NerdMetrics.ca
Saving · May 23, 2026 · 8 min read

TFSA vs RRSP 2026: which account should you contribute to first?

Both shelter growth completely, so the decision comes down to one comparison: your tax rate today against your expected rate at withdrawal.

The accounts are mirror images. An RRSP defers tax; a TFSA prepays it. Where the rate is identical, the outcome is identical.

The arithmetic

A $1,000 pre-tax contribution to an RRSP at a 30% rate doubles to $2,000 and is taxed at 30% on withdrawal, leaving $1,400. Pay the 30% first, put $700 into a TFSA, double it, and withdraw $1,400 tax-free. The same.

TFSA 2026 room
$7,000
$109,000 cumulative since 2009
RRSP 2026 limit
$33,810
Or 18% of earned income
Rate that decides it
Marginal
Today versus at withdrawal

What tips the balance

  • Income under $55,000: lean TFSA. Your rate is likely to rise.
  • Income over $115,000: lean RRSP. The deduction is worth over 40 cents on the dollar.
  • Receiving income-tested benefits: lean RRSP, because the deduction raises the benefit as well.
  • Expecting a defined-benefit pension: lean TFSA, because your retirement rate may exceed today’s.
Run it on your own numbersTFSA, RRSP and FHSA roomContribution room since 2009, wrapper comparison, and the FHSA deduction.

The flexibility difference

TFSA withdrawals restore contribution room on January 1 of the following year. RRSP withdrawals destroy the room permanently and are taxed as income on the way out, with withholding tax applied immediately. For money you might genuinely need, that asymmetry matters more than a few points of rate.

Run it on your own numbersAccount optimizerWhere your next dollar belongs: FHSA, RRSP, RESP, TFSA or the debt.

Figures are the published 2026 federal and provincial amounts at the time of writing. General information only, not financial, tax, or legal advice — see the methodology and disclaimer.