How much tax does an RRSP contribution save?

Your refund equals the deductible contribution multiplied by your marginal tax rate. Contribute C$10,000 at a 40% marginal rate and the deduction cuts your taxable income by C$10,000, worth about C$4,000 back. The saving is a deferral, not a gift: the money is taxed as income when you eventually withdraw it.

How is RRSP contribution room calculated?

Room for the year is 18% of your previous year's earned income, capped at the annual dollar limit set by the CRA, minus any pension adjustment from a workplace plan, plus unused room carried forward from earlier years. Your notice of assessment shows the exact figure, which is the number you should rely on.

Should I use an RRSP or a TFSA?

Compare your marginal tax rate today with the rate you expect on withdrawal. If your retirement rate is lower, the RRSP wins because you deduct at the high rate and pay at the low one. If it is higher, the TFSA wins. At equal rates the after-tax outcome is identical.

What happens when I withdraw from an RRSP?

Withdrawals count as taxable income in the year you take them, and your institution holds back withholding tax of 10%, 20% or 30% outside Quebec depending on the amount. You also lose that contribution room permanently. By 31 December of the year you turn 71 the RRSP must become a RRIF or an annuity.

RRSP Calculator

Estimate what your Registered Retirement Savings Plan will be worth, what this year's contribution refunds, and what is left after tax.

Deduct now, pay tax later

An RRSP deduction is worth your marginal tax rate today; the withdrawal is taxed at your rate in retirement. This calculator shows both halves of that trade.

Your RRSP Plan

Current RRSP Balance (C$) Total already invested across all your RRSP accounts

Annual Contribution (C$) Amount you plan to contribute every year

Years to Retirement How long the money stays invested

Expected Return (% per year) Long-run return after fund fees

Marginal Tax Rate Now (%) Combined federal plus provincial rate on your top dollar

Expected Tax Rate in Retirement (%) Average rate you expect on RRSP or RRIF income

Contribution Timing Start-of-year money earns a full extra year of growth

Over-Contribution Buffer (C$) Lifetime cushion before the 1% per month penalty applies

Contribution Room Check

Previous Year Earned Income (C$) Employment and self-employment income that creates room

Room Rate (% of earned income) Statutory rate, currently 18%

Annual RRSP Dollar Limit (C$) CRA caps new room each year. Verify the current figure with CRA

Pension Adjustment (C$) Box 52 of your T4 if you belong to a workplace pension

Unused Room Carried Forward (C$) From your latest notice of assessment

Results

Projected RRSP Balance

C$0

Value at retirement, before tax

Total Contributions

C$0

Money you put in

Investment Growth

C$0

Compounding, sheltered from tax

This Year's Tax Refund

C$0

Deductible contribution at your marginal rate

After-Tax Value

C$0

If the whole balance were withdrawn

Contribution Room

Enter your income details above to check your room.

Contribution against available room 0%

Projection Breakdown

Starting balance C$0

Contributions over the period C$0

Investment growth C$0

                Projected balance at retirement
                C$0
            

Tax refunds generated C$0

Net out-of-pocket cost after refunds C$0

Tax on full withdrawal C$0

                After-tax value
                C$0
            

RRSP vs TFSA on the Same Pre-Tax Income

Each year you direct your annual contribution of pre-tax income to one account. The RRSP invests the full amount; the TFSA invests what is left after tax at your current rate. Your starting balance is excluded so the comparison is clean.

Measure	RRSP	TFSA
Pre-tax income used each year	C$0	C$0
Tax paid before investing	C$0	C$0
Actually invested each year	C$0	C$0
Balance at retirement	C$0	C$0
Tax on withdrawal	C$0	C$0
After-tax value	C$0	C$0

Which Account Wins

Enter your tax rates to see the verdict.

Sensitivity: After-Tax Value by Retirement Tax Rate

Your retirement tax rate is the single biggest unknown in an RRSP projection. Here is what the same projected balance is worth at other rates.

Retirement Tax Rate	Tax on Withdrawal	After-Tax Value	Vs Your Estimate

Year-by-Year Projection

Year	Opening Balance	Contribution	Growth	Closing Balance	Cumulative Refunds

Formulas Used

Room = min(Earned Income × 18%, Annual Limit) − Pension Adjustment + Carry-Forward
Refund = min(Contribution, Room) × Marginal Tax Rate
Balance (start-of-year) = (Opening + Contribution) × (1 + r)
After-Tax Value = Balance × (1 − Retirement Tax Rate)

Assumptions in This Projection

The return is applied as a single steady annual rate net of fund fees, real markets are not steady. Contributions, tax rates and contribution room are held constant for every year. The after-tax figure assumes the entire balance is withdrawn in one year at your stated retirement rate, which is the pessimistic case: a real RRIF drawdown spreads income over many years, usually at a lower average rate. The dollar limit, the 18% rate and the over-contribution buffer are editable because the CRA revises them; verify the current figures with the CRA or your provider before acting.

Nothing here is tax or investment advice. Contribution room shown on your notice of assessment is the authoritative number.

Understanding RRSPs

The Deduction Is a Deferral

An RRSP contribution reduces taxable income in the year you claim it, so the refund is your marginal rate multiplied by the deducted amount. Nothing inside the plan is taxed while it compounds, which is where most of the benefit comes from. The bill arrives on withdrawal, when every dollar out is ordinary income. The plan wins when you deduct at a high rate and withdraw at a lower one, and you can hold a contribution slip and claim the deduction in a later, higher-income year.

How Room Builds Up

18% of prior-year earned income, capped at the CRA annual dollar limit
Minus the pension adjustment if a workplace pension already shelters income for you
Plus unused room from every earlier year, carried forward indefinitely
Buffer: a cumulative lifetime cushion, currently C$2,000, before penalties bite
Penalty: 1% per month on the excess above that cushion until it is withdrawn

RRSP or TFSA

The arithmetic is symmetric: with the same return and the same pre-tax income, the RRSP beats the TFSA precisely when your withdrawal rate is below your contribution rate, and loses when it is above. A TFSA also keeps withdrawals out of income entirely, so it does not claw back Old Age Security or the Guaranteed Income Supplement and it returns the room the following year. Lower earners early in a career often fill the TFSA first, then shift to the RRSP as their marginal rate climbs.

Getting Money Out

Withholding tax: 10%, 20% or 30% outside Quebec depending on the amount, credited against your final bill
Room is gone: ordinary withdrawals do not restore contribution room
Age 71: the plan must convert to a RRIF or an annuity by 31 December of that year
RRIF minimums: a set percentage must be withdrawn annually once converted
Exceptions: the Home Buyers' Plan and Lifelong Learning Plan allow repayable withdrawals

Deduct now, pay tax later

Your RRSP Plan

Contribution Room Check

Results

Contribution Room

Projection Breakdown

RRSP vs TFSA on the Same Pre-Tax Income

Which Account Wins

Sensitivity: After-Tax Value by Retirement Tax Rate

Year-by-Year Projection

Formulas Used

Assumptions in This Projection

Understanding RRSPs

The Deduction Is a Deferral

How Room Builds Up

RRSP or TFSA

Getting Money Out

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