RRSP vs TFSA Comparator

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). Every dollar figure on this page is in future dollars, the amount you would see in the account then, not adjusted for inflation. The OAS note is the one place a balance is brought back to today's dollars.

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.

Where the gap comes from

Because FV grows in step with the contribution, the RRSP before tax is the TFSA plus the future value of the refunds: FV(X) = FV(X × (1 − t_now)) + FV(X × t_now). Withdrawal tax then takes FV(X) × t_ret. So RRSP net − TFSA net = FV(X) × (t_now − t_ret): your reinvested refunds, with their growth, set against the tax on the way out. The bridge chart shows exactly these amounts, so its last bar always equals the RRSP figure above.

The crossover chart

It plots FV(X) × (1 − rate) for every withdrawal rate from 0% to 55% (60% if you type a higher rate) against the TFSA, which does not change. The lines meet exactly at t_now (marked break-even), and your expected t_ret is marked "you". The shading takes the colour of whichever account is ahead.

The refund myth

The RRSP's advantage lives entirely in the refund. Say you have $7,000 of after-tax pay to save and a 30% rate. Put it in an RRSP and you get $2,100 back. Spend that refund and the RRSP holds only $7,000 of pre-tax money, which is taxed on the way out, so it ends up behind a TFSA holding the same $7,000. That is the dashed line in the growth chart: FV(X × (1 − t_now)) × (1 − t_ret). Reinvest the refund, or gross up the contribution to $10,000, and you get the full RRSP line instead. This tool assumes you reinvest; 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.

The room check compares one year of this plan with new 2026 room only. The RRSP gets the full amount, measured against 18% of the income you entered up to the dollar limit (CRA actually uses last year's earned income, less any pension adjustment). The TFSA gets the after-tax amount, measured against the annual limit. Carry-forward room can make both larger. The comparison itself assumes you have the room every year.

Your marginal rate and the refund rate

With an income entered, the rate chart shows how much income tax each $1,000 of RRSP deduction saves at every level of employment income: each step is the tax saved by deducting the top $1,000 of that income (the top $2,000 or more once a high income stretches the axis past $299,000). It uses the same engine as the income tax calculator: the 2026 federal and provincial brackets, basic personal amounts, the Canada employment amount, the CPP or QPP, EI and (in Quebec) QPIP credits, the CPP or QPP enhancement deduction, Quebec's deduction for workers, the Ontario surtax and health premium, and the Quebec abatement. Your own deduction is the shaded band. The refund rate is what that deduction actually saves, measured down from your income with your pay held fixed: (tax without the deduction − tax with it) ÷ amount deducted, where the amount deducted is X, or your taxable income if that is smaller. It can differ from the rate on your last dollar when the deduction crosses a bracket or a health-premium step, and it is the right figure for "Marginal tax rate now". Provincial low-income tax reductions (such as the Ontario Tax Reduction) and other credits and deductions are not modelled, so treat it as an estimate, and a rough one below about $30,000.

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 net income above $93,454, the threshold for 2025 income, indexed each year) 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. The OAS note in the verdict appears when the RRSP's final balance, brought back to today's dollars at FP Canada's planning inflation rate, is more than about 12 times the threshold.

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.