Take an Ontario resident with $90,000 of taxable income who puts $8,000 into an RRSP. In 2026 that saves about $2,372 in tax, so the real cost of the contribution is $5,628. Left to grow for 25 years at 5%, the $8,000 becomes about $27,850. Enter your own numbers above.
How an RRSP saves tax
Contributions come off your income, so you’re taxed on less. The saving equals the tax on that slice, which is your marginal rate. At $90,000 the combined federal and Ontario rate is 29.65%, so each dollar contributed saves about 30 cents. The tax comes later, when you withdraw.
Your contribution room
Every year you earn room equal to 18% of last year’s earned income, up to a limit, and the 2026 limit is $33,810. Unused room carries forward. That’s why your notice of assessment can show a bigger number than one year would give. The calculator shows this year’s room from your income as a guide.
Going over the limit
An overage of $2,000 carries no penalty. Beyond that, the CRA charges 1% a month on the extra amount. Look up your exact deduction limit in My Account before making a large contribution. A warning appears above when your input passes the room shown.
Who gains most
Higher earners save more per dollar because their marginal rate is higher. Someone at $60,000 saves about 29.65% too, while a person at $40,000 saves closer to 20%. Expect a lower rate in retirement? Then the gap between saving now and paying later is your gain.
Growth inside the account
Interest, dividends and gains aren’t taxed while they stay inside an RRSP. The calculator applies your expected return over the years you enter, using the contribution alone. Regular yearly deposits would add a good deal more.
RRSP or TFSA?
An RRSP gives a deduction now and taxes withdrawals. A TFSA gives no deduction but lets you withdraw tax-free. If your rate today is higher than your expected rate later, the RRSP tends to win, and if it’s lower the TFSA tends to. Plenty of people use both.
Timing a contribution
Money contributed in the first 60 days after year end can still be claimed for the year before. After an unusually high income year, holding the deduction for a later high-income year can be worth more. Keep the receipt and note the year you claim it, in case the CRA asks.
Spousal RRSPs
With a spousal RRSP, the higher earner contributes and deducts, but the account belongs to a spouse who may pay less tax on withdrawal. Attribution rules apply if money leaves within three years of a contribution. Couples with very different incomes can use it to plan retirement.
What to do with the refund
The tax saving often arrives as a refund. Some people send it back into the RRSP or a TFSA, which builds savings faster, and others pay down debt. Decide before it lands. A refund with a purpose is less likely to be spent by accident.
Where to go next
Compare with the TFSA calculator. Saving for a first home? The FHSA calculator adds a deduction and a tax-free withdrawal. To check your rate, use the marginal tax rate calculator.
Frequently asked questions
How much tax does an RRSP contribution save?
It saves tax at your marginal rate. In Ontario at $90,000, that is about 29.65%.
What is the RRSP limit for 2026?
18% of last year's earned income, up to $33,810.
What happens if I over-contribute?
You can go over by $2,000. Above that, a 1% monthly tax applies to the excess.
Is RRSP growth taxed?
Not while it stays in the account. Withdrawals are taxed as income.
Is an RRSP better than a TFSA?
It depends on your tax rate now compared with later. Many people use both.
Where do I find my room?
On your notice of assessment or in CRA My Account.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.