RRSP contributions are tax-deductible in the year they’re made, and investments grow tax-deferred until withdrawal — typically in retirement, often at a lower tax bracket.
The 2026 contribution limit is the lesser of 18% of 2025 earned income or $33,810, plus any unused room carried forward.
The deadline to contribute for the 2025 tax year is March 2, 2026.
- 2026 annual limit
- 18% or $33,810
- 2025 contribution deadline
- March 2, 2026
- Tax treatment
- Deductible now, taxed on withdrawal
- Converts to a RRIF at
- Age 71
The lesser of 18% of 2025 earned income, or the dollar cap
To deduct on your 2025 return
By December 31 of that year
What the deduction is really doing
An RRSP contribution reduces your taxable income for the year, so the value of the deduction depends on your marginal tax rate. A contribution made while earning $120,000 is worth considerably more in tax saved than the identical contribution made while earning $45,000.
This is why the timing of contributions matters as much as the amount. Room carries forward indefinitely, so contributing during a low-income year — parental leave, a return to school, a career change — is often worth deferring in favour of claiming the deduction in a higher-earning year later.
Tax-deferred, not tax-free
Investments grow without annual tax inside the account, but withdrawals are fully taxable as income. The strategy assumes you will draw the money in retirement at a lower marginal rate than the one you deducted at.
Withdrawing early is expensive: your financial institution withholds tax immediately, the full amount is added to your income for the year, and — unlike a TFSA — the contribution room is gone permanently.
- The Home Buyers’ Plan allows a withdrawal for a first home, repayable over 15 years
- The Lifelong Learning Plan allows a withdrawal for full-time training or education, repayable over 10 years
- A spousal RRSP can shift retirement income toward the lower-earning partner
Worth checking before you decide
- Check your RRSP Deduction Limit Statement on your Notice of Assessment for your exact room
- Employer pension contributions create a pension adjustment that reduces your available RRSP room
- You can contribute and choose to carry the deduction forward to a higher-income year
- US withholding tax on dividends is generally waived inside an RRSP under the Canada-US tax treaty, which is not the case in a TFSA
Common questions
What if I contribute more than my limit?
There is a $2,000 lifetime cushion before penalties apply. Beyond that, CRA charges 1% per month on the excess.
Do I have to claim the deduction the same year I contribute?
No. You can contribute now and carry the deduction forward indefinitely, which is often worth doing if you expect to be in a higher bracket soon.
What happens to my RRSP at 71?
By December 31 of the year you turn 71, it must be converted — most commonly to a RRIF, which requires a minimum withdrawal each year, or used to purchase an annuity.
Important
This page provides general information only and is not personalized financial, tax, or legal advice. Product features, availability, and eligibility vary by provider. Figures shown are for the 2026 tax/benefit year and are subject to change — book a conversation with Supriya to confirm what applies to your situation.
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