TFSA & RRSP Calculator

TFSA vs. RRSP: Canada's Most Important Investment Decision

The Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) are Canada's two most powerful registered investment accounts. Choosing between them — or finding the right mix — can mean tens of thousands of dollars in difference over your lifetime. Our TFSA & RRSP Calculator helps you compare both strategies side by side based on your personal tax situation.

How the TFSA Works

The TFSA lets you contribute after-tax dollars that grow completely tax-free. Withdrawals are also tax-free, and the contribution room is restored the following year. The 2025 annual limit is $7,000, and cumulative room since 2009 for someone who was 18+ is $95,000. TFSAs are incredibly flexible — use them for retirement, a home down payment, emergency fund, or any goal. Unlike RRSPs, TFSA withdrawals don't affect government benefits like OAS, GIS, or the Canada Child Benefit.

How the RRSP Works

The RRSP lets you contribute pre-tax dollars (or get a tax refund on contributions), which grow tax-deferred until withdrawal. Contributions reduce your taxable income in the year you contribute. The 2025 limit is 18% of earned income, up to $31,560. The key trade-off: every dollar withdrawn in retirement is taxed as ordinary income. RRSPs are best when your current tax rate is higher than your expected retirement tax rate, so you're essentially shifting income from a high-tax year to a lower-tax year.

TFSA vs. RRSP: When to Choose Which

Choose TFSA when: Your income is under $55,000 (lower tax bracket), you expect your income to rise significantly, you need flexibility for non-retirement goals, or you want to preserve government benefits in retirement. Choose RRSP when: Your marginal tax rate is above 30%, you expect a lower rate in retirement, your employer offers RRSP matching (always take the match!), or you want to use the Home Buyers' Plan ($35,000 tax-free withdrawal). The best strategy for most Canadians: Max out your TFSA first if you're in a lower bracket, then contribute to RRSPs once your income pushes you into higher brackets. If your employer matches RRSP contributions, always contribute enough to get the full match first.

The Tax Refund Reinvestment Strategy

If you contribute to an RRSP, you'll get a tax refund. The smartest move is to reinvest that refund back into your TFSA or RRSP rather than spending it. For example, if you contribute $10,000 to your RRSP at a 30% marginal rate, you get a $3,000 refund. Investing that $3,000 in your TFSA creates a powerful compounding effect that maximizes both accounts.