What the contribution buys you.
A contribution cuts this year’s tax at your marginal rate, then compounds untaxed. This estimates both.
Dollar limits from the Canada Revenue Agency; marginal rates from CRA publication T4127, Table 8.1, effective 1 July 2026.
| Contribution room this year | $0 |
| Contribution counted | $0 |
| Combined marginal rate | 0% |
| Tax refund generated | $0 |
| Current balance | $0 |
| Future contributions | $0 |
| Investment growth | $0 |
| Balance at retirement | $0 |
How contribution room works
Your room for a year is 18% of the previous year’s earned income, capped at the annual dollar limit, minus any pension adjustment from a workplace pension, plus every dollar of unused room carried forward since 1991. The exact figure is printed on your CRA notice of assessment — this estimates it, but the notice is the authority.
RRSP dollar limits by tax year
| Tax year | Dollar limit | Income to reach it |
|---|---|---|
| 2023 | $30,780 | $171,000 |
| 2024 | $31,560 | $175,333 |
| 2025 | $32,490 | $180,500 |
| 2026 | $33,810 | $187,833 |
Why the refund is bigger for higher earners
A contribution is a deduction, not a credit, so it comes off the top of your income and saves tax at your marginal rate. Someone in Ontario earning $60,000 gets back about 29.65 cents per dollar contributed; someone earning $260,000 gets back about 53.5 cents. If you expect a large raise, contributing now but deferring the deduction to a later, higher-income year is allowed and often worth more.
RRSP or TFSA?
- RRSP wins when your tax rate today is higher than it will be when you withdraw — typically mid-to-late career.
- TFSA wins when your rate today is low, or when withdrawals would claw back income-tested benefits such as OAS or the GIS. TFSA withdrawals are invisible to the CRA for benefit purposes.
- FHSA beats both for a first home: deductible going in like an RRSP, tax-free coming out like a TFSA.
Rules worth knowing
- Contributions in the first 60 days of a calendar year can be deducted against either that year or the previous one.
- Over-contributing beyond a $2,000 lifetime buffer attracts a penalty of 1% per month on the excess.
- You must convert your RRSP to a RRIF or annuity by 31 December of the year you turn 71.
- The Home Buyers’ Plan lets you withdraw up to $60,000 tax-free toward a first home, repayable over 15 years.
The refund is not a bonus
An RRSP is a tax deferral, not a tax exemption — you will pay income tax on every dollar you withdraw. Reinvesting the refund rather than spending it is what converts the deferral into a real return. Spend it and you have borrowed from your future self at your own marginal rate.