Take money out of an RRSP and your institution withholds 10%, 20% or 30% depending on how much you take. That is a deposit against your tax bill, not the bill itself, and the gap between the two is where the unpleasant surprise lives.
The short answer
- Withholding is 10% up to $5,000, 20% from $5,000 to $15,000, and 30% above $15,000.
- Quebec residents have a lower federal portion: 5%, 10% and 15%.
- Non-residents are generally withheld at 25%, unless a treaty reduces it.
- The full withdrawal is added to your income and taxed at your marginal rate.
- If your marginal rate is above the withholding rate, you owe the difference at filing.
- The contribution room is gone. It does not come back the way TFSA room does.
The withholding rates
| Amount withdrawn | Withheld outside Quebec | Withheld in Quebec (federal portion) |
|---|---|---|
| Up to $5,000 | 10% | 5% |
| More than $5,000, up to $15,000 | 20% | 10% |
| More than $15,000 | 30% | 15% |
A non-resident of Canada is generally subject to 25% withholding, which a tax treaty may reduce.
Why the withholding is not the tax
The withdrawal is income. It goes on your return, sits on top of everything else you earned that year, and is taxed at your marginal rate. The withholding is simply an instalment collected at source.
Withdraw $20,000 with a marginal rate around 40%, and $6,000 is withheld at 30%. The tax on that income is closer to $8,000. The remaining $2,000 is payable when you file, months later, when the money has usually been spent.
The reverse can also happen. Someone with very little other income that year may have had more withheld than they owe, and gets it back as a refund. See the current tax brackets for where a withdrawal actually lands.
The splitting-it-up idea
A common suggestion is to take several small withdrawals rather than one large one, so that each is withheld at 10% instead of 30%. It works, and it changes nothing about what you owe. All of it is still income in the same year. You have reduced what is collected up front, which means a larger balance at filing rather than a smaller one.
There is a legitimate version of this idea, which is spreading withdrawals across different tax YEARS so that less of it is taxed at a high marginal rate. That is a real strategy and it depends on your other income in each year.
Withdrawals with no tax withheld
Two programmes allow you to take money out without withholding: the Home Buyers’ Plan and the Lifelong Learning Plan. Both require the conditions to be met and the amounts to be repaid on schedule. A missed repayment is added to your income for that year.
If the RRSP is a spousal one, a different rule applies before you withdraw anything. See spousal RRSPs and the three-year rule.
Common questions
How much tax is withheld on an RRSP withdrawal?
Outside Quebec, 10% on amounts up to $5,000, 20% on amounts over $5,000 up to and including $15,000, and 30% on amounts over $15,000. In Quebec the federal portion is 5%, 10% and 15%. A non-resident is generally withheld at 25% unless a treaty reduces it.
Is the withholding the actual tax I owe?
No, and this is the part that catches people. The withdrawal is added to your income for the year and taxed at your marginal rate. If that rate is higher than the amount withheld, you owe the difference when you file.
Can I withdraw in smaller amounts to pay less tax?
You would reduce the amount WITHHELD, not the tax you owe. Several $5,000 withdrawals attract 10% each rather than 30% on $20,000, but all of it still lands in your income and is taxed at your marginal rate at filing. The only thing changed is timing, and you may face a larger bill in April.
Are there withdrawals with no withholding?
The Home Buyers’ Plan and the Lifelong Learning Plan allow withdrawals without tax withheld, provided the conditions are met and the required repayments are made.
Does the withdrawal affect anything besides tax?
It can. RRSP income counts toward net income, which is what income-tested benefits and credits are calculated on. A large withdrawal can reduce or claw back amounts that have nothing to do with the RRSP itself.
Do I get the contribution room back?
No. Room used for a regular RRSP contribution is gone once you withdraw, unlike a TFSA where withdrawals restore room the following year.
If you want a second opinion
Whether a withdrawal is the right move usually depends on what else is in your income that year, which is a fifteen minute conversation rather than a guess.
Sources: CRA, Tax rates on withdrawals. Checked 11 August 2026. General information only, not advice for your situation.