What is the TFSA contribution limit for 2026?

The 2026 TFSA annual limit is $7,000. If you have been a Canadian resident and 18+ since 2009, your cumulative TFSA room as of January 1, 2026 is $102,000.

What is the RRSP contribution limit for 2026?

Your RRSP contribution limit is 18% of your prior year's earned income, up to a maximum of $32,490 in 2026, minus any pension adjustment. Your exact limit is shown on your CRA MyAccount or prior year's Notice of Assessment.

Can I hold the same investments in both TFSA and RRSP?

Yes — both TFSA and RRSP are registered accounts that can hold stocks, ETFs, GICs, bonds, mutual funds, and cash. The account type (TFSA vs RRSP) determines the tax treatment, not what you can hold inside it.

Do TFSA withdrawals affect OAS or GIS?

TFSA withdrawals do not count as income for any means-tested government benefit. This means TFSA withdrawals do not affect OAS clawback, GIS eligibility, CPP, or other income-tested benefits. RRSP/RRIF withdrawals do count as taxable income and can trigger OAS clawback.

·· Savings · Tax

TFSA vs RRSP in 2026: Which One First?

Q: Should I contribute to TFSA or RRSP first?

If your income is below ~$55,000, prioritize your TFSA first — the tax refund from RRSP is modest, and TFSA withdrawals are tax-free forever. If your income is above ~$100,000, prioritize RRSP — the large deduction now is worth more than the future flexibility. Between $55,000 and $100,000, use a hybrid: contribute to RRSP first, deposit the refund into your TFSA.

The right answer depends almost entirely on your income today and what you expect to earn in retirement.

Updated June 2026 · 7 min read · Source: CRA

The Core Difference in One Sentence

RRSP: You get a tax deduction today, but pay tax when you withdraw. TFSA: No deduction today, but withdrawals are completely tax-free forever.

📈 RRSP

✓Contributions are tax-deductible

✓Grows tax-sheltered

✓Withdrawals taxed as income

✓Room = 18% of earned income (max $32,490)

✓Converts to RRIF at 71

✓Can withdraw early for HBP/LLP

📊 TFSA

✓After-tax contributions (no deduction)

✓Grows completely tax-free

✓Withdrawals are 100% tax-free

✓$7,000/year room ($102,000 cumulative)

✓No mandatory conversion age

✓Room restored the following January

The Income-Based Decision Framework

The single most important factor is the difference between your tax rate now versus your expected tax rate in retirement.

Under $55,000

TFSA first

Low marginal rate — RRSP deduction saves little. TFSA keeps all future growth tax-free.

$55,000 – $100,000

Hybrid approach

Max RRSP first, deposit the refund into TFSA. Best of both worlds.

Over $100,000

RRSP first

High marginal rate — deduction saves 43%+ now. Expect lower income in retirement.

Situations Where TFSA Wins Clearly

You expect high income in retirement

If rental income, RRIF withdrawals, CPP, and OAS will push your retirement income above $90,000+, RRSP withdrawals get taxed at the same (or higher) rate as when you deducted them. TFSA avoids this entirely.

You need flexibility

TFSA withdrawals don't affect OAS, GIS, income-tested credits, or CERB-type programs. You can pull money out at any time without tax consequences.

You're a student or on a low-income year

Earning little this year? Contributions to TFSA now don't waste RRSP room. Defer the RRSP contribution to a higher-income year when the deduction is worth more.

You've already maxed your RRSP

Once you've used all available RRSP room, TFSA is your only registered option.

⚠️ The RRSP Withdrawal Trap Withdrawing from an RRSP before retirement costs you twice: you pay tax on the withdrawal, AND you permanently lose the contribution room. Only the RRSP Home Buyers' Plan (HBP) and Lifelong Learning Plan (LLP) allow temporary tax-free withdrawals with room replenishment.

📈 Calculate Your TFSA & RRSP Room

See your exact cumulative TFSA room ($102,000 as of 2026), project RRSP growth, and compare both accounts side by side.

Open Calculator →

Frequently Asked Questions

Should I contribute to TFSA or RRSP first?

Under $55K income: TFSA first. Over $100K: RRSP first. In between: hybrid — contribute to RRSP, deposit refund into TFSA.

What's the 2026 TFSA limit?

$7,000/year in 2026. Cumulative room since 2009 is $102,000 if you've never contributed and were 18+ in Canada for all years.

Do TFSA withdrawals affect OAS?

No — TFSA withdrawals are not income and don't trigger OAS clawback or affect GIS, income-tested credits, or other means-tested benefits.

Can I have both TFSA and RRSP?

Yes — most Canadians should use both. They complement each other and serve different purposes in a complete savings plan.

📖 Related Guides & Tools

🍁 When to Take CPP 🏡 FHSA Guide 📈 RRSP / TFSA Calculator 🎓 RESP Calculator