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The RRSP, TFSA and FHSA all shelter savings from tax, in different ways. For 2026 the limits are $33,810, $7,000 and $8,000. RRSP withdrawals are taxed as income, and TFSA withdrawals aren't.
The RRSP, TFSA and FHSA differ mainly in when you pay the tax. For 2026 the RRSP dollar limit is $33,810, the TFSA limit is $7,000, and the FHSA allows $8,000 a year up to $40,000 over its life. An RRSP deduction lowers this year’s tax, TFSA withdrawals are tax-free, and the FHSA is built for a first home and gets both breaks.
What separates the RRSP, TFSA and FHSA?
An RRSP contribution is a deduction, so it lowers this year’s tax, and what you withdraw later is taxed as income. A TFSA contribution isn’t deductible, but nothing you take out is taxed. Which one wins depends on whether your tax rate today is higher or lower than it will be when you spend the money. The CRA’s TFSA overview covers the rules.
Sam in Calgary puts $5,000 into an RRSP and has a 30% marginal rate, so the deduction is worth about $1,500 at tax time (5,000 x 0.30). Put the same $5,000 in a TFSA and there’s no refund, but every dollar that comes out later is yours.
Deductible RRSP and PRPP contributions can be used to reduce your income tax.
Line 20800 – RRSP deduction, canada.ca
The RRSP calculator shows what a contribution saves you, the TFSA calculator works out your room, and the TFSA vs RRSP calculator puts the two side by side. The page on FHSA vs RRSP does the same for a first-home saver.
What are the RRSP, TFSA and FHSA limits for 2026?
The RRSP dollar limit is $33,810, and your own limit is 18% of last year’s earned income up to that cap, plus unused room, minus any pension adjustment. The TFSA limit is $7,000 for the year. The FHSA allows $8,000 a year and $40,000 over its life, and unused room carries forward up to $8,000. The CRA explains how that works on its FHSA page. The limits and rates page has every figure with its source, and the FHSA calculator works out your room.
What tax is taken when you withdraw from an RRSP?
Outside Quebec, the bank withholds 10% on up to $5,000, 20% on the next $10,000 and 30% above $15,000. That’s withholding, not your final bill. The whole amount is added to your income for the year, so you might owe more or get some back. Take out $12,000 and the bank holds back $1,900, yet your real tax could be higher or lower. The RRSP withdrawal tax calculator estimates it.
What changes at 71?
You have until December 31 of the year you turn 71 to close the RRSP, turn it into a RRIF that pays you a minimum each year, or use it to buy an annuity. That is also the last day you can contribute. The RRIF withdrawal tax calculator shows what the payments cost in tax.
Where do CPP and OAS fit in?
CPP and OAS sit alongside your own savings. Canada Pension Plan payments depend on what you contributed while working, and Old Age Security depends on how long you’ve lived in Canada. The CPP guide, the CPP calculator and the OAS calculator cover each, and the retirement calculator puts everything on one page.
What do people get wrong about registered accounts?
The big one is treating the RRSP withholding as the final tax. Another is pulling RRSP money out in a high-income year when waiting would cost less. The article on tax myths in Canada covers more common misunderstandings.
More about saving and retirement
- RDSP in Canada: Disability Savings Grants and Bonds
How a registered disability savings plan works: who can open one, the grant of up to $3,500, the bond, the $200,000 limit and the 10-year repayment rule.
- RESP and the Canada Education Savings Grant Explained
The CESG adds 20% on the first $2,500 a year, up to $7,200 per child. See the extra grant by income, the Learning Bond and how RESP withdrawals are taxed.
- Lifelong Learning Plan in Canada: RRSP Withdrawals for School
The LLP lets you withdraw $10,000 a year and $20,000 in total from your RRSP for full-time study. See who qualifies and the 10-year repayment schedule.
- Canadian Corporate Capital Gains Tax: Rate and Example
Canadian corporations add half of a capital gain to income. See how the taxable half, refundable tax and a $100,000 example work
- Ontario Regional Opportunities Investment Tax Credit
Private corporations get 10% back on building spending in designated regions, up to $45,000 a year, but Ontario shows the credit ending soon
- Short Term Capital Gains Tax in Canada: How It Works
Short holding periods don't change capital gains tax in Canada. See the extra tax on a $10,000 gain at four salaries in Ontario
- Free income tax filing for seniors in Canada
Seniors on a modest income can file for free. See the clinic income limits, what to bring and when software is the better route
- Business Investment Loss: What You Can Deduct
A loss on small business shares or debt can cut your tax bill. See how the ABIL works, where to claim it and what a $40,000 loss saves
Frequently asked questions
Should I use my RRSP or my TFSA first?
There is no single answer. An RRSP deduction pays off most when your tax rate now is higher than it will be in retirement, while a TFSA is flexible because withdrawals are tax-free. Try both in the calculators with your own income.
What is the RRSP limit for 2026?
$33,810 is the dollar cap. Your own limit is 18% of last year's earned income up to that cap, plus unused room, minus any pension adjustment. Your notice of assessment shows it.
What is the TFSA limit for 2026?
The TFSA limit is $7,000 for the year. A TFSA contribution is not deductible, but nothing you take out is taxed. The TFSA calculator works out your own room.
How much can I put into an FHSA?
The FHSA allows $8,000 a year and $40,000 over its life, and unused room carries forward up to $8,000. It is built for a first home and gets both the deduction and tax-free withdrawal breaks.
What tax is taken when I withdraw from an RRSP?
The bank withholds 10% on up to $5,000, 20% on $5,000 to $15,000 and 30% above that, outside Quebec. That's withholding, not the final tax, because the withdrawal is added to your income.
What happens to my RRSP at 71?
The last day to contribute is December 31 of the year you turn 71. By then you close it, turn it into a RRIF, or buy an annuity.