An RRSP contribution is deducted from your taxable income, so it saves tax at your marginal rate, the rate on your top dollars of income. The higher your income, the bigger the refund for the same contribution.
Tax saved by a $5,000 RRSP contribution (Ontario, 2026)
| Salary | Tax saved | Real cost of the $5,000 |
|---|---|---|
| $60,000 | $1,217 | $3,783 |
| $90,000 | $1,483 | $3,518 |
| $120,000 | $1,995 | $3,005 |
| $160,000 | $2,248 | $2,752 |
If you contribute through payroll, the saving shows up in every paycheque. If you contribute on your own, it comes back as a refund when you file.
RRSP or TFSA?
- RRSP is best when your tax rate today is higher than it will be in retirement. You get the deduction now and pay tax on withdrawals later.
- TFSA is best when your income is low now, or you may need the money before retirement. There is no deduction, but withdrawals are tax-free.
Your contribution room is shown on your latest Notice of Assessment from the CRA. It is generally 18% of last year’s earned income up to the annual limit, plus any unused room.
Frequently asked questions
How do I calculate my RRSP refund?
Multiply your contribution by your marginal tax rate. The calculator above does it exactly: compare take-home with and without the RRSP percentage.
Does an RRSP reduce CPP or EI?
No. CPP and EI are based on your gross employment earnings.
When is the RRSP deadline?
Contributions made in the first 60 days of a year can be deducted on the previous year’s return.
