TFSA vs RRSP vs FHSA (2026): Which First, With a Calculator
$5,000 of pre-tax income invested for 25 years at 5.8% a year. Your tax rate is higher now than later, which favours the RRSP.
- TFSA$14,329You invest $3,500 after 30.0% tax now. Growth and withdrawals are tax-free.
- RRSP$16,376You invest all $5,000 (the deduction cancels the tax now) and pay 20.0% when you withdraw.
Your order
- RRSPYour tax rate now (30.0%) is above your expected rate later (20.0%).
- TFSAFor money you may need before retirement, and once RRSP room is used.
Turn on JavaScript to change the numbers. The figures shown are for $5,000 at a 30% tax rate now and 20% later.
The short answer
If your tax rate is the same when you put money in and when you take it out, a TFSA and an RRSP leave you with exactly the same amount. The RRSP wins when your rate now is higher than it will be at withdrawal; the TFSA wins when it is lower or you may need the money early. If you are buying your first home, the FHSA beats both: it is deductible going in and tax-free coming out.
This is step 2 of six in our investing path. The calculator puts the same pre-tax dollars into each account so you can compare what comes out.
Why equal tax rates give equal results
Take $5,000 of income at a 30% tax rate. In a TFSA you pay the tax first and invest $3,500; it grows and comes out tax-free. In an RRSP the deduction lets you invest the full $5,000; it grows, and you pay tax when you withdraw. If the rate at withdrawal is also 30%, you keep 70% of the grown amount either way. Multiplying by 0.7 before or after growth gives the same answer. The default in the calculator, 30% now and 20% later, gives the RRSP about 14% more.
The rules for 2026
| Account | How much you can put in | Tax going in | Tax coming out |
|---|---|---|---|
| TFSA | $7,000 for 2026; $109,000 in total since 2009 if you were eligible all along | No deduction | Tax-free; withdrawals come back as room on January 1 |
| RRSP | 18% of last year’s earned income, up to $33,810 for 2026, plus unused room, minus pension adjustments | Deductible | Taxed as income |
| FHSA | $8,000 a year, up to $40,000 in total; up to $8,000 of unused room carries forward | Deductible | Tax-free for a qualifying first home |
From the CRA pages listed under sources. The 2027 RRSP limit is $35,390; the 2027 TFSA limit had not been announced on October 30, 2026.
The FHSA, if you are buying a first home
You can open an FHSA if you are an adult resident of Canada and a first-time home buyer, meaning you have not lived in a home you or your spouse owned in the current year or the previous four. Qualifying withdrawals to buy a first home are tax-free. The account must be closed by December 31 of the year of the earliest of three events: the 15th anniversary of opening your first FHSA, turning 71, or the year after your first qualifying withdrawal. Money you do not use for a home can be moved to an RRSP. Our benefits hub covers other first-home programs.
The RRSP Home Buyers’ Plan still exists alongside it: you can withdraw up to $60,000 from an RRSP for a first home. For a first withdrawal made from 2026 to 2028, repayment starts in the fifth year after the withdrawal, and you repay over 15 years.
Picking the order
- Employer match. If your employer matches pension or RRSP contributions, take all of it first.
- FHSA, if you will buy a first home.
- RESP, $2,500 a year per child, if you have children: the Canada Education Savings Grant adds 20%, up to $500 a year and $7,200 per child.
- RRSP or TFSA, by comparing your tax rate now with your expected rate at withdrawal. Many people with income in the first federal bracket (under $58,523 in 2026) start with a TFSA; many in higher brackets start with an RRSP.
Your tax rate, roughly
Federal rates for 2026 are 14% up to $58,523, 20.5% to $117,045, 26% to $181,440, 29% to $258,482 and 33% above. Your province adds its own rate on top, so your combined marginal rate is higher. The calculator asks for the combined figure; the chips give common values.
How the calculator works
TFSA = amount x (1 – tax rate now) x growth. RRSP = amount x growth x (1 – tax rate at withdrawal). FHSA = amount x growth, assuming a qualifying first-home withdrawal. Growth = (1 + return) raised to the number of years. The RRSP figure assumes you invest the full pre-tax amount, which in practice means investing the tax refund too.
Frequently asked questions
Is a TFSA or RRSP better?
If your tax rate is the same when you contribute and when you withdraw, they give the same result. An RRSP is better when your rate now is higher than at withdrawal; a TFSA is better when it is lower, or when you may need the money before retirement.
Should I use an FHSA or RRSP for a first home?
If you qualify, the FHSA usually comes first: contributions are deductible and qualifying withdrawals for a first home are tax-free. The limit is $8,000 a year and $40,000 in total. The RRSP Home Buyers’ Plan lets you withdraw up to $60,000 but must be repaid.
How much can I put in an RRSP for 2026?
18% of your previous year’s earned income, up to $33,810 for 2026, plus any unused room from earlier years, minus pension adjustments. Your notice of assessment shows your exact limit.
What is the TFSA limit for 2026?
$7,000. Someone who has been 18 or older and resident in Canada since 2009 and never contributed has $109,000 of room.
- CRA: TFSA dollar limits, modified February 20, 2026; CRA: RRSP deduction limit (18% rule), modified January 29, 2026; CRA: RRSP and TFSA limits table, modified October 28, 2026; CRA: Participating in your FHSAs, modified September 17, 2026; CRA: Opening your FHSAs; CRA: Closing your FHSA, modified February 2, 2026; CRA: Withdrawing from your FHSA, modified February 10, 2026; CRA: Home Buyers’ Plan, modified February 17, 2026; CRA: Canada Education Savings Grant, modified February 27, 2026; CRA: 2026 federal tax rates, modified June 25, 2026. Checked October 30, 2026.
- Method: formulas shown above; results checked against a separate implementation.
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