WealthTFSA vs RRSP Calculator 2026 — net after-tax value compared
TFSA vs RRSP Comparator 2026
Estimate for illustration only. Not personalized advice. Future returns are not guaranteed.
How the math works
The logic is simpler than it looks. A TFSA is funded with money you've already paid tax on: you contribute a net amount, it grows tax-sheltered, and the withdrawal is completely tax-free. Its final value is simply amount × (1 + r)^t.
An RRSP works as a mirror image. You contribute pre-tax money (or recover the tax through a deduction), the capital grows gross, and the withdrawal is taxed at your marginal rate in retirement. The RRSP capital becomes amount × (1 + r)^t × (1 − retirement_rate). But one essential piece is missing: the tax refund generated by the deduction (amount × current_rate). For a fair comparison, this refund must be reinvested — otherwise the RRSP starts at a disadvantage.
Our calculator grows that refund until retirement and adds it to the RRSP value. You choose where it sits: in a TFSA (tax-free growth, the most favourable case) or in a non-registered account, where the capital gain is taxed using Canada's 50% inclusion rate at your retirement rate.
The one thing that actually matters
Once the refund is reinvested, the return, the horizon and the amount almost entirely cancel out between the two accounts. What's left is the tax-rate spread:
- current_rate = retirement_rate → TFSA and RRSP produce exactly the same net value. That's math, not opinion.
- retirement_rate < current_rate → the RRSP wins (the typical case of a high earner who'll have a more modest retirement income).
- retirement_rate > current_rate → the TFSA wins (student, early career, or a retirement with large pension income).
Worked example
You contribute $10,000 at a current marginal rate of 29.7% (Ontario, income ~$75,000), you expect 22.0% in retirement, with a 6% return over 25 years (growth factor ≈ 4.29):
- TFSA: $10,000 × 4.29 ≈ $42,900 net.
- RRSP (capital): $10,000 × 4.29 × (1 − 0.22) ≈ $33,500. Plus the $2,970 refund reinvested in a TFSA: $2,970 × 4.29 ≈ $12,700. Total ≈ $46,200 net.
The RRSP leaves roughly $3,300 more, purely because the rate drops from 29.7% to 22.0%. If both rates were 29.7%, the two options would land on exactly the same net amount.
Bottom line
The "TFSA or RRSP" debate isn't about return: both shelter your growth from tax. It's about the tax-rate arbitrage between today and retirement — plus the discipline to reinvest the RRSP refund. Use the numbers above as a starting point, not a final decision.
Frequently Asked Questions
TFSA or RRSP if my tax rate is high right now?
When your current marginal rate is high and you expect a lower rate in retirement, the RRSP usually wins: you deduct at a high rate today and withdraw at a low rate later. If your two rates are identical, the TFSA and RRSP produce exactly the same net value. The TFSA regains the edge if you expect a higher rate in retirement.
Should I reinvest the RRSP tax refund?
Yes. The tax refund generated by the RRSP deduction is part of its return. If you spend it instead of investing it, the RRSP loses its mathematical advantage and the TFSA becomes almost always better. Our calculator assumes by default that you reinvest the refund.
Where does the FHSA fit in?
The FHSA (First Home Savings Account) combines the best of both: a deductible contribution like the RRSP and a tax-free withdrawal like the TFSA, provided you buy a qualifying first home. If you are a first-time buyer, it often comes before both the TFSA and the RRSP. See our FHSA calculator.
Can I contribute to both a TFSA and an RRSP?
Yes, they are two separate accounts with their own limits (TFSA $7,000 and RRSP 18% of income up to $33,810 for 2026). Many Canadians use both: RRSP to cut tax in high-income years, TFSA for flexibility and tax-free withdrawals.
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