About the RRSP vs TFSA Calculator
This calculator answers the classic Canadian question: should you put your savings in an RRSP or a TFSA? It compares the same amount of pre-tax income saved each year in both accounts. In the RRSP the full amount goes in and grows tax-deferred, then withdrawals are taxed in retirement. In the TFSA you invest what is left after tax, and every withdrawal is tax-free.
The answer comes down to two numbers: your marginal tax rate now and your expected marginal tax rate when you withdraw. If your rate will be lower in retirement, the RRSP wins; if it will be higher, the TFSA wins; if the rates are equal, the two produce exactly the same after-tax result. The calculator shows the after-tax value of each, the gap between them and how it builds year by year.
The default assumes you invest your RRSP tax refund, which is what makes the comparison fair. Switch that off to see the common real-world case where the refund gets spent. For 2026 the TFSA dollar limit is $7,000 and the RRSP limit is 18% of last year’s earned income up to $33,810. Withdrawals are treated as taxed at a single average rate; OAS clawback, GIS and pension-credit effects are not modelled.
How to use the rrsp vs tfsa calculator
- 1Enter how much pre-tax income you set aside each year.
- 2Enter the years until you will withdraw and an expected return.
- 3Enter your combined federal and provincial marginal tax rate today.
- 4Estimate the tax rate you will pay on RRSP withdrawals in retirement.
- 5Decide whether you will invest the RRSP refund, then compare the after-tax values.
Formula and method
Both accounts receive the same pre-tax income A at the end of each year for n years. The RRSP contribution is deductible, so the full A is invested (the refund is treated as reinvested). The TFSA receives A after paying tax at your current marginal rate. Both grow at the same return r, so they share the future-value factor F. At withdrawal the RRSP is taxed at your expected retirement rate; the TFSA is not taxed.
Dividing the two results shows the whole story: RRSP ÷ TFSA = (1 − t_ret) ÷ (1 − t_now). With the refund-spent option, the RRSP receives only A × (1 − t_now), so it is always taxed twice compared with the TFSA unless the retirement rate is zero.
- A
- Pre-tax income saved each year
- r
- Annual return
- n
- Years until withdrawal
- t_now
- Marginal tax rate when contributing
- t_ret
- Tax rate on RRSP withdrawals
Worked examples
30% now, 20% in retirement, refund reinvested
Saving C$10,000 of pre-tax pay a year for 25 years at 6% grows the RRSP to about C$548,645; after 20% tax that is C$438,916. The TFSA gets C$7,000 a year after 30% tax and grows to C$384,052 tax-free, so the RRSP wins by about C$54,865.
Low income now, higher rate later
With a 20% rate today and 30% expected on withdrawals, the TFSA’s C$8,000 yearly contribution grows to about C$632,465 tax-free, beating the RRSP’s C$553,407 after tax. Young or low-income savers often do better in a TFSA.
Refund spent instead of invested
If you contribute C$7,000 to the RRSP and spend the C$2,100 refund, the RRSP grows to C$384,052 but is taxed 20% on the way out, leaving C$307,241 — well below the TFSA.
Frequently asked questions
Is an RRSP or TFSA better?+
If you invest the RRSP refund, the RRSP is better when your tax rate on withdrawals will be lower than your marginal rate today, and the TFSA is better when it will be higher. When the rates are the same, both give an identical after-tax result. The TFSA also wins on flexibility because withdrawals are tax-free and the room comes back next year.
What are the 2026 TFSA and RRSP limits?+
The TFSA annual dollar limit for 2026 is $7,000, plus any unused room from previous years. The RRSP limit for 2026 is 18% of your 2025 earned income up to $33,810, minus any pension adjustment, plus unused room; your Notice of Assessment shows your exact deduction limit.
Why does investing the RRSP refund matter?+
An RRSP contribution is made with pre-tax dollars only if you reinvest the refund. If you contribute after-tax money and spend the refund, you are effectively putting less into the RRSP but still paying tax on every dollar withdrawn, which makes the TFSA better in almost every case.
How do RRSP withdrawals affect OAS and GIS?+
RRSP and RRIF withdrawals count as taxable income, so they can reduce the Guaranteed Income Supplement and trigger the OAS recovery tax for higher incomes. TFSA withdrawals are not income and do not affect these benefits, which is a key reason lower-income retirees often favour TFSAs.
Can I use both an RRSP and a TFSA?+
Yes, and many Canadians do. A common approach is to contribute to an RRSP up to the point where your marginal rate drops, and use a TFSA for the rest — or to put the RRSP refund into your TFSA each year.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.