The RRSP-or-TFSA question gets asked as if there were one answer. There is a rule, and it is short: an RRSP wins when your tax rate today is higher than it will be when you withdraw; a TFSA wins when it is lower. Everything else is working out which side of that line you are on.
How much room you have
RRSP. New room each year is 18% of the previous year's earned income, capped at the dollar limit, which is $33,810 for 2026. Someone who earned $80,000 in 2025 gets $14,400 of new room. Unused room carries forward indefinitely, so the figure on your notice of assessment is often much larger than one year's worth. The RRSP calculator adds carry-forward to the new-room figure and then estimates the refund on whatever you plan to put in.
TFSA. Room is a flat annual amount, $7,000 for 2026, and it accrues from the year you turned 18 whether or not you opened an account. Someone who was 18 or older in 2009, when the TFSA launched, has $109,000 of cumulative room; someone who turned 18 in 2018 has $57,000. The TFSA calculator totals it from your eligibility year and subtracts what you have already contributed.
What the RRSP refund is actually worth
An RRSP contribution is deducted from taxable income, so the refund is your marginal rate times the contribution. At $80,000 in Ontario, a $10,000 contribution saves $2,965 in combined federal and provincial tax, a 29.65% rate, computed from the same brackets as our Canada income tax calculator. Take-home for the year drops from $59,684 to $53,138, but $2,965 of the $10,000 comes back at filing time, so the real cost of the contribution is $7,035.
That refund is not free money. It is tax deferred, not tax avoided. When the money comes out in retirement it is taxed as income at whatever rate applies then. If that rate is 20%, you kept 9.65 points. If it is 30%, you gained nothing on the tax and only benefited from decades of tax-free growth in between, which is still worth having.
When the TFSA should go first
- Your income is under roughly $50,000. Your marginal rate is low, the refund is small, and you are likely to be in the same or a higher bracket later. TFSA room is more valuable to you now; RRSP room does not expire, so you can use it in higher-earning years.
- You expect to draw income-tested benefits in retirement. RRSP withdrawals count as income and can reduce Guaranteed Income Supplement and, at higher levels, Old Age Security. TFSA withdrawals do not count.
- You may need the money before retirement. TFSA withdrawals are free and the room comes back the following January. RRSP withdrawals are taxed and the room is gone for good, except under the Home Buyers' Plan and Lifelong Learning Plan.
When the RRSP should go first
- Your marginal rate is 30% or more and you expect to retire on less. This is the classic case: deduct at 30% or 40%, withdraw at 20%. At $80,000 in Ontario the 29.65% refund rate sits right at that threshold; at $100,000 or above it is clearly there.
- Your employer matches. A match is an instant return that no shelter comparison beats. Contribute enough to capture all of it before putting a dollar anywhere else.
- You need the discipline. The tax on withdrawal is a genuine deterrent to raiding the account, which for some people is the point.
The version most people should actually run
Capture any employer match. Then, if your marginal rate is under about 30%, fill the TFSA before touching remaining RRSP room; if it is over, contribute to the RRSP and put the refund into the TFSA rather than spending it. That last step is where most of the RRSP's advantage comes from and where most of it is lost: a $2,965 refund invested in a TFSA compounds tax-free for decades; a $2,965 refund spent on a spring holiday resets the comparison to a straight deferral.
Both calculators use the 2026 limits and brackets. Run your own income through them rather than reading off the $80,000 example, because the answer moves quickly around the bracket edges.