RRSP vs TFSA vs FHSA: how it works in 2026, with a worked example

Verified for tax year 2026: September 7, 2026Updated September 7, 2026By Nishant Malik

How this calculator works

All three accounts shelter investment growth from tax. The difference is when you pay tax on the money itself.

RRSP: contributions are deducted from taxable income now, and every dollar withdrawn later is taxed as income.
TFSA: contributions come from after-tax money, and withdrawals are tax-free.
FHSA: contributions are deducted like an RRSP, and withdrawals are tax-free like a TFSA, provided the money buys a qualifying first home.

The calculator takes the after-tax amount you can save each year and works out what each account turns it into. For the RRSP it grosses the contribution up by your marginal rate, because the refund lets the same after-tax cost buy a bigger contribution. Both marginal rates come from the same 2026 federal and provincial tax engine as the take-home pay calculator, so Ontario’s surtax, Quebec’s abatement and every province’s credits are reflected.

The result is a ranking per dollar, which is the honest way to compare accounts with different limits. The rule it demonstrates: RRSP value = TFSA value × (1 − retirement rate) ÷ (1 − current rate). When the two rates are equal the factor is 1 and the accounts tie. The FHSA multiplies by 1 ÷ (1 − current rate) with no tax on the way out, which is why it beats both whenever you qualify.

Worked example: $90,000 in Ontario, saving $6,000 a year for 25 years at 5%

Line	Amount
Marginal tax rate today (Ontario, $90,000 employment income)	29.6%
Marginal rate when withdrawing ($50,000 of retirement income)	19.1%
TFSA: $6,000 a year for 25 years	$300,680.72
RRSP contribution with the refund reinvested: $6,000 ÷ (1 − 29.6%)	$8,528.78 a year
RRSP value before tax	$427,406.62
RRSP after tax at 19.1%	$345,985.66
RRSP if the refund is spent instead	$243,401.04
FHSA: $8,000.00 a year for 5 years, then growing untouched	$123,153.62 from only $40,000 paid in

Per after-tax dollar saved, the FHSA returns 71.23, the RRSP 57.66 and the TFSA 50.11. So for a first-home buyer at this income the order is FHSA first, then RRSP, then TFSA.

Assumptions and limits

Contributions are made at the start of each year and returns are constant. Real returns vary; the ranking does not.
The retirement marginal rate is calculated on the income you enter as if it were pension-type income in the same province, with no CPP, EI or employment credits.
Withdrawals are assumed to happen in one tax year at one marginal rate. Spreading RRSP withdrawals over many low-income years makes the RRSP look better than shown; a lump sum in a high-income year makes it worse.
The tool does not model the OAS clawback, GIS, or provincial income-tested benefits, all of which count RRSP and RRIF withdrawals as income but ignore TFSA withdrawals. These matter most for lower-income retirees, where the TFSA often wins even when the tax rates alone say RRSP.
Contribution room is checked against the 2026 limits and flagged, not enforced, because unused room from earlier years is common.

Questions people ask

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.

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 ↗

Sources

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