribution: www.canada.ca, checked 2026-09-27
  • 2026 CPP maximum self-employed contribution: www.canada.ca, checked 2026-09-27
  • 2026 CPP second ceiling (YAMPE): www.canada.ca, checked 2026-09-27
  • 2026 CPP2 (second tier) employee/employer rate: www.canada.ca, checked 2026-09-27
  • 2026 CPP2 maximum employee contribution: www.canada.ca, checked 2026-09-27
  • 2026 CPP2 maximum self-employed contribution: www.canada.ca, checked 2026-09-27
  • 2026 QPP maximum pensionable earnings: www.revenuquebec.ca, checked 2026-09-27
  • 2026 QPP employee/employer rate: www.revenuquebec.ca, checked 2026-09-27
  • 2026 QPP maximum employee/employer contribution: www.revenuquebec.ca, checked 2026-09-27
  • 2026 QPP2 (second tier) employee/employer rate: www.revenuquebec.ca, checked 2026-09-27
  • 2026 QPP2 maximum employee contribution: www.revenuquebec.ca, checked 2026-09-27
  • 2026 EI maximum insurable earnings: www.canada.ca, checked 2026-09-27
  • 2026 EI employee rate (outside Quebec): www.canada.ca, checked 2026-09-27
  • 2026 EI maximum employee premium (outside Quebec): www.canada.ca, checked 2026-09-27
  • 2026 EI employee rate (Quebec): www.canada.ca, checked 2026-09-27
  • 2026 EI maximum employee premium (Quebec): www.canada.ca, checked 2026-09-27
  • 2026 QPIP maximum insurable earnings: www.canada.ca, checked 2026-09-27
  • 2026 QPIP employee rate: www.canada.ca, checked 2026-09-27
  • 2026 QPIP maximum employee premium: www.canada.ca, checked 2026-09-27
  • 2026 OAS recovery tax (clawback) start threshold: www.canada.ca, checked 2026-09-27
  • OAS recovery tax rate: www.canada.ca, checked 2026-09-27
  • 2026 RRSP dollar cap (18% of 2025 earned income, up to): www.canada.ca, checked 2026-09-26
  • FHSA annual contribution limit: www.canada.ca, checked 2026-09-29
  • 2026 TFSA annual contribution limit: www.canada.ca, checked 2026-09-29
  • Maximum cumulative TFSA room at end of 2026 (eligible since 2009): www.canada.ca, checked 2026-09-29
  • RRSP contribution deadline for the 2026 tax year: www.wealthsimple.com, checked 2026-09-28
  • RRSP lifetime excess-contribution buffer: www.canada.ca, checked 2026-09-26
  • RRSP withdrawal withholding tax (outside Quebec): www.canada.ca, checked 2026-09-26
  • Home Buyers' Plan withdrawal limit per person: www.canada.ca, checked 2026-09-26
  • HBP standard repayment period: www.canada.ca, checked 2026-09-26
  • FHSA lifetime limit: www.canada.ca, checked 2026-09-29

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