Ben Nguyen 
A registered retirement savings plan (RRSP) allows Canadians to invest funds for retirement while deferring taxes until withdrawals begin at retirement. Contributions to an RRSP are deductible on your income tax return, helping reduce your taxable income. According to the latest statistics, 39% of Canadians plan to contribute to an RRSP in 2025.
The Canada Revenue Agency (CRA) sets an annual maximum limit for how much Canadians can contribute to an RRSP each year. This limit is called your RRSP contribution limit. Understanding your current year’s RRSP contribution limit enables you to maximize your retirement contributions for tax-efficient growth.
With strategic RRSP planning, you can take full advantage of this powerful retirement savings tool offered uniquely to Canadian residents. Read on to boost your RRSP expertise and optimize your contributions.
What is the RRSP Contribution Limit for 2025?
The RRSP contribution limit is the maximum you can put into your RRSP each year. The CRA calculates this limit based on your income level.
For the 2025 tax year, the RRSP contribution limit is set at $32,490. This means that the total RRSP contributions that you can deduct from your 2025 income taxes cannot exceed $32,490.
If your earned income in 2024 was less than $180,500 (18% of $180,500 is $32,490), your maximum deductible contribution is limited to 18% of your prior year’s earned income.
For reference, here are the previous RRSP contribution limits for the past 10 years:
| Year | Contribution Limit |
|---|---|
| 2024 | $31,560 |
| 2023 | $30,780 |
| 2022 | $29,210 |
| 2021 | $27,830 |
| 2020 | $27,230 |
| 2019 | $26,500 |
| 2018 | $26,230 |
| 2017 | $26,010 |
| 2016 | $25,370 |
| 2015 | $24,930 |
The annual limit has steadily increased over the past decade. Always reference your annual CRA Notice of Assessment to find your official RRSP deduction limit for the current tax year.
Source: MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE, Government of Canada
What Factors Determine Your RRSP Deduction Limit?
The RRSP deduction limit refers to the maximum RRSP contribution you can deduct from your taxable income. This limit carries forward unused RRSP rooms from previous tax years.
Your specific RRSP deduction limit can vary based on the following:
Unused RRSP Contribution Room from Prior Years
Any RRSP contribution room you have not utilized from previous tax years will carry forward and increase your deduction limit in future years. Review your CRA Notice of Assessment to find your unused room.
Pension Adjustments (PAs)
If you contributed to an employer-sponsored pension plan or deferred profit-sharing plan (DPSP) in 2024, it will reduce your 2025 RRSP room. Your PA appears on your Notice of Assessment.
RRSP Overcontributions
If you overcontributed in prior years, your current year’s RRSP deduction room will be reduced. Overcontributions also incur a tax penalty until rectified.
How is the Annual RRSP Deduction Limit Calculated?
The CRA calculates your personal RRSP deduction limit based on the following formula:
- Take your unused RRSP deduction room carried forward from the previous tax year.
- Add the lesser of 18% of your earned income from the prior tax year and the annual RRSP limit set by the government.
- This amount is then reduced by any pension adjustment (PA) or prescribed amount for connected persons from the previous year.
For example, if you earned 60,000 in 2024 and had 5,000 of unused RRSP room carried forward, your 2025 RRSP deduction limit would be:
- 18% of 60,000 = 10,800
- Plus $5,000 unused room
- Total RRSP deduction limit of $15,800
Always reference your annual CRA Notice of Assessment to find your official deduction limit for the current tax year.
Who Can Contribute to an RRSP?
The following individuals can make RRSP contributions for the 2025 tax year:
- Any Canadian resident with available RRSP contribution room, until the end of the year when they turn 71.
- You can contribute to your spouse’s RRSP if they are under 71 and have contribution room available.
While RRSPs have no minimum age requirement, individuals under 18 or 19 face restrictions on independently holding investments. At 71, your RRSP must be converted to a Registered Retirement Income Fund (RRIF) or annuity to begin withdrawing minimum amounts annually.
Proper RRSP planning considers age limits to reduce tax penalties and ensure continuity of retirement income.
When is the 2025 RRSP Contribution Deadline?
The deadline for deducting RRSP contributions from your 2024 income taxes was March 3, 2025, and for the 2025 tax year is March 2, 2026. Contributing by this deadline allows you to reduce your taxable 2025 income.
If you miss the deadline, you can still contribute to your RRSP until December 31, 2025, but the deduction would apply to your 2026 taxes. Some considerations around the RRSP deadline include:
- Contributing early in the year allows more tax-deferred growth.
- Waiting until closer to the deadline allows you to use more up-to-date income information.
- If you expect a lower income in 2026, you may want to delay your deduction.
Always consult a tax advisor to determine the optimal contribution strategy for your situation.
What Happens If You Overcontribute to Your RRSP?
Exceeding your RRSP deduction limit results in an RRSP overcontribution. The implications include:
- Overcontributions of $2,000 or less: No tax penalty, but the excess is not deductible until you have available contribution room.
- Overcontributions exceeding $2,000: 1% tax penalty for every month the excess remains in the RRSP.
- Overcontributions reduce your RRSP room for the following tax year.
If you have overcontributed, you should withdraw the excess amount as soon as possible to avoid accruing tax penalties. Work with an accountant or tax advisor to report and rectify RRSP overcontributions.
Source: What happens if I overcontribute to an RRSP?, Sun Life
FAQs about RRSP contribution limit
What Types of Contributions Are Deductible?
Contributions you make to your own or your spouse's RRSP are eligible for deductions up to your total contribution room.
What Is Not Considered an RRSP Contribution?
Direct transfers of certain tax-sheltered investments do not impact room or deductions.
Can You Contribute After Death?
No contributions can be made to a deceased person's RRSP. However, within specific time limits, the deceased individual’s legal representative can make contributions to a surviving spouse’s RRSP.
When Can RRSP Contributions Be Made?
Contributions can be made any time of year up to the deadline, but are limited by your available deduction room. Contributions in the first 60 days of a year can apply to either the current or prior tax year.
Are There Age Restrictions on RRSP Contributions?
he maximum age for contributions is capped at 71. Individuals under 18 or 19 face restrictions on independently holding investments.
The bottom line
Developing a robust retirement strategy is crucial to achieving financial security in your later years. RRSPs can provide a critical pillar of tax-advantaged savings to fund your life after leaving the workforce.
To maximize the benefits, time your contributions to align with your income fluctuations and tax circumstances each year. And utilize every dollar of your available RRSP room to its fullest potential.
