The RRSP vs TFSA decision is one of the most common questions Canadian investors face. Both accounts offer tax advantages, but they work differently — and the right choice depends on your marginal tax rate today compared to what it will be when you withdraw.
The calculator above models a single contribution and projects both accounts to the same end date, showing you the after-tax result side by side.
How the comparison works
TFSA path: You contribute after-tax dollars. The money grows tax-free inside the account. Withdrawals are completely tax-free. The calculator applies your contribution-year tax rate to determine how much of your gross income goes into the TFSA.
RRSP path: You contribute pre-tax dollars and receive a tax deduction — generating a refund at your marginal rate. The full contribution grows tax-deferred. When you withdraw, the entire amount is taxed as income at your withdrawal-year rate. If you reinvest the refund back into the RRSP, that extra compounding is included in the result.
What marginal tax rate should I use?
Use your combined federal + provincial marginal rate — the rate that applies to the next dollar of income at each stage of your life. For 2025 in Ontario, for example:
- ~$55,000 income: roughly 29% marginal rate
- ~$100,000 income: roughly 43% marginal rate
- ~$150,000+ income: 50–53% marginal rate
At withdrawal (retirement), many Canadians drop to the 20–30% range if their only income is from registered accounts and CPP/OAS.
Reinvesting the RRSP refund
The “Reinvest in RRSP” option assumes you put the tax refund straight back into the RRSP each year. This is the most favourable RRSP scenario — and it demonstrates the true power of the deduction when tax rates differ.
Scope note: This tool models a single lump-sum contribution over a fixed time horizon. It does not account for annual contribution limits, income-tested benefits, estate considerations, or provincial surtaxes. For full tax planning, consult a qualified advisor.