Canadians continue to debate the best way to save: Registered Retirement Savings Plans (RRSPs) or Tax-Free Savings Accounts (TFSAs). With recent contribution limit updates and evolving financial landscapes, understanding the benefits of each is more important than ever.
Both are powerful tools to grow your savings, but they serve different purposes. Which one is best for you—that depends on your financial goals.
TFSA Benefits (2025)
Tax-Free Growth: Any investment gains within a TFSA are never taxed.
Flexible Withdrawals: Need cash? Withdraw funds anytime, tax-free.
No Impact on Government Benefits: Withdrawals don’t count as income for programs like OAS or GIS.
Growing Contribution Room: If you haven’t maxed out your TFSA, your room carries forward.
2025 Contribution Limit: $7,000 (check your total room on your CRA account).
RRSP Benefits (2025)
Tax—Deferred Growth: You don’t pay tax on investment gains until withdrawal.
Lower Taxable Income: Contributions reduce your taxable income, lowering your tax bill today.
Ideal for Retirement: Withdraw funds in retirement when you may be in a lower tax bracket.
First Home & Education Perks: Withdraw funds for a first home or education through government programs.
2025 Contribution Limit: 18% of your previous year’s income (up to a maximum set by the CRA)
TFSA or RRSP – Which One Should You Choose?
The best choice depends on your income, tax situation, and savings goals. A mix of both might be the best strategy!
If you’re unsure which is right for you, connect with our financial experts. We’ll help you make the most of your savings in 2025 and beyond.
