Earning under about $58,500 in 2026? Fund the TFSA first. Earning more? The RRSP usually wins, as long as you invest the refund. The reason is one number: your marginal tax rate today compared to the rate you will pay when you take the money out. This page covers the rest: contribution room, deadlines, the refund trap, and a reasonable default order. Under about $58,500: TFSA first. Above it: usually the RRSP, if you invest the refund. It comes down to your marginal tax rate today vs. when you withdraw.
For most Canadians in 2026, income is the tiebreaker. The line that matters is $58,523, where the lowest federal tax bracket ends and each extra dollar starts being taxed noticeably more:
A rule of thumb, not a rule: a large workplace pension, a big expected RRSP balance, or a very different spouse's income can flip it. The rest of this page covers when and why.
An RRSP gives you a deduction now and taxes the withdrawal later. A TFSA gives you no deduction now and taxes nothing later. If your tax rate is identical in both periods, the two produce exactly the same after-tax result, the decision only matters because most people's rate changes between now and retirement.
If you deduct at 43% and withdraw at 25%, the RRSP captures that 18-point gap. If you deduct at 20% and withdraw at 30%, common early in a career, or for someone who'll have a large pension, the TFSA wins and the RRSP actively costs you.
Put the same $1,000 of pay into each account. The RRSP wins when your tax rate as you contribute is higher than your rate as you withdraw; the TFSA wins when it is lower. Growth and the number of years change the size of the gap, never the winner.
Everything combined: CPP, OAS, pensions and withdrawals, in today’s dollars.
Contribute after-tax money. Growth and withdrawals are completely tax-free, forever. Room comes back the following January after a withdrawal.
Contribute pre-tax and get a refund at your marginal rate. Growth is tax-deferred; withdrawals are taxed as income, and the room doesn't come back.
| TFSA | RRSP | FHSA | |
|---|---|---|---|
| 2026 limit | $7,000 | 18% of earned income, max $33,810 | $8,000/yr, $40,000 lifetime |
| Deadline for 2026 | None: room just accumulates | March 1, 2027 | December 31, 2026 |
| Deduction now? | No | Yes | Yes |
| Growth taxed? | No | No (deferred) | No |
| Withdrawal taxed? | No | Yes, as income | No, if qualifying home purchase |
| Room restored after withdrawal? | Yes, next Jan 1 | No | No |
| Affects OAS/GIS clawback? | No | Yes | No |
Every figure in this table is listed on the methodology page, with a rating for how well sourced it is.
Unused room carries forward indefinitely in all three accounts, so a year you can't contribute is deferred, not lost. RRSP room is also reduced by a pension adjustment if you belong to a workplace pension, check your CRA My Account for your actual number rather than calculating 18% yourself.
RRSP: March 1, 2027 for the 2026 tax year. Contributions made in the first 60 days of 2027 can be deducted on your 2026 return, which is why RRSP season peaks in February. That is separate from the April 30 filing deadline.
TFSA: no deadline. Your $7,000 of 2026 room was added on January 1, 2026 and never expires: unused room simply carries forward. There is no refund to claim, so there is no cutoff to beat.
FHSA: December 31, 2026. Unlike the RRSP there is no 60-day window. To count toward 2026, the money has to be in by the end of the calendar year.
This is where the RRSP advantage most often evaporates in practice.
A $10,000 RRSP contribution at a 40% marginal rate generates a $4,000 refund. The RRSP only beats the TFSA if that $4,000 is also invested. Contributing $10,000 to an RRSP and spending the refund is roughly equivalent to contributing $6,000 to a TFSA, you've taken the deduction and consumed the benefit.
Put differently: the correct comparison isn't "$10,000 in an RRSP versus $10,000 in a TFSA." It's "$10,000 in an RRSP plus the invested refund versus $10,000 in a TFSA." If the refund reliably becomes a vacation, the TFSA is the better account for you regardless of what the arithmetic says.
All of this turns on one number: your marginal rate, which depends on your salary and your province. The take-home pay calculator works it out for 2026, including the provincial brackets and the Ontario and PEI surtaxes that shift it more than most people expect.
If you're a first-time home buyer, the FHSA is usually the first account to fill, because it's the only one that gives you both sides of the benefit: a deduction going in like an RRSP, and a tax-free qualifying withdrawal like a TFSA. It's capped at $8,000 per year and $40,000 in total, and must be used within 15 years of opening it.
If you don't end up buying a home, the balance can generally be transferred to an RRSP or RRIF without using RRSP room, so opening one early is low-risk if there's any chance you'll buy. See where the FHSA sits among the other money steps.
For someone with no workplace pension and no immediate home purchase planned:
This is a starting point, not a rule. Pensions, self-employment income, a spouse in a very different bracket, and expected inheritances all change it.
It also assumes the groundwork is done: no debt above about 8% and an emergency fund in place. The full money order of operations covers the steps that come before it.
Finance Simulator estimates your marginal rate from your salary and province, shows your TFSA/RRSP/FHSA room, projects growth in each, and calculates the RRSP refund your contributions would generate. Free, no account, nothing sent to a server.
Referral link, no obligation. The account-order advice above doesn't change either way. See the full bonus breakdown, including the transfer match and how it compares to Questrade.
It depends on your marginal tax rate now versus in retirement. If you expect to be in a lower tax bracket when you withdraw, the RRSP generally wins because you deduct at a high rate and withdraw at a low one. If you expect a similar or higher rate later, or your income is currently low, the TFSA generally wins. At the same rate in both periods, the two are mathematically equivalent.
A common rule of thumb in 2026 is about $58,500, where the lowest federal tax bracket ends. Below it, the TFSA usually comes first because an RRSP deduction is only worth the lowest rates and RRSP room carries forward to higher-income years. Above it, the RRSP usually comes first, provided you invest the refund. A large workplace pension or a big expected RRSP balance can change that.
For 2026 the TFSA annual limit is $7,000. RRSP room is 18% of your previous year's earned income up to a maximum of $33,810, reduced by any pension adjustment. Unused room in both accounts carries forward indefinitely.
No. TFSA withdrawals are completely tax-free and are not counted as income, so they do not affect income-tested benefits such as OAS or GIS. The amount you withdraw is added back to your contribution room on January 1 of the following year.
March 1, 2027. Contributions made in the first 60 days of 2027 can be deducted on your 2026 tax return. That is separate from the April 30, 2027 deadline for filing the return itself.
An RRSP contribution reduces your taxable income, generating a refund at your marginal rate. The RRSP's advantage over a TFSA depends on that refund being invested rather than spent. If you spend the refund, an RRSP contribution generally underperforms the equivalent TFSA contribution.
No. TFSA room is added every January 1 ($7,000 for 2026) and unused room carries forward indefinitely, so there is no cutoff date. The FHSA is different: contributions must be made by December 31 to count for that year.
Yes. The three accounts have separate contribution room and can be used together. The FHSA is limited to $8,000 per year with a $40,000 lifetime cap and is intended for a first home purchase, combining an RRSP-style deduction with TFSA-style tax-free qualifying withdrawals.
The Canada Revenue Agency charges a penalty of 1% per month on the highest excess amount in the account for each month the over-contribution remains. Unlike the RRSP, the TFSA has no over-contribution buffer, so the penalty applies from the first dollar over your limit.
Finance Simulator's calculator estimates your marginal tax rate from your salary and province, shows your TFSA, RRSP and FHSA room, and calculates the refund an RRSP contribution would generate, which are the inputs the TFSA vs RRSP decision turns on. It is free, needs no account, and runs entirely in your browser.
Contribution figures on this page reflect the 2026 tax year and match the rates used in the calculator. This page is educational and is not financial, tax, or legal advice: see the terms of use. For decisions with real money at stake, talk to a qualified professional who can see your whole situation.