Registered savings plans compared (RRSP, TFSA, FHSA, RESP, RDSP)

Canada’s five main registered plans all let investments grow without tax each year, but they answer two questions differently: do you get a deduction when you put money in, and is the money taxed when it comes out? The answers decide which plan suits which goal.

At a glance

Plan	Contributions	Money coming out
RRSP	Deductible, up to your deduction limit	Taxable when paid to you
TFSA	Not deductible	Tax-free, growth included
FHSA	Generally deductible	Tax-free when used to buy a qualifying first home
RESP	Not deductible	Contributions come back tax-free; investment income paid to the student is taxed to the student
RDSP	Not deductible	Contributions aren’t taxed; grants, bonds and investment income are taxed to the beneficiary

RRSP: registered retirement savings plan

You deduct your RRSP contributions, which lowers your tax for the year. Income earned in the plan usually isn’t taxed while it stays there, and you generally pay tax when you receive payments from the plan.

Your deduction limit is generally 18% of your previous year’s earned income, up to the annual dollar limit ($32,490 for 2025), less any pension adjustment, plus unused room from earlier years. You can contribute to your own RRSP until December 31 of the year you turn 71, and you can also contribute to a spouse’s or common-law partner’s RRSP. Contributions made from March 4, 2025, to March 2, 2026, count for your 2025 return. Interest on money you borrow to contribute isn’t deductible. More in RRSPs: how contributions save tax.

TFSA: tax-free savings account

TFSA contributions aren’t deductible. In return, interest, dividends and capital gains earned in the account are generally tax-free, even when you withdraw them. You can take money out at any time for any reason.

Room builds from the year you’re 18 and resident in Canada, at the annual dollar limit ($7,000 for 2025), and unused room carries forward. A withdrawal is added back to your room on January 1 of the following year. Contributing more than your room costs 1% of the excess for each month it stays in the account.

The CRA says TFSA income and withdrawals don’t affect your eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement and the Canada child benefit. More in Your TFSA: how it works.

FHSA: first home savings account

The FHSA is for first-time home buyers saving to buy or build a qualifying first home. Contributions are generally deductible, like an RRSP’s, and a qualifying withdrawal to buy your first home is tax-free, like a TFSA’s. Your participation room in the year you open your first FHSA is $8,000, and other limits apply. Transfers from your RRSP into an FHSA are allowed but aren’t deductible. More in FHSA and the Home Buyers’ Plan.

RESP: registered education savings plan

A subscriber opens an RESP for one or more beneficiaries and makes contributions. They aren’t deductible. Government grants, such as the Canada Education Savings Grant and the Canada Learning Bond, can be paid into the plan, and income earned in the plan isn’t taxed while it stays there.

When the student goes on to post-secondary education, the income earned is paid out as educational assistance payments, which the student reports as income. Contributions can be returned tax-free. The Income Tax Act sets a lifetime limit on contributions for each beneficiary. More in Saving for school with an RESP.

RDSP: registered disability savings plan

An RDSP helps a person who is approved for the disability tax credit save for the long term. Contributions aren’t deductible and can be made until the end of the year the beneficiary turns 59. When money is paid out, the contributions aren’t taxed, but the Canada disability savings grant, the Canada disability savings bond and the investment income earned in the plan are included in the beneficiary’s income. More in RDSP basics.

Choosing between them

The plans aren’t either-or, and the right mix depends on your income now, your income later and what you’re saving for:

• A deduction (RRSP, FHSA) is worth more when your current tax rate is high.
• Tax-free withdrawals (TFSA, FHSA for a first home) mean the money you take out doesn’t add to your income.
• RESPs and RDSPs can also receive government grants and bonds, paid into the plan.

For a closer comparison of the three plans most people use, see RRSP, TFSA or FHSA: which first? Current limits are in the registered plans table.