With just weeks until the RRSP contribution deadline for the 2025 tax year, now is the time to take advantage of one of Canada’s most powerful tax-saving opportunities.
Immediate Tax Benefits
Contributing to your RRSP before March 2nd will reduce your 2025 taxable income by the amount you contribute.
Here’s how the tax savings work: If you’re in Ontario’s highest marginal tax bracket (53.53%), a $10,000 RRSP contribution could reduce your tax bill by approximately $5,353. That means you’re effectively saving over half the cost of your contribution in taxes alone—money you can reinvest or use for other financial goals.
For 2025, you can contribute up to $32,490 or 18% of your previous year’s earned income, whichever is lower. Plus, any unused contribution room from previous years carries forward. Check your available room by reviewing your 2024 CRA Notice of Assessment or logging into your CRA profile online.
Start Early for Maximum Growth
Beyond the immediate tax savings, RRSPs offer another advantage—your investments grow tax-deferred through the power of compounding.
Think of compounding like a snowball rolling downhill—starting small but gathering more snow with every turn, growing exponentially by the time it reaches the bottom. The longer it rolls, the larger it becomes.
In your RRSP, this means your earnings generate additional earnings. A $10,000 contribution growing at 5% annually becomes $10,500 after one year. In year two, you earn 5% on the full $10,500, not just your original $10,000. After 30 years at 5%, the initial $10,000 contribution is worth $43,219.42. This compounding effect accelerates your portfolio’s growth over time.
Even modest contributions compound into substantial retirement savings when given enough time to grow.
Take Action Now
Beat the March 2nd deadline to claim your 2025 tax deduction, and set yourself up for long-term wealth accumulation through the power of compounding.
To discuss RRSP accounts or other investment options, reply directly to this email to speak with our wealth advisor, Cory Wilson, or call 416-391-3764.
