RRSP Contribution & Tax Refund Calculator

Your room accrues at 18% of your prior year's earned income, up to a CRA-published annual dollar maximum of $33,810 for 2026. That cap only applies once 18% of your earned income exceeds it, which requires roughly $187,833 or more of prior-year earned income; below that, your room is simply 18% of what you earned. Unused room from previous years carries forward indefinitely with no expiry, so if you've never maxed out, your actual available room is likely higher than 18% of last year's income alone. Check your exact figure on your CRA My Account or your latest Notice of Assessment.

It's deducted from your taxable income before federal and Ontario tax are calculated, dollar-for-dollar, the same mechanic as any above-the-line deduction. That means the tax you save is calculated at your marginal rate, the rate on the last dollars you earned, not your average or effective rate. A dollar contributed while you're in the 43.4% combined federal+Ontario bracket saves far more tax than a dollar contributed while you're in the roughly 20% bracket, which is why RRSP contributions are generally most valuable for higher earners or in high-income years.

Not automatically. If your employer doesn't adjust payroll withholding for RRSP contributions made through the year, the tax savings show up as a larger refund (or smaller balance owing) when you file your T1 return. Some employers offer payroll RRSP deduction programs that reduce withholding immediately, spreading the benefit across each paycheque instead of waiting for tax season. Either way, the total tax saved over the year is the same.

Over-contributions beyond a small $2,000 lifetime cushion are subject to a 1% per month penalty tax on the excess amount until it's withdrawn or absorbed by new contribution room. This calculator estimates room from the salary you enter using the 18% rule, but your real, CRA-confirmed room (which includes carry-forward and any Pension Adjustment reduction) should always be checked before contributing, especially if you're close to the limit.

It's one of the more common uses of a bonus in Ontario, since directing bonus income into an RRSP reduces the taxable amount the CRA bonus method calculates withholding against, lowering both the immediate tax hit and your total tax for the year, provided you have the contribution room. See our Ontario Bonus Tax Calculator to check what a bonus looks like with and without an RRSP contribution alongside it.

No. CPP, CPP2, and EI are calculated on your gross pensionable and insurable earnings before any RRSP deduction is applied, so contributing to an RRSP has no effect on those payroll deductions. It only reduces the income used to calculate federal and Ontario income tax.

It uses the 2026 CRA RRSP dollar limit ($33,810), the 18%-of-earned-income rule, and 2026 federal and Ontario tax rates to model the tax-reduction effect of a contribution. It does not model investment growth inside the RRSP, withdrawal tax (RRSPs are taxed when withdrawn, not when contributed), Pension Adjustment reductions to your room, or the Home Buyers' Plan and Lifelong Learning Plan withdrawal rules. Always confirm your exact contribution room with the CRA before contributing.