FolioNorth

Canadian Tax Decision Tool

RRSP or TFSA: where does the next dollar belong?

Compare the after-tax value of one contribution to your RRSP versus your TFSA, given your current and expected retirement income. The answer hinges on one thing: are you in a higher tax bracket now than you'll be when you withdraw?

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What you expect to draw per year once you stop working. Include CPP, OAS, pension, and planned RRIF/non-reg draws.

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The portion of total retirement income above that comes from annual RRSP or RRIF withdrawals.

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The dollars you have available right now to put into a TFSA — or, equivalently, the after-tax amount you'd contribute to an RRSP with the refund spent or reinvested.

The honest answer depends on this. Most academic comparisons assume reinvestment; most Canadians spend it.

RRSP vs TFSA projection
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Waiting for income and contribution
Projection
TFSA after-tax final dollars$—
RRSP after-tax final dollars$—
Breakeven retirement income$—
Enter your current income, expected retirement income, annual withdrawal, and contribution amount to see the projection.
Scenario projection
RRSP projects higher by $8,720
The effective deduction rate is 39.8% and the modeled withdrawal rate is 21.5%. Under this scenario, the 18.3-point gap leaves the RRSP $8,720 higher after tax.

TFSA path

Dollars contributed$5,000
Final balance at retirement$28,717
Tax on withdrawal$0
After-tax final dollars$28,717

RRSP path

Pre-tax contribution$8,307
Final balance at retirement$47,711
Tax on withdrawal-$10,273
After-tax final dollars$37,438
At roughly $127,374 of total retirement income, the effective withdrawal rate reaches today's effective deduction rate. Below that, the RRSP projects higher; above it, the TFSA projects higher.
This compares the math, not the rules. The projection above follows the assumptions you supplied. It does not account for OAS clawback (RRIF withdrawals over ~$93,000 are clawed back at 15 cents on the dollar), GIS eligibility (RRSP/RRIF withdrawals can eliminate it for low-income retirees), or the discipline question — whether you'll actually invest the refund or spend it. The "refund handling" toggle above is the single biggest lever in this calculation. This is not advice. Your real situation includes pension splitting, attribution rules, spousal RRSPs, FHSA interactions, and behaviour. Use this number to anchor a conversation, not to make the call.

Next steps

RRSP RefundIf the RRSP wins, estimate what the deduction is worth in tax at your income.TFSA Contribution RoomConfirm how much TFSA room you actually have before contributing.Transfer BonusesOpening or moving the account? Compare current transfer and signup bonuses.

What is being modeled

This compares one after-tax contribution using estimated 2026 federal and provincial income tax, basic-personal credits, Ontario surtax, and the Quebec abatement. It assumes the same province now and in retirement and keeps the 2026 brackets flat across the horizon. It excludes CPP/EI, benefit clawbacks, and filer-specific credits.

Frequently asked questions

Why does the answer depend on my retirement income?+
RRSP defers tax to withdrawal. If you withdraw in a lower bracket than you contributed, you pocket the difference. If you withdraw in a higher bracket, you're worse off than if you'd just used the TFSA.
What about OAS clawback?+
Not modeled in v1. OAS is clawed back at 15% on income above ~$93k (the threshold indexes annually). RRIF/RRSP withdrawals count as income; TFSA withdrawals don't. If your retirement income lands near or above the clawback threshold, RRSP looks worse than this calculator suggests.
What about GIS?+
Not modeled. GIS is income-tested and starts clawing back at very low income levels. For Canadians who will rely meaningfully on GIS in retirement, TFSA is almost always the right answer even when bracket math says otherwise.
Are surtaxes included?+
Yes. The 2026 estimate includes Ontario surtax, Quebec's federal abatement, and federal and provincial basic-personal credits. It excludes CPP/EI, benefit clawbacks, and filer-specific credits.
Should I do both?+
Most Canadians should use both accounts over their lifetime. This tool answers "which one gets this dollar." For people with a high current income, RRSP-first-then-TFSA is the textbook order. For people in lower brackets, TFSA-first-then-RRSP saves room for higher-earning years.