Thinking about withdrawing from your RRSP? You're not alone. Whether you're facing an emergency, between jobs, or strategically drawing down your savings, understanding the tax implications is crucial. Here's everything you need to know about RRSP withdrawal taxes in Canada for 2026.
RRSP Withholding Tax Rates (2026)
When you withdraw money from your RRSP, your financial institution is required by law to withhold tax and send it to the Canada Revenue Agency (CRA). The withholding rate depends on how much you withdraw:
| Withdrawal Amount | Rest of Canada | Quebec |
|---|---|---|
| Up to $5,000 | 10% | 15% |
| $5,001 to $15,000 | 20% | 25% |
| Over $15,000 | 30% | 35% |
Important: Withholding ≠ Final Tax
The withholding tax is just a prepayment of tax, not your final tax bill. When you file your tax return, you'll pay tax based on your actual marginal rate. You might owe more tax or get a refund, depending on your total income for the year.
Calculate Your RRSP Withdrawal Tax
Use our interactive calculator to see how much tax you'll pay and what you'll actually receive. This calculator shows both the withholding tax and your estimated actual tax based on your income.
RRSP Withdrawal Tax Calculator
Calculate how much tax you'll pay on your RRSP withdrawal and what you'll actually keep.
Including this withdrawal
How it works: When you withdraw from your RRSP, your financial institution withholds tax (10%/20%/30% depending on amount). At tax time, you'll pay tax based on your actual marginal rate (25.55%). You'll likely owe additional tax when you file your return.
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Real-World Examples
Let's look at three real scenarios to see how RRSP withdrawal tax works in practice:
Retired Person with Modest Income
Low-income withdrawal scenario
Scenario:
- •Sarah, age 68: Retired with CPP and OAS only
- •Annual income: $40,000 (CPP: $15,000, OAS: $8,500, Part-time: $16,500)
- •RRSP withdrawal: $20,000 to renovate her home
At Tax Time:
- Total income:$60,000
- Marginal rate (Ontario):~29.7%
- Actual tax on $20,000:~$5,940
- Tax refund expected:~$60
Result: Sarah's withholding was slightly more than her actual tax, so she'll get a small refund when she files. The withholding was fairly accurate.
Between Jobs Emergency Withdrawal
Very low income year - best case scenario
Scenario:
- •Michael, age 42: Between jobs, laid off in March
- •Annual income: $22,000 (Employment: $18,000, EI: $4,000)
- •RRSP withdrawal: $10,000 for living expenses
At Tax Time:
- Total income:$32,000
- Marginal rate (Ontario):~20.1%
- Actual tax on $10,000:~$2,010
- Less: Basic personal amount credit:-$500
- Tax refund expected:~$490
Result: Michael will get a significant refund because his low income year means he's in a much lower tax bracket. This is an ideal time to make RRSP withdrawals if needed.
High Earner Large Withdrawal
High-income year - worst case scenario
Scenario:
- •Jennifer, age 55: Senior executive still working
- •Annual income: $180,000 from employment
- •RRSP withdrawal: $50,000 for cottage purchase
At Tax Time:
- Total income:$230,000
- Marginal rate (Ontario):~48.3%
- Actual tax on $50,000:~$24,150
- Additional tax owed:~$9,150
Result: Jennifer will owe significant additional tax because she's in the highest tax bracket. The 30% withholding only covered part of her actual 48.3% marginal rate. She should set aside the additional ~$9,150 to pay when filing.
Key Takeaway from Examples
Your total annual income determines your actual tax on RRSP withdrawals, not just the amount you withdraw. Low-income years are optimal for RRSP withdrawals because you'll pay less tax overall.
Frequently Asked Questions
Frequently Asked Questions
Q:Does RRSP withdrawal count as income?
A:Yes, RRSP withdrawals count as fully taxable income in Canada. The entire amount you withdraw is added to your taxable income for the year and taxed at your marginal rate. There is no 'penalty' for withdrawing from an RRSP, but you do pay income tax on the withdrawal.
Q:Can I withdraw from my RRSP without paying tax?
A:No, you cannot withdraw from your RRSP without paying tax, except for two specific programs: the Home Buyers' Plan (HBP) which allows you to borrow up to $60,000 for a first home, and the Lifelong Learning Plan (LLP) which allows up to $20,000 for education. Both require you to repay the amounts over time. All other RRSP withdrawals are subject to withholding tax immediately and income tax when you file your return.
Q:Is it better to withdraw from RRSP in a low-income year?
A:Yes, absolutely. Since RRSP withdrawals are taxed at your marginal rate, withdrawing in a year when your income is lower means you'll pay less tax overall. For example, if you're between jobs, semi-retired, or have a year with unusually low income, that's an optimal time to make RRSP withdrawals. The tax savings can be substantial - potentially 20-30% less tax than withdrawing in a high-income year.
Q:What is the Home Buyers' Plan (HBP)?
A:The Home Buyers' Plan allows first-time home buyers to withdraw up to $60,000 from their RRSP tax-free to purchase or build a qualifying home. You must repay the amount to your RRSP over 15 years, starting the second year after withdrawal. If you don't make the required annual repayment, that amount is added to your taxable income for the year. Both you and your spouse can each withdraw $60,000 if buying together. Note: The new FHSA (First Home Savings Account) may be a better alternative since it doesn't require repayment — learn more about the FHSA at /learn/fhsa-first-home-savings-account.
Q:What is the Lifelong Learning Plan (LLP)?
A:The Lifelong Learning Plan allows you to withdraw up to $10,000 per year (maximum $20,000 total) from your RRSP to finance full-time education or training for yourself or your spouse. Withdrawals are not taxed as long as you repay them over 10 years. Repayment begins the fifth year after your first withdrawal, or earlier if you're no longer in school. Any missed repayment is added to your taxable income.
Q:When do I have to convert my RRSP to a RRIF?
A:You must convert your RRSP to a Registered Retirement Income Fund (RRIF) or another retirement income option by December 31st of the year you turn 71. Once converted to a RRIF, you must withdraw a minimum amount each year based on your age, but these minimum withdrawals have no withholding tax. You can also convert earlier if you wish - some people convert in their 60s to start receiving pension income that qualifies for pension income splitting with a spouse.
Question: Does RRSP withdrawal count as income?
Answer: Yes, RRSP withdrawals count as fully taxable income in Canada. The entire amount you withdraw is added to your taxable income for the year and taxed at your marginal rate. There is no 'penalty' for withdrawing from an RRSP, but you do pay income tax on the withdrawal.
Question: Can I withdraw from my RRSP without paying tax?
Answer: No, you cannot withdraw from your RRSP without paying tax, except for two specific programs: the Home Buyers' Plan (HBP) which allows you to borrow up to $60,000 for a first home, and the Lifelong Learning Plan (LLP) which allows up to $20,000 for education. Both require you to repay the amounts over time. All other RRSP withdrawals are subject to withholding tax immediately and income tax when you file your return.
Question: Is it better to withdraw from RRSP in a low-income year?
Answer: Yes, absolutely. Since RRSP withdrawals are taxed at your marginal rate, withdrawing in a year when your income is lower means you'll pay less tax overall. For example, if you're between jobs, semi-retired, or have a year with unusually low income, that's an optimal time to make RRSP withdrawals. The tax savings can be substantial - potentially 20-30% less tax than withdrawing in a high-income year.
Question: What is the Home Buyers' Plan (HBP)?
Answer: The Home Buyers' Plan allows first-time home buyers to withdraw up to $60,000 from their RRSP tax-free to purchase or build a qualifying home. You must repay the amount to your RRSP over 15 years, starting the second year after withdrawal. If you don't make the required annual repayment, that amount is added to your taxable income for the year. Both you and your spouse can each withdraw $60,000 if buying together. Note: The new FHSA (First Home Savings Account) may be a better alternative since it doesn't require repayment — learn more about the FHSA at /learn/fhsa-first-home-savings-account.
Question: What is the Lifelong Learning Plan (LLP)?
Answer: The Lifelong Learning Plan allows you to withdraw up to $10,000 per year (maximum $20,000 total) from your RRSP to finance full-time education or training for yourself or your spouse. Withdrawals are not taxed as long as you repay them over 10 years. Repayment begins the fifth year after your first withdrawal, or earlier if you're no longer in school. Any missed repayment is added to your taxable income.
Question: When do I have to convert my RRSP to a RRIF?
Answer: You must convert your RRSP to a Registered Retirement Income Fund (RRIF) or another retirement income option by December 31st of the year you turn 71. Once converted to a RRIF, you must withdraw a minimum amount each year based on your age, but these minimum withdrawals have no withholding tax. You can also convert earlier if you wish - some people convert in their 60s to start receiving pension income that qualifies for pension income splitting with a spouse.
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