RRSP vs TFSA: Which Is Better? (2026)

Simple rule:Contribute to RRSP if your income now is higher than your expected retirement income. Contribute to TFSA if your retirement income will be equal or higher, or if you're in a low tax bracket today.

RRSP vs TFSA Optimizer

Simplified federal tax comparison

Current annual income

Marginal rate: 20.5%

Expected retirement income

Marginal rate at retirement: 15.0%

Annual contribution

Expected annual return (%)

Years until retirement

5 years25 years40 years

🏆 RRSP wins by $2,361

RRSP

Tax refund now: $2,050

After-tax value at withdrawal: $36,481

Total net benefit: $45,279

TFSA

After-tax cost: $7,950

Tax-free value at withdrawal: $42,919

This is not financial advice. Tax calculations are simplified for illustrative purposes. Provincial taxes, pension clawbacks, and other credits can significantly change the outcome. Consult a CPA or financial advisor for personalized advice.