TFSA vs RRSP vs FHSA — Which Account Should You Use in 2026?
The shortest answer: if you're saving for a first home, max the FHSA ($8,000/yr) — it's the best deal in Canadian tax law right now. Earning under $55K? TFSA next. Earning $55K-$110K? Split TFSA and RRSP. Earning over $110K? RRSP first for the deduction. Below is the math by income and province.
You just got a $5,000 bonus. Do you drop it in your TFSA, RRSP, or that newer FHSA thing? The answer depends on three things: your income, your marginal tax rate, and whether you're saving for a home. We're going to skip the "it depends on your personal situation" hedge and actually tell you what makes sense at each income level — with numbers from CRA's 2026 published bracket data, not hand-waving.
2026 Contribution Limits at a Glance
| Feature | TFSA | RRSP | FHSA |
|---|---|---|---|
| 2026 annual limit | $7,000 | $32,490 (or 18% of income) | $8,000 |
| Lifetime max | $102,000 | No lifetime cap | $40,000 |
| Tax on contributions | No deduction | Tax-deductible | Tax-deductible |
| Tax on growth | Tax-free | Tax-deferred | Tax-free |
| Tax on withdrawal | Tax-free | Taxed as income | Tax-free (for home purchase) |
| Eligibility | 18+ with SIN | Earned income, under 71 | First-time buyer, 18-71 |
Use our TFSA calculator to check your exact contribution room, or compare all three with the FHSA vs RRSP vs TFSA comparison tool.
The Income-Based Decision Framework
Forget the generic "it depends" — here's what actually makes sense at each bracket. These recommendations assume you have room in all three accounts and no employer RRSP match (if you have a match, always take it first — that's free money).
Under $55,000 — TFSA First
At this income, your combined federal-provincial marginal rate is between 20% and 28% depending on province. An RRSP deduction saves you relatively little now, and when you withdraw in retirement, you might be in a similar or higher bracket. The TFSA is the clear winner: all growth is permanently tax-free, and you can pull money out for any reason without penalty.
Manitoba example: earning $52,000, your combined marginal rate is 27.75%. A $7,000 RRSP contribution saves you $1,943 in taxes this year. But that $7,000 in a TFSA grows completely tax-free — and when you withdraw it at 65, you pay $0. With the RRSP, you'll pay tax on every dollar you pull out.
$55,000–$110,000 — Split TFSA + RRSP (or FHSA if Buying)
This is the sweet spot where the RRSP starts making real sense. In Ontario at $85,000, your combined marginal rate is 29.65%. A $10,000 RRSP contribution nets you a $2,965 tax refund. If you expect to withdraw in retirement at a lower rate (say 20%), you pocket the difference.
Saving for a first home? The FHSA is the best deal in Canadian tax law right now. You get the RRSP-style deduction going in AND tax-free growth AND tax-free withdrawal for a qualifying home purchase. It's a double tax advantage that the RRSP Home Buyers' Plan can't match (HBP requires repayment; FHSA doesn't).
Our take: max the FHSA ($8,000), then split remaining savings between TFSA and RRSP. Use our RRSP calculator to see your exact tax savings by province.
Over $110,000 — RRSP First, Then FHSA, Then TFSA
Now the RRSP deduction is genuinely powerful. In BC at $120,000, your combined marginal rate is 40.70%. Every $1,000 in RRSP contributions saves you $407 in taxes this year. If you withdraw in retirement at a 25% rate, you keep the 15.7% spread — that's a guaranteed return before your investments even grow.
In Alberta at the same income, the math is different — the combined rate is only 30.50% because Alberta has a flat 10% provincial rate up to $148,269. The RRSP still wins, but the advantage is smaller. This is why we built province-level breakdowns into every calculator — national averages mislead.
Province-by-Province Marginal Rates at $85,000
| Province | Federal Rate | Provincial Rate | Combined | RRSP Savings on $10K |
|---|---|---|---|---|
| Ontario | 20.50% | 9.15% | 29.65% | $2,965 |
| British Columbia | 20.50% | 7.70% | 28.20% | $2,820 |
| Alberta | 20.50% | 10.00% | 30.50% | $3,050 |
| Manitoba | 20.50% | 12.75% | 33.25% | $3,325 |
| Quebec | 20.50% | 14.00% | 34.50% | $3,450 |
Rates shown for the bracket that $85,000 falls into. Your effective rate will be lower. Check your exact numbers with the marginal tax rate calculator.
The FHSA Edge — Why It's the Best Account Nobody's Using
The First Home Savings Account launched in April 2023 and most Canadians still don't know it exists. Here's why it's objectively the best registered account for first-time buyers:
- Tax deduction on contributions (like RRSP)
- Tax-free growth (like TFSA)
- Tax-free withdrawal for a qualifying home (unlike either)
- No repayment required (unlike the RRSP Home Buyers' Plan)
- Unused room carries forward (up to $8,000 per year)
For someone earning $75,000 in Ontario who plans to buy in 3-4 years, maxing the FHSA at $8,000/year saves roughly $2,372 in taxes annually AND gives you a tax-free down payment fund. There's no comparable deal anywhere in the tax code.
If you're not sure whether you qualify, our FHSA comparison tool walks through the eligibility requirements and shows the tax savings side by side.
What We'd Do
If we were starting from scratch at 28 years old, earning $70,000 in Manitoba, planning to buy a home in 3-5 years, here's the exact order:
- FHSA: $8,000/year — Double tax advantage for the home purchase. No-brainer.
- TFSA: $7,000/year — Flexible, tax-free, use for the emergency fund and medium-term goals.
- RRSP: whatever's left — At $70K in Manitoba (33.25% marginal rate), the deduction is solid but we'd prioritize the first two accounts.
At $110K+, we'd flip the RRSP and TFSA — the RRSP deduction becomes too valuable to leave on the table. At any income, if your employer matches RRSP contributions, do that first. A 50% match is a guaranteed 50% return — no investment strategy beats that.
The bottom line: there's no single "best" account, but there is a best order for your specific income and province. Plug your numbers into our TFSA calculator and RRSP calculator to see the actual dollar difference. The CRA's official explainers on the TFSA, RRSP, and FHSA are also worth bookmarking — that's where we cross-check our numbers.
Editorial disclaimer
This article is published by LoonieLabs for general information only. It is not financial, tax, legal, accounting, or immigration advice and must not be relied on as such. Rules, dollar figures, interest rates, and program eligibility change — always verify with the Canada Revenue Agency, IRCC, or a qualified professional before acting. Spotted an error? See our corrections policy. Last reviewed: April 14, 2026.
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Written and reviewed by Shrey Patel — Founder & Editor-in-Chief
Winnipeg, MB · Fact-checked by our Tax & Benefits reviewer · Last reviewed April 14, 2026 · LinkedIn
Founder of LoonieLabs · based in Winnipeg, MB · writes and reviews every page on the site I oversee every figure on this page personally — verified against primary sources (CRA, IRCC, Statistics Canada, the Bank of Canada, or the originating provincial ministry). LoonieLabs has no affiliate relationships with any bank, credit card, or immigration consultant featured on this site. Spotted a mistake? Tell us.
Published by the LoonieLabs Editorial Team.