Is an RRSP or a TFSA better?

It depends on one comparison: your marginal tax rate today versus your marginal rate when you withdraw. If today's rate is higher, the RRSP wins because you deduct at a high rate and pay tax at a low one. If it is lower, the TFSA wins. If the two are equal, both accounts leave you with exactly the same money, so choose the TFSA for flexibility.

What is an FHSA and who can open one?

A First Home Savings Account combines the RRSP's tax deduction on contributions with the TFSA's tax-free withdrawal, as long as the money buys a qualifying first home. You can open one if you are a Canadian resident aged 18 to 71 and have not lived in a home you or your spouse owned in this year or the previous four. You can contribute $8,000 a year up to $40,000 in total.

Can I use both an FHSA and the RRSP Home Buyers' Plan?

Yes. Since 2023 you can withdraw from an FHSA and also borrow from your RRSP under the Home Buyers' Plan for the same home. The HBP withdrawal limit is $60,000 per person and must be repaid over 15 years; FHSA withdrawals are never repaid.

What happens to my FHSA if I don't buy a home?

You can transfer the whole balance to your RRSP or RRIF tax-free, and the transfer does not use up any RRSP room. So the downside of an FHSA is small: at worst it becomes extra RRSP room. The account must be closed by the end of the 15th year after opening or the year you turn 71, whichever is first.

Should I reinvest my RRSP refund?

The comparison only works if you do. An RRSP contribution of $6,000 at a 30% marginal rate really costs you $4,200 after the refund. To compare fairly with $6,000 in a TFSA, you either contribute $8,571 to the RRSP (so it costs $6,000 after the refund) or you put the refund back in. If you spend the refund, the RRSP line labelled 'refund spent' shows how much worse you do.

What tax rate will I pay in retirement?

Nobody knows for certain, which is why the tool lets you set the income you expect in the year you withdraw. Most people withdraw at a lower rate than they earned at, but not always: a large RRSP, a good pension and CPP and OAS together can push retirement income into a higher bracket, and RRIF withdrawals can trigger the OAS clawback. TFSA withdrawals are never counted as income.

Does the expected investment return change the answer?

No. The return changes the dollar amounts but not the ranking, because the same growth applies inside every account. Only the two tax rates decide which account wins per dollar. The exception is the FHSA's lifetime cap, which limits how much of your saving can benefit from it.

What if my employer matches RRSP contributions?

Take the match first, always. An immediate 50% or 100% match dwarfs any difference between accounts. Then use this tool for whatever you save beyond the match.

What is the one number that decides RRSP vs TFSA?

Your tax rate when you withdraw compared with your tax rate today. If the retirement rate is lower, the RRSP wins by exactly that difference; if higher, the TFSA wins; if the same, they tie. The calculator shows the retirement rate at which they tie so you can judge which side of it you are likely to fall on.

Does spending the RRSP refund change the answer?

Dramatically. The RRSP only beats the TFSA if the refund is reinvested, because the refund is what makes an RRSP contribution cost less after tax. If you spend it, the TFSA usually wins even when your retirement rate is lower. Toggle the refund switch to see both.

Should the FHSA come before the RRSP and TFSA?

If you might buy a first home within 15 years, yes: the FHSA is deductible like an RRSP and tax-free on the way out like a TFSA, up to $8,000 a year and $40,000 lifetime. If you never buy, it rolls into your RRSP without using room, so there is little downside.

What order should I fill the accounts in?

The fill-order table applies this year's savings in sequence: employer match first, then FHSA if you are saving for a home, then whichever of RRSP or TFSA your tax rates favour, then the other, then a non-registered account once the room is used up.

RRSP vs TFSA vs FHSA: Which Should You Use?

Tells you which account your next dollar should go into and in what order, based on your tax rate today versus the rate you expect in retirement, whether the refund gets reinvested, and how much room you have. One number decides it: the retirement tax rate at which RRSP and TFSA tie.

Put your next dollar inFHSA$1 of after-tax saving becomes $1.15 in an RRSP for every $1.00 in a TFSA, and $1.42 in an FHSA for a first home. RRSP wins by 15.1% because your rate today is 29.6% and your retirement rate 19.1%.

What you keep after 25 years, after tax

This year's $6,000, in order	Put in	Room
FHSA	$8,000	$8,000
RRSP	$529	$16,200
Tax refund this creates next spring (put it back in)	$2,529

The one number that decides it: the RRSP beats the TFSA as long as your tax rate when you withdraw is below 29.6% (your rate today). Above it, the TFSA wins; at exactly that rate they tie.

After 25 years	Cost after tax	You keep
FHSA, tax-free for a home in 5 years ($40,000 in)	$28,140	$46,415
FHSA if you never buy (rolls into your RRSP)		$99,693
RRSP, refund reinvested ($213,220 in)	$150,000	$345,986
TFSA	$150,000	$300,681
RRSP if the refund were spent instead	$150,000	$243,401

An FHSA must be closed within 15 years of opening, so the FHSA line stops contributing and just grows after that.

Show the math

Marginal rate today on $90,000 in Ontario: 29.6%; on $50,000 of retirement income: 19.1% (2026 brackets, or your overrides). TFSA: $6,000.00 a year at 5% = $300,680.72, tax-free out. RRSP: the same after-tax cost buys $8,528.78 pre-tax ($6,000.00 ÷ (1 − 29.6%)); grows to $427,406.62, taxed at 19.1% on the way out. Per dollar: RRSP = TFSA × (1 − retirement rate) ÷ (1 − rate now). FHSA: deductible in and tax-free out for a qualifying first home, $8,000 a year to $40,000; if no home is bought within 15 years it transfers to the RRSP tax-free without using room, which the "never buy" line shows. The fill order caps each account by its room (defaults: this year's limits) and stretches deductible contributions by the reinvested refund. Not modelled: OAS/GIS clawbacks on RRIF income (they favour the TFSA at lower retirement incomes), employer matches (take them first), and HBP withdrawals.

How to open the accounts

All three are opened at a bank, credit union or brokerage. Open the FHSA as soon as you can even with $0 in it: room only starts accruing once the account exists.

FHSA: you must be 18 to 71, a resident, and not have lived in a home you (or your spouse) owned in this or the previous four years. Open it, then contribute up to $8,000 a year, $40,000 lifetime.Opening an FHSA ↗
RRSP: your room is on last year’s Notice of Assessment or in CRA My Account. Contributions in the first 60 days of the year can be deducted on the previous year’s return.CRA My Account ↗
TFSA: open one and check the room the tool calculated against CRA My Account.Opening a TFSA ↗
Buying a first home: you can use both the FHSA and the RRSP Home Buyers’ Plan ($60,000 withdrawal, repaid over 15 years) on the same purchase.Home Buyers’ Plan ↗

Common questions

Frequently asked questions

Is an RRSP or a TFSA better?: It depends on one comparison: your marginal tax rate today versus your marginal rate when you withdraw. If today's rate is higher, the RRSP wins because you deduct at a high rate and pay tax at a low one. If it is lower, the TFSA wins. If the two are equal, both accounts leave you with exactly the same money, so choose the TFSA for flexibility.
What is an FHSA and who can open one?: A First Home Savings Account combines the RRSP's tax deduction on contributions with the TFSA's tax-free withdrawal, as long as the money buys a qualifying first home. You can open one if you are a Canadian resident aged 18 to 71 and have not lived in a home you or your spouse owned in this year or the previous four. You can contribute $8,000 a year up to $40,000 in total.
Can I use both an FHSA and the RRSP Home Buyers' Plan?: Yes. Since 2023 you can withdraw from an FHSA and also borrow from your RRSP under the Home Buyers' Plan for the same home. The HBP withdrawal limit is $60,000 per person and must be repaid over 15 years; FHSA withdrawals are never repaid.
What happens to my FHSA if I don't buy a home?: You can transfer the whole balance to your RRSP or RRIF tax-free, and the transfer does not use up any RRSP room. So the downside of an FHSA is small: at worst it becomes extra RRSP room. The account must be closed by the end of the 15th year after opening or the year you turn 71, whichever is first.
Should I reinvest my RRSP refund?: The comparison only works if you do. An RRSP contribution of $6,000 at a 30% marginal rate really costs you $4,200 after the refund. To compare fairly with $6,000 in a TFSA, you either contribute $8,571 to the RRSP (so it costs $6,000 after the refund) or you put the refund back in. If you spend the refund, the RRSP line labelled 'refund spent' shows how much worse you do.
What tax rate will I pay in retirement?: Nobody knows for certain, which is why the tool lets you set the income you expect in the year you withdraw. Most people withdraw at a lower rate than they earned at, but not always: a large RRSP, a good pension and CPP and OAS together can push retirement income into a higher bracket, and RRIF withdrawals can trigger the OAS clawback. TFSA withdrawals are never counted as income.
Does the expected investment return change the answer?: No. The return changes the dollar amounts but not the ranking, because the same growth applies inside every account. Only the two tax rates decide which account wins per dollar. The exception is the FHSA's lifetime cap, which limits how much of your saving can benefit from it.
What if my employer matches RRSP contributions?: Take the match first, always. An immediate 50% or 100% match dwarfs any difference between accounts. Then use this tool for whatever you save beyond the match.
What is the one number that decides RRSP vs TFSA?: Your tax rate when you withdraw compared with your tax rate today. If the retirement rate is lower, the RRSP wins by exactly that difference; if higher, the TFSA wins; if the same, they tie. The calculator shows the retirement rate at which they tie so you can judge which side of it you are likely to fall on.
Does spending the RRSP refund change the answer?: Dramatically. The RRSP only beats the TFSA if the refund is reinvested, because the refund is what makes an RRSP contribution cost less after tax. If you spend it, the TFSA usually wins even when your retirement rate is lower. Toggle the refund switch to see both.
Should the FHSA come before the RRSP and TFSA?: If you might buy a first home within 15 years, yes: the FHSA is deductible like an RRSP and tax-free on the way out like a TFSA, up to $8,000 a year and $40,000 lifetime. If you never buy, it rolls into your RRSP without using room, so there is little downside.
What order should I fill the accounts in?: The fill-order table applies this year's savings in sequence: employer match first, then FHSA if you are saving for a home, then whichever of RRSP or TFSA your tax rates favour, then the other, then a non-registered account once the room is used up.

Full guide: how it works, a worked example, every rule and every source Read the guide →

What changed in 2025 and 2026

Sources

Every figure on this page comes from one of these primary sources. Data last verified September 7, 2026.

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Data verified for tax year 2026: September 7, 2026 Updated September 7, 2026 By Nishant Malik, founder of GlassLayer