Back to Calculators

TFSA vs RRSP Calculator

Compare Tax-Free Savings Account and Registered Retirement Savings Plan strategies. Understand how current vs. retirement tax rates and refund reinvestment impact your optimal choice.

Key Insight

The optimal choice depends on your Marginal Effective Tax Rate (METR) now vs. retirement, and whether you reinvest the RRSP tax refund. METR includes benefit clawbacks like CCB and GIS - often much higher than basic marginal tax rates. Equal METRs with refund reinvestment = equal outcomes.

RRSP Strategy Decision

This choice fundamentally changes the comparison

Reinvest RRSP tax refund

Without reinvestment, RRSP loses its primary advantage. This setting determines whether the tax refund is invested (fair comparison) or spent (unfair to RRSP).

Investment Parameters

$10K
20 years
7%

Marginal Effective Tax Rates (METR)

METR vs Marginal Tax Rate

METR includes benefit clawbacks (CCB, GIS, etc.). A 35% marginal rate might be 65%+ METR if RRSP contributions increase your Canada Child Benefit.

40%

Consider CCB, GIS, OAS clawback, and other income-tested benefits

25%

May include OAS clawback at high income levels (75k+)

TFSA Final Value

$39K

RRSP Final Value

$48K

RRSP Advantage

$10K

Advantage Percentage

25.0%

RRSP wins by $10K (25.0% advantage)

Lower retirement METR + reinvested refund favors RRSP (common scenario due to benefit clawbacks)

Growth Comparison Over Time

Chart only available on larger screens

View on a tablet or desktop to see the visualization

TFSA Results

Tax-Free Savings Account

Initial Investment:$10K
Final Value:$39K
Tax on Withdrawal:$0
Effective Multiple:3.87x

RRSP Results

Registered Retirement Savings Plan

Gross Contribution:$17K
Tax Refund:$7K
Value Before Tax:$64K
Tax on Withdrawal:-$16K
Final After-Tax Value:$48K
Effective Multiple:4.84x

TFSA vs RRSP Comparison

1
TFSA Initial Investment
After-tax dollars contributed to TFSA
$10K (no tax deduction)
$10,000.00
2
TFSA Growth
Tax-free compound growth over 20 years
$10K × (1 + 7%)^20
$38,696.84
3
TFSA Final Value
Tax-free withdrawal (no tax on withdrawal)
No tax deducted on withdrawal
$38,696.84
4
RRSP Gross Contribution
Grossed-up to account for 40% tax refund reinvestment
$10K ÷ (1 - 40%)
$16,666.67
5
RRSP Tax Refund Generated
Tax deduction immediately reinvested
$17K × 40%
$6,666.67
6
RRSP Growth (Tax-Deferred)
Tax-sheltered compound growth over 20 years
$17K × (1 + 7%)^20
$64,494.74
7
RRSP Withdrawal Tax
Tax at retirement marginal rate (25%)
$64K × 25%
$16,123.69
8
RRSP Final After-Tax Value
After paying withdrawal tax in retirement
$64K - $16K
$48,371.06

Calculation Notes

• TFSA contributions are after-tax but withdrawals are tax-free
• RRSP contributions are tax-deductible but withdrawals are taxed as income
• With refund reinvestment: RRSP wins by $10K
• Current tax rate: 40% | Retirement tax rate: 25%
• Tax arbitrage favors RRSP (higher tax now, lower in retirement)

Email me a copy of these results

Get a permanent link to your TFSA vs RRSP Calculator calculations

You might also be interested in...

Related calculators that complement your financial planning

Canadian Tax Calculator

Personal & Corporate Taxes

Calculate Canadian personal and corporate taxes by province. Get detailed federal and provincial tax breakdowns, deductions, and credits for 2025.

TFSA Limit Estimator

Future Contribution Limit Calculator

Estimate future TFSA contribution limits using the official CRA formula. See 5-year projections indexed to CPI and rounded to nearest $500.

Dying Without a Will Calculator

See Who Inherits Your Estate

Dying without a will in Canada? Calculate estate distribution by province. See who inherits your assets under intestacy laws based on family situation.

Frequently Asked Questions

About This Calculator

v1.0
Updated: October 2025

Choosing between a Tax-Free Savings Account (TFSA) and a Registered Retirement Savings Plan (RRSP) is one of the most important financial decisions for Canadians. Our free TFSA vs RRSP calculator helps you compare these two powerful savings vehicles based on your current marginal tax rate, retirement tax rate, and refund reinvestment strategy. The key difference between TFSA and RRSP comes down to when you pay taxes. RRSP contributions provide an immediate tax deduction, reducing your taxable income today. However, withdrawals in retirement are taxed as regular income. TFSAs use after-tax dollars, but all growth and withdrawals are completely tax-free forever. For most Canadians, the optimal choice depends on your Marginal Effective Tax Rate (METR) - which includes benefit clawbacks like CCB and GIS. If your current METR is significantly higher than your expected retirement rate, RRSPs usually win. If rates are similar, or you expect higher income in retirement, TFSAs provide better long-term value. Our calculator models both scenarios over 20-40 years, showing you the exact after-tax value of each strategy. We account for RRSP refund reinvestment (critical for fair comparison!), compound growth, and inflation. The results show you which account type maximizes your retirement savings based on your specific situation.

Key Features

  • Compare TFSA vs RRSP with your actual tax rates
  • Model refund reinvestment strategies (increases RRSP value by 30-50%)
  • See 20-40 year projections with compound growth
  • Includes METR calculations (not just marginal tax rate)
  • Interactive charts showing growth over time
  • Step-by-step math explanations
  • Mobile-friendly interface with real-time updates

When to Use This Calculator

  • Young professionals deciding where to invest first $10,000
  • High-income earners comparing tax arbitrage opportunities
  • Pre-retirees planning optimal withdrawal strategies
  • Families with Canada Child Benefit considering METR impact
  • Anyone confused by conflicting TFSA vs RRSP advice online
Free to Use
Canadian-Specific
No Registration Required
Real-Time Calculations