Key takeaways
- Your 2026 RRSP room grows by 18% of last year’s earned income, up to $33,810
- Your tax saving is roughly your contribution × your marginal tax rate
- Contributions made in the first 60 days of 2027 can count for 2026
- Newcomers usually have no RRSP room in their first year, because room comes from the previous year’s Canadian earned income
- You can over-contribute by up to $2,000 without penalty; beyond that, 1% a month
How an RRSP saves you tax
A Registered Retirement Savings Plan (RRSP) contribution is a deduction: it comes off your income before tax is calculated. The tax you save is about equal to your contribution times your marginal tax rate. The calculator works out your 2026 income tax twice, with and without the deduction, so it also catches cases where the contribution moves you into a lower bracket.
The tax is deferred, not cancelled. When you withdraw from the RRSP (usually in retirement), the withdrawal is taxed as income.
Your RRSP deduction limit
CRA calculates your limit as your unused room from earlier years, plus the lesser of 18% of your earned income in the previous year or the annual maximum, minus any pension adjustment from a workplace pension plan.
| Year | RRSP dollar limit |
|---|---|
| 2024 | $31,560 |
| 2025 | $32,490 |
| 2026 | $33,810 |
| 2027 | $35,390 |
Your exact limit is on your notice of assessment and in your CRA My Account.
Worked example
Mei lives in B.C. and earns $80,000 in 2026. Her marginal rate is 28.2% (20.5% federal plus 7.7% B.C.). A $5,000 RRSP contribution lowers her tax from about $13,270 to $11,860: a saving of about $1,410. The real cost of her $5,000 contribution is about $3,590. She earned $78,000 in 2025, so her 2026 room grew by $14,040.
Newcomers: when do you get RRSP room?
RRSP room is based on your earned income in Canada in the previous year. If you arrived in 2026, you usually have no RRSP room until 2027, based on what you earned in Canada in 2026. You must file a 2026 tax return for CRA to calculate it. Our page on TFSA and RRSP room in your first year explains this step by step.
Your TFSA works differently: you get the full year’s TFSA limit in the year you become a resident, if you are 18 or older. Not sure which account to use? Try the RRSP vs TFSA calculator, and if you are saving for a first home, the FHSA calculator.
Tips to get more from your RRSP
- Timing: you do not have to deduct your contribution in the same year. If you expect a higher income next year, you can carry the deduction forward.
- Get the refund sooner: if you contribute every payday, ask CRA (Form T1213) to let your employer reduce tax at source.
- Spousal RRSP: contributing to your spouse’s plan can split income in retirement.
- Check your rate with the marginal tax rate calculator.
Can you take money out of an RRSP?
Yes, but the withdrawal is added to your income and the bank holds back tax (10% to 30%, depending on the amount; different rates apply in Quebec). You also lose that contribution room for good. Two programs let you withdraw without tax if you repay: the Home Buyers’ Plan for a first home and the Lifelong Learning Plan for full-time education.