TFSA vs RRSP vs FHSA: which to fill first, with the actual math

Before the tables, the short version. If a first home is realistically in your future (even a maybe), the FHSA comes first. It’s the only account that gives you a tax deduction going in and tax-free money coming out, and if you never buy, the balance rolls into your RRSP. No home in the picture? Then TFSA vs RRSP comes down to a single comparison: your tax rate today versus your tax rate when the money comes back out.

That’s the decision; everything after it is supporting math. The one input bank comparison pages never include is what each account actually pays, so each rate below comes out of our own database, the same numbers that rank the boards, current as of August 26.

The 30-second answer

• A first home is possible, someday: open an FHSA and fill it before anything else. You get the RRSP’s deduction and the TFSA’s tax-free exit on the same dollars; no other account does both.
• High income now, lower expected in retirement: RRSP. The deduction is worth the most in your highest-earning years, and the withdrawal tax arrives later, at what you hope is a lower rate.
• Modest income now, raises ahead: TFSA, and save the RRSP room for the years when the deduction is worth more.
• Genuinely unsure: TFSA. It’s the forgiving one. Withdrawals are tax-free and the room comes back the following year; nothing about it complicates your tax return.

You can hold all three at once (they have separate room and don’t affect each other’s limits), and many savers eventually do. The question is order, not membership.

Tax at three moments, and the current room

Every difference between these accounts is really about when the tax happens: when money goes in, while it grows, and when it comes out.

Moment	TFSA	RRSP	FHSA
Money going in	No deduction (after-tax dollars)	Deductible from income	Deductible from income
While it grows	No tax	No tax	No tax
Money coming out	Tax-free	Taxed as regular income	Tax-free for a qualifying first-home purchase

All three shelter growth. The TFSA taxes you on the way in (invisibly, since you simply contribute after-tax pay), the RRSP on the way out, and the FHSA, used as designed, on neither. That last column is the whole reason the FHSA jumps the queue.

The room itself resets every January, and a surprising share of the pages ranking for this search still carry figures from two or three years back; the CRA’s TFSA pages and RRSP pages are where the canonical figures live. These are the current ones:

	TFSA	RRSP	FHSA
Annual room	$7,000 for 2026	18% of last year’s earned income, up to $33,810 for 2026	$8,000
Lifetime cap	None (room accrues every year from age 18)	None (room builds from earned income)	$40,000
Carry-forward	Unused room carries forward indefinitely; withdrawals restore room the next calendar year	Unused room carries forward indefinitely	unused room carries forward, to a maximum of $8,000
The clock	None	must be wound up (converted to a RRIF or an annuity, or withdrawn) by the end of the year you turn 71	closes at the earliest of 15 years after opening, the year you turn 71, or the year after your first qualifying withdrawal

Over-contributing any of them draws the same penalty, 1% per month on the excess (the RRSP alone allows a $2,000 cushion before the tax applies), until it’s withdrawn or new room absorbs it. The fix is fastest in a TFSA (withdraw the excess) and slowest in an RRSP (forms are involved). TFSA room and its withdrawal-and-restore wrinkle get a fuller treatment in our TFSA contribution room explainer.

First home in sight? The FHSA jumps the queue

For an eligible first-time buyer, the FHSA pairs a deduction on the way in with a tax-free withdrawal at the purchase, and the growth in between goes untaxed as well. You contribute $8,000 and deduct $8,000; the growth and the exit both go untaxed. There is no version of the TFSA or RRSP that matches that combination. The caps and carry-forward mechanics are covered separately in our FHSA contribution rules explainer.

Two features make it stronger than it first looks. The fallback: if you never buy, the balance can move into your RRSP tax-free, without using RRSP contribution room, so opening one costs you nothing but paperwork — even if home ownership stays hypothetical. The stack: on an actual purchase, an FHSA withdrawal can be paired with the Home Buyers’ Plan, which lets you borrow up to $60,000 from your own RRSP for the same down payment. FHSA plus HBP is the largest tax-advantaged down payment available to one person, and each half of a couple can run the stack separately.

The caveat comes from our own data: the FHSA rate shelf is the thinnest of the tax lanes we track. Fewer institutions post FHSA-eligible GIC rates, and the current FHSA board tops out below the other lanes at every term; the exact figures are two sections down. The tax treatment usually outweighs the rate gap, but both numbers belong in the decision.

TFSA vs RRSP: the bracket logic

Strip away the acronyms and the RRSP is a deal with the CRA: skip tax on this income now, pay tax on it when it comes out. Whether that deal is good depends entirely on the two rates.

• Tax rate now higher than in retirement: the RRSP wins. You deducted at the high rate and repaid at the low one, and the spread is yours.
• Tax rate now lower: the TFSA wins. Prepaying tax at today’s low rate beats deferring into a higher one.
• Rates roughly equal: mathematically a tie, provided you actually save the RRSP refund rather than spending it, which is where the tie breaks for a lot of real humans.

To put illustrative numbers on it: an $8,000 RRSP contribution deducted at a 43% marginal rate returns about $3,440 at tax time; the same $8,000 deducted at 30% returns about $2,400. Deduct in a high-bracket year and withdraw in a low-bracket one and the spread on that example, roughly $1,040, is the RRSP’s whole advantage. If your brackets run the other way, so does the advantage, which is why “which is better, TFSA or RRSP” has no universal answer, only a personal one.

One point in the TFSA’s favour that rarely makes the bank tables: TFSA withdrawals don’t count as income, so they can’t claw back income-tested benefits later in life. RRSP withdrawals can.

What the same GIC pays in each lane right now

Tax treatment is half the decision. The other half is what the best GIC rate on our boards pays in each tax lane.

Term	Non-registered	TFSA	RRSP	FHSA
1 year	4.00% (Brunswick Credit Union)	4.00% (Brunswick Credit Union)	4.00% (Brunswick Credit Union)	3.45% (Moya Financial)
2 years	4.25% (Brunswick Credit Union)	4.25% (Brunswick Credit Union)	4.25% (Brunswick Credit Union)	3.50% (Meridian Credit Union)
3 years	4.05% (Wealth One Bank of Canada)	4.00% (Oaken Financial)	4.00% (Oaken Financial)	3.70% (Meridian Credit Union)
4 years	4.10% (Wealth One Bank of Canada)	4.05% (Oaken Financial)	4.05% (Oaken Financial)	3.80% (Meridian Credit Union)
5 years	4.30% (Wealth One Bank of Canada)	4.25% (Oaken Financial)	4.25% (Oaken Financial)	4.00% (Meridian Credit Union)

Two things jump out. At one and two years, it is literally the same GIC at the top of the TFSA, RRSP and non-registered boards: same institution, same rate. The account you wrap it in changes what the taxman takes — not what the GIC pays. How GICs behave inside these wrappers is covered in our registered GICs guide. And the FHSA lane trails at every term, 55 basis points behind at one year and 75 at two. On a full $8,000 annual contribution, the two-year gap costs about $60 a year in interest: a real cost, but a small one next to the tax math above.

For scale, the big banks’ posted average for a 1-year non-registered GIC sits at 2.93% on the same data, 1.07 points behind the boards’ best. On $50,000, that gap is $535 a year. Whichever account wins your ranking, buying the GIC from whoever happens to hold your chequing account is the more expensive mistake.

Lane first, then rate

Pick the lane (FHSA if a home is plausible, then the TFSA-or-RRSP bracket call), then shop the rate inside it. The GIC boards filter by tax lane, so you can rank exactly the accounts you’re eligible to fill, and a rate alert will flag it when the top of your lane moves.

Frequently asked questions

Which is better, a TFSA or an RRSP?

It depends on one comparison: your marginal tax rate now versus your expected rate in retirement. Higher now favours the RRSP (deduct high, repay low); lower now favours the TFSA. If the rates are about equal, the outcomes land close enough that flexibility usually tips it to the TFSA.

Which account should I open first in Canada?

If a first home is realistically possible, the FHSA: it combines the RRSP’s deduction with the TFSA’s tax-free withdrawal, and rolls into your RRSP if you never buy. Otherwise start with the TFSA, unless you’re in a high bracket, in which case the RRSP’s deduction earns its keep.

How does FHSA contribution room work?

Room starts when you open the account, at $8,000 per year up to a $40,000 lifetime maximum, and unused room carries forward to a maximum of $8,000. That carry-forward cap is the catch: opening early and contributing slowly builds more usable room than opening late.

Can I move money between a TFSA, RRSP and FHSA?

Some directions are friendly and some are taxable, so check before you move. An FHSA balance can roll to an RRSP by direct transfer with no tax and no RRSP room used, but money leaving an RRSP is a taxable withdrawal unless it moves by direct transfer into an FHSA (which uses FHSA room and earns no deduction), and there is no direct TFSA-to-FHSA transfer; you withdraw from one and contribute to the other, using FHSA room.