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A $5,000 RRSP contribution cuts your 2026 Ontario tax bill by $1,217 at $60,000 of taxable income, and by $2,170 at $150,000. The saving follows your marginal tax rate, so the same deposit gets you more back the higher your income sits.
How does an RRSP contribution turn into a refund?
You deduct the contribution from your taxable income on your return, and the tax you would have paid on that slice is what you save. Did your employer already take tax off your pay? Then the saving shows up as a bigger refund or a smaller balance owing.
It isn’t a fixed percentage of the deposit. It equals your combined federal and provincial rate on the income at the top of your range. To see that rate for your own numbers, open the marginal tax rate calculator, and use the tax refund calculator to check the size of the refund as a whole.
What does $5,000 save at different incomes?
The table comes from the site’s RRSP tax savings calculator, for a resident of Ontario in 2026, with no pension adjustment and no unused room from earlier years.
| Taxable income | Tax saved | Share of the deposit | Real cost of $5,000 |
|---|---|---|---|
| $45,000 | $953 | 19.1% | $4,048 |
| $60,000 | $1,217 | 24.3% | $3,783 |
| $100,000 | $1,508 | 30.2% | $3,492 |
| $150,000 | $2,170 | 43.4% | $2,830 |
Picture Priya in Burlington, who has $60,000 of taxable income and puts $5,000 in her RRSP in February. Her return gets roughly twelve hundred bucks lighter on tax, $1,217 to be exact, so the deposit really cost her $3,783. A neighbour at $150,000 would get $2,170 back on the same deposit. Same $5,000, very different result.
The same $100,000 income in Alberta saves $1,525, a little more than in Ontario, because the provincial rates differ. Pick your own province in the calculator before you trust a number.
How much RRSP room do you have?
Your deduction limit for a year is the unused room carried forward, plus the smaller of the annual dollar limit and 18% of last year’s earned income, minus any pension adjustment. The dollar limit is $32,490 for 2025 and $33,810 for 2026, according to the CRA’s table of savings plan limits. Your Notice of Assessment states your exact room, and that’s the figure to trust.
Take a worker with $100,000 of earned income last year and no other room. The calculator gives $18,000 for the year. A $5,000 contribution fits easily, and you don’t need to think about it twice. A workplace pension lowers the limit, because the pension adjustment cuts your room dollar for dollar.
Do you have to claim the deduction right away?
No. If you contribute this year, you can claim the deduction on this year’s return or carry unused contributions forward and claim them on a later one. That helps when you’re in a lower bracket this year than you expect to be next year, for example after a raise or a bonus. The deposit starts growing tax-free either way. Only the deduction waits.
When is the RRSP deadline, and what goes wrong?
You can contribute during the year or in the first 60 days after it ends and still claim the deduction for the earlier year. For the 2025 tax year, that window ran from March 4, 2025 to March 2, 2026. For 2026 it works out to March 1, 2027, but check the CRA’s page for the exact day before you plan around it.
Same few mistakes, every year.
- Going over your room. A $2,000 cushion is tolerated, but beyond it each month of excess costs a tax of 1% of the extra amount, and you report it on a separate form, the T1-OVP, within 90 days after year end.
- Forgetting the pension adjustment when a job comes with a pension plan.
- Assuming the saving is permanent. Withdrawals are taxed as income, so you gain most when your rate in retirement is lower than today. Compare the numbers with the RRSP withdrawal tax calculator.
- Using an RRSP when a TFSA suits a low income better. The TFSA calculator shows the growth side by side.
Contributions stop after December 31 of the year you turn 71. After that you close the plan, convert it to a RRIF or buy an annuity.
Where the numbers come from
Room rules, dollar limits and the contribution deadline come from Canada Revenue Agency pages on RRSP contributions and on annual limits, read in October 2026, including its page on how contributions affect your deduction limit. Tax rates are the 2026 federal and provincial figures used by the calculators. This site is not linked to any government body, and your own Notice of Assessment is the record that counts.
Frequently asked questions
How much tax does a $5,000 RRSP contribution save?
In Ontario in 2026 it saves $953 at $45,000 of taxable income and $2,170 at $150,000. The saving rises with income.
What's the RRSP dollar limit for 2026?
$33,810, capped at 18% of last year's earned income, less any pension adjustment.
When's the RRSP deadline for the 2026 tax year?
60 days after the end of the year. The 2025 window closed on March 2, 2026.
What happens if I contribute more than my room?
An excess of up to $2,000 is tolerated. Above that, a 1% a month penalty applies to the extra amount.
Is the RRSP refund free money?
No. You're taxed on withdrawals, so the saving is a deferral unless your tax rate falls later.