Answer a few questions about your income and goals. Get a clear breakdown of which account to prioritise for tax efficiency, based on your actual numbers, not a blanket rule.
The TFSA vs RRSP question has no universal answer. It depends on your income today versus what you expect in retirement. The RRSP gives you a bigger tax refund the higher your income, but you'll pay tax on withdrawals later. The TFSA grows and withdraws completely tax-free. This tool runs the numbers for your specific situation: income, province, and marginal rate, and shows you which account is likely more tax-efficient over time. Always worth discussing with a financial advisor before making a decision.
The recommendation is based on your income, province, age, and goals. Not a generic income bracket rule.
This tool helps you decide which account to contribute to first. What you invest in inside those accounts is a separate decision.
All calculations use confirmed 2026 federal and provincial brackets, including the Ontario surtax where applicable.
You contribute money you've already paid tax on. Inside the account, every dollar compounds tax-free — dividends, capital gains, interest, all of it. Withdrawals are tax-free and don't count as income. In 2026 the annual limit is $7,000, with cumulative room up to $95,000 if you've never contributed since age 18.
RRSP contributions reduce your taxable income today — you get a refund at your marginal rate. Inside the account, growth is tax-sheltered. But withdrawals are fully taxable as income. The tax advantage is largest when you contribute in a high-income year and withdraw in a lower-income year (e.g. early retirement before CPP/OAS).
If your income is lower now (under ~$55K), TFSA first — the RRSP deduction isn't worth much and withdrawals later could push you into higher brackets. If you're in a high bracket now (over ~$100K) and expect lower income in retirement, RRSP gives the largest upfront tax refund. Most Canadians should use both.
The First Home Savings Account (FHSA) gives you an RRSP-style deduction on contributions and TFSA-style tax-free withdrawals for a qualifying home purchase. Up to $8,000/year, $40,000 lifetime. If you're a first-time buyer, maxing your FHSA before either TFSA or RRSP is often the highest-value move.