RRSP contribution room equals 18% of the prior year’s earned income, capped at the annual maximum ($33,810 for 2026), minus any pension adjustment from a registered pension plan, plus any unused contribution room carried forward from prior years. The exact figure for an individual is shown on the most recent Notice of Assessment from Canada Revenue Agency.
The four components of RRSP contribution room
CRA calculates RRSP contribution room (formally the RRSP deduction limit) using four inputs from the prior tax year. The formula is the same for everyone but the values differ based on individual circumstances.
- 18% of prior-year earned income. Earned income includes employment, self-employment, net rental, and certain other categories. For 2026 contribution room, the calculation uses 2025 earned income.
- The annual RRSP dollar limit. The lesser of 18% of earned income or this dollar cap applies. The 2026 limit is $33,810. The 2025 limit was $32,490.
- Minus the pension adjustment (PA). Members of a registered pension plan or deferred profit sharing plan have a PA reported on T4 box 52. The PA represents pension benefits accrued in the year and reduces RRSP room dollar-for-dollar.
- Plus carry-forward room from prior years. Any unused RRSP room from prior years carries forward indefinitely and adds to the current year’s available room.
Annual RRSP dollar limit by year
| Year | Annual RRSP dollar limit | Earned income required for full room |
|---|---|---|
| 2026 | $33,810 | $187,833 |
| 2025 | $32,490 | $180,500 |
| 2024 | $31,560 | $175,333 |
| 2023 | $30,780 | $171,000 |
| 2022 | $29,210 | $162,278 |
| 2021 | $27,830 | $154,611 |
Earned income above the threshold in the prior-year column does not produce additional RRSP room because the dollar cap takes effect. The cap is indexed to the average industrial wage and increases most years.
Example calculation
A salaried employee earning $90,000 in 2025 with no pension plan and no prior carry-forward room calculates 2026 RRSP room as follows: 18% of $90,000 equals $16,200, which is below the $33,810 cap. With no PA and no carry-forward, available 2026 RRSP room is $16,200.
An employee earning $90,000 in 2025 who is a member of a defined benefit pension plan with a $14,000 pension adjustment calculates as follows: $16,200 (18% of $90,000) minus $14,000 (PA) equals $2,200. Pension plan members typically have less RRSP room because the pension itself counts as retirement saving.
What counts as earned income for RRSP purposes
Earned income for RRSP purposes is broader than salaried employment income. CRA includes net employment income (T4 box 14 minus union dues), net self-employment income (T2125), net rental income from real property, royalties for a work or invention authored by the contributor, certain disability pensions from CPP or QPP, and some support payments received. It excludes investment income (interest, dividends, capital gains), Old Age Security, CPP retirement benefits, EI benefits, and pension income.
Pension adjustment and pension adjustment reversal
Members of a defined benefit (DB) pension plan receive a pension adjustment that approximates the value of the year’s pension benefits. A defined contribution (DC) plan PA equals total employee plus employer contributions. The PA is reported on T4 box 52 and used by CRA to calculate the next year’s RRSP room.
An employee who leaves a DB plan and has the commuted value transferred out may receive a pension adjustment reversal (PAR) that restores some prior-year RRSP room. The PAR is reported on a T10 slip from the former employer.
Where to find your exact RRSP room
The most reliable source is the Notice of Assessment (NOA) for the most recently filed T1 return. The NOA shows total RRSP room as of January 1 of the current year. CRA’s My Account portal displays the same figure and updates after each filing season. Mid-year contributions made in the current year are not yet reflected in the displayed room until the next return is filed and assessed.
Over-contribution and the lifetime cushion
The Income Tax Act allows a $2,000 cumulative lifetime over-contribution cushion without penalty. Contributions above $2,000 over available room trigger a 1% per month tax on the excess. The cushion is one-time and lifetime, not annual. Contributions above the cushion are not deductible in the year made but can be deducted in future years if room becomes available.
RRSP first-60-days rule
Contributions made in the first 60 days of a calendar year (typically January 1 to March 1) can be deducted on either the prior year’s return or the current year’s return, at the contributor’s choice. This is reported on Schedule 7. The 60-day window does not create extra contribution room; it only changes which tax year’s return takes the deduction.
Frequently asked questions
- What is the 2026 RRSP dollar limit?
- $33,810. A taxpayer's actual room is the lesser of this or 18% of 2025 earned income, minus any pension adjustment, plus carry-forward.
- What is earned income for RRSP purposes?
- Net employment, net self-employment, net rental from real property, royalties for own works, and certain disability pensions. Investment income does not count.
- What is a pension adjustment?
- The deemed value of pension benefits accrued in the year, from T4 box 52. It reduces next year's RRSP room dollar-for-dollar.
- Does unused RRSP room expire?
- No. Carry-forward is indefinite. Room from any prior year is preserved and can be used in any future resident year.
- What is the over-contribution penalty?
- 1% per month tax on the excess above a $2,000 lifetime cushion. The cushion is one-time, not annual.
- Where do I find my exact RRSP room?
- Notice of Assessment from the most recent T1, or CRA's My Account. Both update after each filing season.
- What is the first-60-days rule?
- Contributions in the first 60 days of a year can be deducted on either the prior or current year's return. Reported on Schedule 7.