Calculate the Tax Savings Generated by your RRSP Contribution in Canada for 2015 & 2016
When contributing to a Registered Retirement Saving Plan (RRSP), you put money aside that is exempt from tax. It is a way to concretely reduce your tax payment, as long as you keep the funds in the plan. In the event you would cash out a portion or the totality of your RRSP, you will need to pay taxes on the amount taken out.
The main advantage of a RRSP, other than reducing your tax payments, is easing your saving effort for retirement. It allows you to accumulate savings in a simpler way than if you would cash all your yearly income, pay the taxes on it and then invest the money. By being tax deductible, you invest your money first, and then pay tax on your yearly income less the contribution, which decreases tax payment and optimizes your savings for retirement.
There is a maximum contribution allowed based on many factors. Since there are specific attributes to each individual that can limit the contribution, the calculator will intentionnaly not limit any amount. Also, the calculator assumes that the entire contribution inserted in the box is tax deductible, so you could always use this calculator for any 100% deductible amount other than RRSP. Note that the potential tax savings can't obviously surpass the total tax you are supposed to pay for one fiscal year.
A person can contribute to a RRSP until March 1st and the impact of the tax reduction would be applied the following month in April, when you pay the provincial and federal governments. Therefore, the tax saving benefits when contributing to a RRSP in January and February could be applied on the previous fiscal year, which is from January to December.
Try this calculator to evaluate your potential tax savings and compare it with other Canadian provinces. You could be surprised how much you are able to save by contributing to a RRSP.
Please change the suggested values with your own in the blue text boxes.
Our financial calculators start with default values to suggest what to enter typically in each modifiable field, displayed as blue text boxes, in order to simulate a common scenario. Please change those values with your own. To keep track of your changes, the blue box will turn gray after they are modified.
You will also notice that our calculators behave like financial applications and recalculate automatically all values with each change instead of having to click on some extra button or going to a new result page, this is intentional and helps understand the effect of one change with the overall result in a more dynamic and instantaneous manner.
However, charts in our older calculators are not updated automatically, so if there is an "Update" button next to the chart, make sure to click on it after you make a change before you analyze it.