RRSP Contribution Limit 2025
Understanding the Registered Retirement Savings Plan (RRSP) contribution limit is crucial for maximizing your tax benefits and ensuring a comfortable retirement.
Whether it's how to calculate it, how the limit has evolved over time or what the key deadlines are, here is what you need to know for the 2024 tax year.
What is the RRSP contribution limit?
The RRSP contribution limit is the maximum amount you can contribute to your RRSP each year while still benefiting from tax deductions. The limit is 18% of your previous year's earned income, up to a maximum amount set by the government. Additionally, you can use any 'carry-forward' contribution room from previous years.
In 2024, the maximum RRSP contribution limit is $31,560. If 18% of your previous year's earned income exceeds this limit, you can't contribute more than $31,560. If 18% of your income is less than $31,560, then you can contribute the whole amount representing 18% of your earned income. You can also contribute any unused contribution room carried forward from previous years.
For 2025, the RRSP contribution limit is $32,490.
How to calculate the RRSP contribution limit?
Calculating your RRSP contribution limit involves a few steps:
Step 1 - Determine your earned income: This includes wages, salaries, commissions, and self-employment income. Investment income, rental income, and pension income are not considered earned income.
Step 2: Calculate 18% of your earned income: Multiply your total earned income from the previous year by 18% to find the portion of your income you can contribute to your RRSP.
Step 3: Compare with the maximum limit: Check if 18% of your earned income is less than or equal to the maximum amount that set by the government each year. Choose the lesser amount or the maximum amount.
Step 4: Calculate for unused contribution room: If you did not use up your full RRSP contribution limit in previous years, you can carry forward the unused room to the current year. Check your Notice of Assessment or your CRA My Account for details on unused contribution room.
What is my RRSP contribution limit?
You can find out your specific RRSP contribution limit in a different way,
Check your notice of assessment: After filing your tax return, the CRA will send you a Notice of Assessment, including your current year's RRSP contribution limit.
Visit your CRA My Account: Log in to the Canada Revenue Agency’s My Account service to view your current RRSP contribution limit and any unused contribution room from previous years.
Consult your accountant: If you’re unsure about calculating your limit or have complex financial situations, consulting a tax professional or accountant can ensure you staying within the limits and make the most of your RRSP contributions.
RRSP contribution limit by year
The picture below shows the RRSP contribution limit by year:
What is the RRSP contribution deadline?
The RRSP contribution deadline is the last day you can make contributions for a specific tax year to benefit from tax deductions. Contributions before these deadlines can be tax-deductible.
The last day to make an RRSP contribution for the 2023 tax year was February 29, 2024.
The last day to make an RRSP contribution for the 2024 tax year will be March 1, 2025.
Understanding the RRSP contribution limit for 2024 is essential for effective retirement planning. By staying within these limits and making timely contributions, you can maximize your tax deductions and enhance your long-term savings. Plan your contributions early and fully utilize your RRSP to secure a more financially stable future.