RRSP vs TFSA vs FHSA: Where Should Your Money Go First?

Most people don’t compare an RRSP, a TFSA, and an FHSA. They pick one and stop. In 2023, 5.0 million Canadian tax filers put money in a TFSA and nothing in an RRSP, while another 3.8 million did the reverse, according to Statistics Canada (opens in a new tab). Picking one isn’t a mistake, but the useful answer to RRSP vs TFSA vs FHSA is an order rather than a winner: employer match, high-interest debt, a small cash buffer, then an FHSA if a first home is even possible, then a TFSA, then an RRSP. Below are the 2026 numbers, the math on a single $8,000 contribution followed all the way to withdrawal, and the one thing that changes if you live in Quebec.

Which account should you fill first?

The order tracks the size of the guaranteed return at each step, which is why the first two rungs aren’t account choices at all. Work down this list and stop where you run out of money to save.

1. Any employer RRSP match. If your employer adds 50 cents for every dollar you put in, that’s a 50% return before the money is invested in anything. Nothing further down this list comes close.
2. High-interest debt. A credit card balance at 20% costs you more every month than any savings account pays. Clear that first.
3. A small cash buffer. One month of essentials, somewhere you can reach it. Without it, the first surprise expense undoes everything above. Our guide to building an emergency fund in Canada covers how much and where to keep it.
4. The FHSA, if a first home is even possible. It’s the only one of the three you deduct on the way in and withdraw tax-free on the way out. If you never buy, it rolls into your RRSP.
5. The TFSA. No deduction, but no tax on withdrawal, the room comes back, and taking money out doesn’t affect income-tested benefits.
6. The RRSP. Best once your income is high enough that a deduction today is worth more than the flexibility you give up.

If your income is low, skip the RRSP for now

A deduction is only worth your marginal tax rate, so at $35,000 of income it saves far less than it will at $95,000. Worse, RRSP and RRIF withdrawals count as income later, which can reduce income-tested benefits, while TFSA withdrawals never do. Our guide to saving on a low income in Canada goes through which benefits are affected. Put the money in a TFSA, and keep the RRSP room. It doesn’t expire.

RRSP vs TFSA vs FHSA: the 2026 numbers

Every figure below is the current one for the 2026 tax year, from the CRA. Contribution room is the part people get wrong most often, because two of the three carry unused room forward and the third doesn’t work the way most people assume.

Sources: the CRA’s registered plan limits (opens in a new tab) and its important dates for RRSPs and FHSAs (opens in a new tab). One number worth knowing early: the CRA has already published the 2027 RRSP dollar limit at $35,390, up from $33,810 this year.

What does one $8,000 contribution actually do?

Take an Ontario worker with $70,000 of taxable income in 2026 and $8,000 to put away. (That’s more than one year of TFSA room, so assume a little carried forward, which most people have.) Their marginal rate is 29.65%: 20.5% federal plus 9.15% provincial, using the CRA’s current brackets (opens in a new tab). Ontario’s surtax applies at higher incomes, not at this one. Say the money grows at 4% for five years, reaching $9,733.

The TFSA: nothing now, nothing later

No deduction, so there’s no refund in the spring. Five years later they withdraw $9,733 and keep all of it. No tax form, no withholding, and the full $9,733 comes back as contribution room the following January 1, not just the $8,000 they put in. Tax-free growth permanently adds to your TFSA room, and the other two accounts have no equivalent.

The FHSA: a deduction now and no tax later

The same $8,000 produces a $2,372 refund, and if the withdrawal goes toward a qualifying first home, it comes out tax-free. That’s the deduction of an RRSP and the tax treatment of a TFSA in one account, which is the whole reason it sits above both in the order.

The RRSP: a bigger cheque now, a tax bill later

Same $2,372 refund, but the $9,733 is taxable when it comes out. At the same 29.65% rate the tax is $2,886. What most comparisons skip is that the refund is part of the contribution: invest it, and the RRSP lands exactly where the TFSA does.

The RRSP column assumes the refund is invested too, at the same rate, and that the withdrawal happens at the same 29.65%. Both assumptions matter. Retire into Ontario’s lowest bracket instead, at 19.05%, and the RRSP total rises to $10,765. Spend the refund on something else, which is what usually happens, and it drops to $6,847. So the RRSP ties a TFSA when your tax rate and your discipline both hold steady, beats it when your rate falls, and loses when your rate climbs. You can run your own numbers with our compound interest calculator.

Does the answer change in Quebec?

It does, and in Quebec’s favour. Quebec residents pay their provincial tax to Revenu Québec, and their federal tax is cut by the Quebec abatement, which the Department of Finance describes as a reduction of 16.5 percentage points of federal personal income tax (opens in a new tab) for every Quebec filer. So the federal half of a Quebec marginal rate is 83.5% of the posted rate, and the provincial half is higher than most provinces charge. Both effects push the same way: a deduction is worth more there.

At $70,000 of taxable income in 2026, a Quebecer’s combined marginal rate is 36.12%: 20.5% federal after the abatement plus the 19% provincial rate from Revenu Québec (opens in a new tab). Here’s what the same $8,000 deduction is worth across the four largest provinces, at the same income, whether it goes into an RRSP or an FHSA.

Same contribution, same income, $634 between the top and bottom rows. A Quebecer has a stronger reason than most Canadians to claim the deduction rather than default to a TFSA, and for one buying a first home, the FHSA gets both halves of the benefit at that higher rate. (Nova Scotia and Prince Edward Island charge a bit more than Quebec at this income, so Quebec isn’t the very top of the national list. It’s well above the four provinces where most Canadians live.)

When is the RRSP the right first stop?

Three situations move the RRSP to the front of the queue, and one thing to watch before you commit money to it.

When your employer matches your contributions

A group RRSP match is about the highest guaranteed return a Canadian saver can get, and it usually only exists inside the RRSP. Contribute at least enough to collect the full match, even while carrying debt, even if a TFSA would otherwise suit you better.

When your income is high now and will be lower later

The deduction is worth your current marginal rate; the withdrawal costs you your future one. If you’re earning $150,000 today and expect to draw a modest retirement income, the gap between those two rates is the RRSP’s entire advantage, and it’s real money. Canadians already sort themselves roughly this way: in 2023, 54.0% of RRSP contributors had a total income of $80,000 or more, while half of TFSA contributors earned under $60,000.

When you can bank the contribution and save the deduction

An underused move: you don’t have to claim an RRSP deduction in the year you make the contribution. Put the money in during a lean year, carry the deduction forward, and claim it in a year when your income and your marginal rate are higher. The FHSA works the same way (opens in a new tab), with contributions deductible in the year you make them or a future one. A student contributing before a first full-time salary is the classic case.

One caution before you fill an RRSP: it’s not the account for money you might need. Your bank withholds tax the moment you withdraw, at 10% up to $5,000, 20% to $15,000, and 30% above that (opens in a new tab) (5%, 10% and 15% in Quebec, plus Quebec’s own withholding), the withdrawal is added to your income for the year, and the contribution room is gone permanently. The TFSA is the flexible one.

Three deadlines that cost people money

The calendars are different for all three accounts, and the differences are where the avoidable mistakes happen.

• The FHSA has no 60-day grace period. The CRA is explicit: the contribution period for an FHSA runs from January 1 to December 31 of the same year (opens in a new tab). Miss December 31, and that year’s $8,000 can’t be claimed against that year.
• The RRSP does have one. Contributions in the first 60 days of the following year still count against the previous tax year, so the 2026 deadline is March 1, 2027. This is the one everyone knows, which is exactly why people assume the FHSA matches it.
• A TFSA withdrawal can’t be replaced until January. Room comes back on January 1 of the next calendar year (opens in a new tab), not immediately. Re-contributing in the same year is the most common TFSA penalty there is, at 1% a month on the excess.

What if you can’t max any of them?

Then you’re in the majority, and the fill order still helps: it tells you where the next $50 goes. The median contribution among Canadians who put money in an RRSP and nothing else was $3,420 in 2023, not the annual maximum. On the FHSA side, 739,000 people had opened an account by the end of that year, and the average active holder had $3,899 in one (opens in a new tab), against a $40,000 lifetime limit.

Open the FHSA before you can fund it

This is the one delay with a real price on it. FHSA room doesn’t accumulate until you open an account, and the CRA’s own definition sets your carry-forward at $0 in the year you open your first FHSA. Wait three years to open one and you don’t get $24,000 of room, you get $8,000. Most institutions will open an empty FHSA for nothing, so if a first home is even a maybe, open it now and fund it later. After that first year, up to $8,000 of unused room carries forward, so a year at $25 a week isn’t a year wasted.

How Lodavo fits in

Choosing between an RRSP, a TFSA, and an FHSA is the easy half. The hard half is having something to put in one, and that’s where most plans fall apart, because a tax refund in April is a long way from a Tuesday in November.

Lodavo is a free app that rewards you for saving. Every $25 you set aside earns a ticket in a weekly draw with prizes up to $10,000, and at least $100 goes to a user every single week. It works with the Canadian bank you already use, so your contribution room and your interest rate carry on exactly as before. What changes is that a climbing balance is worth something this week, not only at tax time.

If you do one thing today

Take the match, clear the expensive debt, keep a month of costs in cash, then FHSA if a first home is on the table, then TFSA, then RRSP. Almost every “which account” question lands somewhere on that list. But there’s only one where waiting costs you room: the FHSA. Opening one costs nothing, and its room doesn’t start accumulating until the account exists.

Want saving to feel more like something you’re looking forward to? Download Lodavo free on the Apple App Store (opens in a new tab) or the Google Play Store (opens in a new tab), and get free tickets in this week’s cash draw for what you put away.

Terms and conditions apply. No purchase necessary (alternate method of entry available). Skill-testing question required. Open to legal residents of Canada who are the age of majority. Odds depend on the number of eligible entries received. Full rules and odds at our contest rules.