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With the same tax rate going in and coming out, a TFSA and an RRSP leave exactly the same amount. Put $7,000 in a TFSA, or $10,448 in an RRSP at a 33% marginal rate, grow both at 5% for 25 years, and each ends at $23,704 once the RRSP is taxed at 33%. Drop the withdrawal rate to 25% and the RRSP leaves $26,535, or $2,830 more.
You can change the rates, the growth, the years and whether the refund is reinvested, and see what an OAS clawback does to the result.
Why do the two accounts tie at the same tax rate?
Both accounts multiply your money by the same growth factor and lose the same share to tax, so the order doesn’t matter. The TFSA takes its tax first, because you deposit after-tax dollars. The RRSP takes it last, and the deduction is what covers the gap between $7,000 and $10,448. With 33% at both ends, the two deposits each become $23,704 after 25 years at 5%. The tie holds only if the refund goes back into the account, so the RRSP deposit is the full pre-tax amount.
What makes the RRSP leave more?
A lower tax rate in retirement. Plenty of people drop a bracket once the pay cheque stops. At 18% on withdrawal the RRSP leaves $29,011 against $23,704 in the TFSA, and at 28% it still leads with $25,473. The RRSP also lets you deposit more for the same hit to your pay cheque, which matters if you save well beyond the TFSA limit of $7,000 for 2026 (Canada Revenue Agency: TFSA contributions).
What makes the TFSA leave more?
A higher rate on the way out, or a hidden tax on RRSP income. Old Age Security is reduced by 15 cents for each dollar of net income above $95,323 in 2026 (Employment and Social Development Canada: OAS amounts for 2026; OAS recovery tax). A 20% bracket plus that 15% is a 35% effective rate, and at 35% the TFSA ends $708 ahead ($23,704 against $22,997). TFSA withdrawals never count as income, so they also leave income-tested benefits alone. Spend the refund instead of reinvesting it and the TFSA wins that way too.
How much room do I have?
The RRSP dollar limit is $33,810 for 2026 and $35,390 for 2027, and your own room also depends on 18% of last year’s earned income (Canada Revenue Agency: RRSP and TFSA limits). The 2027 TFSA limit hasn’t been published yet. Check your notice of assessment before you deposit, since the calculator treats both accounts as open-ended.
Where does this information come from?
The 2026 limits come from Canada Revenue Agency pages and the OAS threshold from an Employment and Social Development Canada table. Every projected balance comes from the site’s own calculator. Checked in October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the full disclaimer.
Frequently asked questions
Is a TFSA or an RRSP better for a low income?
Usually the TFSA. At a low marginal rate the RRSP deduction is small, and a withdrawal at the same rate cancels it. With 15% at both ends the two tie, and any benefit reduction in retirement favours the TFSA.
Does the refund really have to be reinvested?
For the two accounts to tie at equal rates, yes. Spend the $3,448 refund and the RRSP side only grows what you actually deposit, so the TFSA ends well ahead.
Can I have both a TFSA and an RRSP?
Yes. The limits are separate: $7,000 for the TFSA and $33,810 for the RRSP in 2026, plus unused room. Many people use the RRSP while their rate is high and keep the TFSA for flexibility.
Do TFSA withdrawals affect OAS?
No. TFSA withdrawals aren't income, so they don't count toward the OAS recovery tax threshold of $95,323 for 2026. RRSP and RRIF withdrawals do.