RRSP

An RRSP (Registered Retirement Savings Plan) is an account for setting aside money for retirement. The advantage is that every dollar you contribute reduces your taxable income for the year, and therefore your tax bill. You pay taxes later, when you withdraw the money. The 2026 contribution limit is $33,810.

At a glance

RRSP = Registered Retirement Savings Plan: Savings for Your Retirement
Each contribution reduces your taxable income, and therefore the amount of tax you owe this year
2026 Contribution Limit: $33,810, or 18% of your earned income (your salary)
You pay tax only when you withdraw funds; unused amounts carry over to subsequent years
Be aware of the contribution limit: if you exceed the limit by more than $2,000, the Canada Revenue Agency will impose a 1% monthly penalty on the excess amount.

Why it matters

An RRSP is like a tax credit you give yourself: by contributing before the deadline (usually the end of February for the previous year), you reduce the amount of tax you owe now. An important detail for business owners: only a salary (not a dividend) creates RRSP contribution room, just as it creates eligibility for the QPP and is reported on the T4 form : It’s worth calculating whether to choose salary or dividends.

Here’s a concrete example: You contribute $5,000 to your RRSP; this amount is deducted from your taxable income, and at a combined marginal tax rate of about 37%, you save nearly $1,850 in taxes this year. You won’t pay tax on this amount until later, upon withdrawal, often at a lower rate once you retire. The $33,810 limit for 2026 and the relevant rules are published by the Canada Revenue Agency. Bankeo connects you for free with a vetted accountant or CPA who will optimize your contributions based on your income, and we’re here to support you every step of the way.

Frequently asked questions

What exactly is an RRSP?

It’s a retirement savings account with a tax benefit: the money you deposit into it is deducted from your taxable income, so you pay less tax this year. You’ll pay the tax later, when you withdraw the money.

What is the RRSP contribution limit in 2026?

You can contribute up to $33,810 in 2026, or 18% of your previous year’s earned income if that amount is lower. Any unused contribution room carries over to subsequent years.

Does a dividend qualify for an RRSP?

No: Only earned income, such as a salary, generates RRSP contribution room. This is a key consideration when deciding between paying yourself a salary or a dividend. Bankeo connects you for free with a vetted accountant or CPA who will advise you, at no cost to you, often within 48 hours, and we’ll be there for you every step of the way.