What an RRSP contribution really costs you in 2026

RRSP contributions come off your taxable income, so each dollar costs you only one dollar minus your marginal tax rate. At $90,000 in Ontario, a 10% contribution of $9,000 saves $2,669 of 2026 tax, a true cost of $6,332. The 2026 contribution limit is 18% of last year's earned income, up to $33,810.

Worked examples (Ontario, 10% contribution)

SalaryRRSP (10%)Tax savedTrue cost
$60,000 $6,000 $1,430 $4,570
$90,000 $9,000 $2,669 $6,332
$120,000 $12,000 $4,345 $7,655

The saving grows with income because the deduction works at your highest bracket. All figures come from the same tested engine as the Canada salary calculator, where you can set any salary, province and percentage.

What an RRSP does not change

CPP and EI premiums are charged on gross employment income before RRSP deductions, so contributing does not shrink them, and it does not reduce the pensionable earnings your CPP retirement benefit is built on. The deduction reduces federal and provincial income tax only.

Payroll deduction or lump sum?

Contributing through your employer's group RRSP reduces tax withholding immediately, so the saving lands in every paycheque. A personal lump-sum contribution gives the same yearly result, but the saving arrives as a refund after filing. The deadline for a contribution to count against a tax year runs 60 days into the following year, which is why February is RRSP season.

Contribution room is the real limit

Your personal limit is 18% of the previous year's earned income up to the $33,810 cap for 2026, plus every unused dollar carried forward from earlier years, minus pension adjustments from a workplace plan. The authoritative number sits on your CRA notice of assessment. Over-contributions beyond a $2,000 cushion are penalized at 1% per month.

Frequently asked questions

Does an RRSP contribution lower CPP and EI?

No. Both are calculated on gross pay before the RRSP, which is also why your CPP pension entitlement is unaffected.

RRSP or TFSA first?

An RRSP deducts at today's marginal rate and taxes withdrawals later; a TFSA gives no deduction but tax-free growth and withdrawals. Higher earners usually benefit from the RRSP first. This is general information, not financial advice.

Why was my refund smaller than the table suggests?

If you contributed through payroll, the saving was already paid out in reduced withholding during the year, so there is less left to refund at filing.

2026 figures per CRA (RRSP dollar limit $33,810), computed with our verified Canada engine. Last updated 2026-11-04.