RRSP vs TFSA Calculator

The only variable that matters

Strip away the marketing and the RRSP-vs-TFSA question reduces to one comparison: your marginal tax rate when you contribute versus your marginal tax rate when you withdraw.

• Rate today > rate at withdrawal: RRSP wins. You deducted at 40% and pay tax at 25% — a permanent 15-point gain.
• Rate today < rate at withdrawal: TFSA wins. You paid tax at 24% to avoid paying 35% later.
• Rates equal: dead tie. The math is multiplicative; order doesn't matter.

Everything else — flexibility, contribution room, OAS clawbacks — is a tiebreaker, not the main event.

How this calculator compares them

We compare what the same pre-tax dollars become in each account. Say you can set aside $6,000 of salary per year:

• RRSP: the full $6,000 goes in (contributions are deductible). It grows tax-deferred, then the whole balance is taxed at your retirement rate when withdrawn.
• TFSA: you pay today's tax first, so $6,000 × (1 − your current rate) goes in. It grows tax-free and is never taxed again.

This is mathematically identical to the "contribute to the RRSP and invest the refund in a TFSA" strategy — the fair fight. If you contribute to an RRSP and spend the refund, your real-world result will be worse than shown here.

Tiebreakers the math doesn't capture

• OAS and GIS clawbacks. RRSP withdrawals count as income and can claw back Old Age Security (and especially GIS for lower-income retirees). TFSA withdrawals don't. For modest retirement incomes, this tilts the field hard toward the TFSA.
• Flexibility. TFSA withdrawals are penalty-free and the room comes back next year. RRSP withdrawals are taxed immediately and the room is destroyed. Emergency money belongs in a TFSA.
• Employer matching. If your employer matches RRSP/group-plan contributions, take the match first no matter what the rates say — an instant 100% return beats any tax arbitrage.
• Behaviour. RRSPs lock money up psychologically; TFSAs are easy to raid. The account you don't touch wins.

And if you're saving for a first home…

The FHSA beats both: deductible going in like an RRSP, tax-free coming out like a TFSA, up to $8,000/year and $40,000 lifetime. Model it with our FHSA calculator. For long-term growth assumptions, the compound interest calculator shows what different returns do to the same contributions.