RRSP Contributions & Tax Relief in Canada (2026)
Last updated: June 2026
A Registered Retirement Savings Plan (RRSP) is the main way Canadians reduce their income tax while saving for retirement. Contributions are deducted from your taxable income, giving you relief at your marginal rate. Here is how it works for 2026.
How RRSP contributions reduce tax
Money you put into an RRSP is deducted from your taxable income. If your marginal rate is 30%, a $1,000 contribution saves you about $300 in combined federal and provincial tax — so it effectively costs you $700. The investments then grow tax-deferred until withdrawal.
The contribution limit
You can contribute up to 18% of your previous year’s earned income, capped at an annual dollar limit (around $32,490 for 2026), plus any unused room carried forward from prior years. Your exact limit appears on your CRA Notice of Assessment.
RRSP vs TFSA
An RRSP gives you a tax deduction now and is taxed on withdrawal, making it ideal if you expect a lower tax rate in retirement. A TFSA gives no deduction but is tax-free on withdrawal. Higher earners often prioritise the RRSP for the immediate marginal-rate relief.
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