Test your knowledge: You contribute $5,000 to your RRSP and your marginal tax rate is 37%. How much of a tax refund will your contribution generate?

Test your knowledge

You contribute $5,000 to your RRSP and your marginal tax rate is 37%. How much of a tax refund will your contribution generate?

May 13th, 2025

Answer: $1,850

Your RRSP contributions reduce your taxable income by an equal amount. If your marginal income tax rate is 37%, your tax savings will be $5,000 X 37/100 = $1,850. By the way, don’t confuse the marginal tax rate, which applies to the highest segment of your income, with the average tax rate, which applies to your taxable income as a whole.

To learn more about current tax rates, do an online search for “tax tables Canada” (or the name of your province). 

The following sources were used to prepare this article:

Government of Canada, “Tax rates and income brackets for individuals.”

DFSI, “What to do with your income tax refund.”