How much tax do I pay to withdraw $20,000 from an RRSP in Ontario?

$6,000 is withheld at 30.00%, but the withdrawal actually costs $6,047 once it is added to $85,000 of income. You owe $47 more when you file.

Is the withholding tax the final tax?

No. It is an instalment. The withdrawal is added to your income and taxed at your marginal rate — the withholding is just what the institution sends the CRA on the day, and it is usually less than the eventual bill for anyone above a modest income.

Can I avoid the withholding by taking smaller amounts?

You can reduce what is withheld — the rate steps up at $5,000 and $15,000 — but not what you owe. Every dollar lands on the same return at the same rate. It moves the bill, it does not shrink it.

Do I get the contribution room back?

No, and that is the bigger cost. RRSP room used by a withdrawal is gone permanently, unlike a TFSA where it returns the next year. The tax is the visible loss; the room is the expensive one.

2026 · all 13 jurisdictions · CRA

RRSP withdrawal tax calculator

The 10, 20 or 30 percent withheld at source is not the tax — it is a deposit. The withdrawal is added to your income and taxed at your marginal rate, and the difference arrives in April.

Written and edited by Pablo Ruiz QuinteroSources checked September 1, 2026Limits and withholding rates read off canada.ca on 2026-09-07

Tax year 2026Where OntarioRuns in your browser

Your annual income

Amount you want to withdraw

Province or territory

What it really costs

$6,047

on a $20,000 withdrawal — you keep $13,953

Withheld now, owed later
Withheld at source (30.00%)	$6,000
Actual tax at your marginal rate	$6,047
Still owing in April	$47

The 30.00% withheld is not the tax. The withdrawal is added to your income and taxed at your marginal rate, so the withholding is an instalment. And the contribution room it used is gone permanently — unlike a TFSA, it does not come back.

The 30% they withhold is not the tax

This is the misunderstanding that costs people money every April. When you take money out of an RRSP the institution withholds 10.00% up to $5,000, 20.00% up to $15,000, 30.00% above that. Most people read that as the tax on the withdrawal. It is a deposit.

The withdrawal is added to your income for the year and taxed at your marginal rate like any other dollar. On $85,000 in Ontario, taking out $20,000 means $6,000 withheld — and the withdrawal actually costs $6,047. You owe another $47 when you file.

The gap grows with income, because the withholding rate is fixed and your marginal rate is not. On $150,000 the same $20,000 withdrawal has $6,000 withheld and costs $8,976 — a shortfall of $2,976 that arrives as a bill months later.

Splitting a withdrawal does not help

The withholding rate steps up at $5,000 and $15,000, so taking $20,000 as four withdrawals of $5,000 has less withheld than one of $20,000. Institutions are supposed to look at the series, and even where they do not, nothing about the actual tax changes.

All of it lands on the same return at the same marginal rate. Withholding less simply moves the shortfall from now to April, larger. It is the same money in a worse order.

The only reason to think about the withholding rate at all is cash flow — knowing what will actually arrive in your account today, which is what the calculator above shows alongside what it will cost.

What the tax does not measure

The room is gone. Withdrawing from an RRSP permanently destroys the contribution room it used. Put in $20,000, take it out, and you cannot put it back — unlike a TFSA, where the room returns the following year. That is not a tax cost, so it appears nowhere in the figures, and over a working life it is usually the larger loss.

And the growth is gone with it. The point of the account is decades of compounding untaxed. A withdrawal at $35 costs the tax today and everything that money would have become by $65.

Two programmes let you withdraw without either the withholding or the tax: the Home Buyers' Plan for a first home and the Lifelong Learning Plan for education, both repayable on a schedule. Neither is modelled here, and both are almost always better than an ordinary withdrawal for the same purpose.

Where these figures come from

Read off the CRA's own pages, with the date:

CRA — MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE — read 2026-09-07. https://www.canada.ca/en/revenue-agency/services/tax/registered-plans-administrators/pspa/mp-rrsp-dpsp-tfsa-limits-ympe.html

CRA — Tax rates on RRSP withdrawals — read 2026-09-07. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/making-withdrawals/tax-rates-on-withdrawals.html

CRA — First Home Savings Account (FHSA) — read 2026-09-07. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html

And what these figures do not cover:

— Your actual RRSP room is not 18% of this year's income. It is the room the CRA carries on your notice of assessment: unused room from previous years carries forward, and a pension adjustment from a workplace plan reduces it. The figure here is the room a year of this salary generates, not the room you have.

— The Home Buyers' Plan and the Lifelong Learning Plan let you withdraw from an RRSP without the withholding or the tax, provided you repay on schedule. Neither is modelled.

— A withdrawal permanently loses the contribution room it used. That is not a tax cost, so it does not appear in the figures — but it is the part that costs most over a lifetime.

— The FHSA lifetime limit and the rules for carrying unused room forward are not applied; the annual participation room in the first year is what is shown.

Where to go next

RRSP contribution refundThe other direction: what putting money in returns.Canada income tax calculatorThe marginal rate a withdrawal lands on.Tax refund calculatorWhether the withholding covered the year.All Canadian calculatorsSales tax, land transfer and the rest.

Questions

How much tax do I pay to withdraw $20,000 from an RRSP in Ontario?: $6,000 is withheld at 30.00%, but the withdrawal actually costs $6,047 once it is added to $85,000 of income. You owe $47 more when you file.
Is the withholding tax the final tax?: No. It is an instalment. The withdrawal is added to your income and taxed at your marginal rate — the withholding is just what the institution sends the CRA on the day, and it is usually less than the eventual bill for anyone above a modest income.
Can I avoid the withholding by taking smaller amounts?: You can reduce what is withheld — the rate steps up at $5,000 and $15,000 — but not what you owe. Every dollar lands on the same return at the same rate. It moves the bill, it does not shrink it.
Do I get the contribution room back?: No, and that is the bigger cost. RRSP room used by a withdrawal is gone permanently, unlike a TFSA where it returns the next year. The tax is the visible loss; the room is the expensive one.