Both the RRSP and TFSA shelter your investments from tax, but they do it in opposite ways — and that difference should drive which one you prioritize.
The core difference
RRSP contributions are tax-deductible now, but withdrawals are taxed later as income. TFSA contributions use after-tax dollars, but withdrawals — including all growth — are completely tax-free, forever.
A simple rule of thumb
If your marginal tax rate today is higher than you expect it to be in retirement, the RRSP tends to win — you get the deduction while your rate is high, and withdraw later at a lower rate. If you're early in your career and expect your income (and tax rate) to rise significantly, the TFSA often makes more sense, since you're not giving up a large deduction now.
2026 contribution room
RRSP room is 18% of last year's earned income, capped at $33,810 for 2026. TFSA room is a flat $7,000 for 2026, the same for everyone regardless of income, with unused room carrying forward indefinitely.
In practice
Many Canadians use both — RRSP for the deduction during peak earning years, TFSA for flexible, tax-free growth alongside it. Neither choice is permanent; contribution room in both accounts persists year to year.
Check your room and estimated tax savings with the Canada RRSP & TFSA Calculator.