Question 1

Is an RRSP or a TFSA better?

Accepted Answer

It depends on whether your tax rate is higher now or in retirement. An RRSP gives you a deduction today at your current marginal rate and taxes the withdrawals later. A TFSA gives no deduction but never taxes the growth or the withdrawals. If your marginal rate today is higher than your average rate on retirement withdrawals, the RRSP comes out ahead. If it is the same, they tie. If it is lower, the TFSA wins. The calculator above compares them using your actual 2026 brackets.

Question 2

Why do they tie when the tax rate is the same?

Accepted Answer

Putting $1,000 of pre-tax income in an RRSP is the same as putting $1,000 x (1 - tax rate) in a TFSA, as long as the RRSP refund is treated as part of the contribution. Both grow at the same rate. At the end the RRSP is taxed at the same rate the TFSA contribution was taxed at the start, so the two end up with the same after-tax amount. All the real difference comes from a gap between your rate now and your rate later.

Question 3

What are the 2026 contribution limits?

Accepted Answer

The 2026 RRSP dollar limit is $33,810, or 18% of your previous year's earned income if that is lower, plus any unused room carried forward and minus pension adjustments. The 2026 TFSA limit is $7,000 and the cumulative room for someone who has been eligible since 2009 is $109,000. TFSA withdrawals are added back to your room the following January.

Question 4

What about OAS clawback and GIS?

Accepted Answer

Large RRSP or RRIF withdrawals count as income and can trigger the Old Age Security recovery tax, or reduce the Guaranteed Income Supplement for lower-income seniors. TFSA withdrawals do not. This calculator does not model either, so if you expect modest retirement income and might qualify for GIS, the TFSA is usually better than the result shown here.

Question 5

Which retirement income should I enter?

Accepted Answer

Enter the taxable income you expect from other sources in today's dollars: CPP, OAS, workplace pensions and any other taxable income. The RRSP withdrawals are then stacked on top of that income and taxed through the brackets. The table of scenarios shows how the verdict changes as that number rises or falls.

Question 6

Does the comparison assume I reinvest the RRSP refund?

Accepted Answer

Yes, in effect. The calculator puts both accounts on the same footing: you give up the same amount of take-home pay either way. The RRSP receives the full pre-tax amount, with the refund covering part of its cost, while the TFSA receives only what is left after tax. If you spend the refund instead of using it to fund the contribution, you are really contributing less to the RRSP, and the RRSP advantage shrinks. The best habit is to put the refund into your TFSA or back into your RRSP.

RRSP vs TFSA Calculator

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