Episode 65: How Much Tax Will I Pay on My RRIF?

Published April 27, 2026

RRIF income is a key part of retirement — but how much tax will you actually pay?

In this episode of Money Monday, Darren Devine, Financial Planner with Sun Life and President of Devine & Associates, explains how Registered Retirement Income Fund (RRIF) withdrawals are taxed in retirement — and what that means for your overall financial plan.

While RRIFs are designed to provide income, every withdrawal is considered taxable income and can influence:

→ Your tax bracket each year

→ How other income sources are taxed

→ Potential eligibility for income-tested benefits

→ The long-term efficiency of your retirement income strategy

This episode explores:

→ How RRIF withdrawals are taxed in Canada

→ Minimum withdrawal requirements and their impact

→ How RRIF income interacts with CPP, pensions, and other sources

→ Why withdrawal timing and coordination matter

Understanding how your RRIF is taxed can help you make more informed decisions — both today and throughout your retirement.

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Related Money Monday Episodes 

If you’re wondering how RRIF withdrawals fit into your tax plan, these Money Monday episodes can help you understand how income, timing, and strategy work together.

Episode 63: How Is CPP Taxed in Retirement?
CPP is another key source of taxable income. This episode helps you understand how it fits into your overall tax picture.
Episode 61: When Should I Take CPP? 60, 65, or 70?
Timing decisions affect both income and taxes. This episode explores how CPP timing works alongside other retirement income sources.
Episode 53: 3 Tax Moves Retirees Should Consider Before Filing
Tax planning doesn’t stop at filing time. This episode highlights strategies that can help improve tax efficiency year after year.
Episode 56: What Will Your Paycheque Be in Retirement in 2026?
Understanding how your income is structured can help you see how RRIF withdrawals fit into your overall retirement paycheque.
Episode 26: RRIF Rules You Should Know
A deeper look at RRIF withdrawal requirements and how they impact your income and planning decisions.

How Much Tax Will I Pay on My RRIF?

Presented by Darren Devine, CFP®, CLU®, Financial Planner, Sun Life and President of Devine and Associates Financial Services Inc.

How much tax will you actually pay on your RRIF withdrawals?

10%?
20%?
More?

The answer isn’t as simple as a single percentage — and misunderstanding it can lead to unpleasant surprises.
Hello, and welcome to Money Monday, where we help simplify your financial journey.
I'm Darren Devine, Financial Planner with Sun Life and President of Devine & Associates. I’ve been helping families across Ontario plan, protect and structure retirement income for over 20 years.

RRIF taxation is one of the most common areas of confusion we see.

Let’s simplify it.

First: what is a RRIF?

A RRIF — Registered Retirement Income Fund — is what your RRSP converts into, typically by the end of the year you turn 71.

Once it becomes a RRIF, you must withdraw a minimum amount each year.
And every dollar withdrawn is considered taxable income.

So how is a RRIF taxed?

RRIF withdrawals are taxed as ordinary income — just like employment income.
There is no special lower tax rate.
The amount of tax you pay depends on:

  • Your total annual income
  • Your province of residence
  • Your tax bracket

The more income you have in a year, the higher your marginal tax rate may be.

What about withholding tax?

Here’s where many people get confused.

There are two types of RRIF withdrawals:
1. Minimum required withdrawals
2. Withdrawals above the minimum

For minimum withdrawals, there is no mandatory withholding tax.

That does not mean the money is tax-free.

It simply means tax may not be deducted at source — and you may owe tax when you file your return.

For withdrawals above the minimum, financial institutions apply withholding tax at prescribed rates.
In Canada (outside Quebec), current federal withholding rates on lump-sum withdrawals are generally:

  • 10% on amounts up to $5,000
  • 20% on $5,001–$15,000
  • 30% on amounts over $15,000

However, this withholding is not necessarily your final tax bill.

It’s a prepayment.

Your actual tax owed depends on your total income for the year.

Now for the OAS clawback layer

For higher-income retirees, RRIF withdrawals can also impact Old Age Security.

If your net income exceeds the annual OAS recovery threshold, part or all of your OAS may be clawed back.

This makes RRIF withdrawal strategy even more important.

The bigger question isn’t just:

“How much tax will I pay this year?”

It’s:

“How should I structure my withdrawals over time to manage tax efficiently?”

For example:

  • Drawing strategically before age 71
  • Coordinating withdrawals with CPP and OAS
  • Managing tax brackets annually
  • Planning for the tax impact at death

Because when someone passes away, the remaining RRIF is generally fully taxable in their final return — unless transferred to a qualified spouse or dependent.

That can create a significant tax bill if not planned properly.

The key takeaway

RRIF withdrawals are taxable.

The rate depends on your total income, not a flat percentage.

And proper planning can reduce lifetime tax — not just this year’s tax.

If you’re approaching age 71 — or already drawing from a RRIF — it’s worth reviewing your withdrawal strategy.

A coordinated plan can help smooth income, reduce tax surprises and protect more of what you’ve built.

Thanks for tuning into Money Monday. Don’t forget to like and comment for more episodes filled with tips to help make your financial journey a breeze. Until next time, I'm Darren Devine, and you can always talk to us today at DevineAndAssociates.ca!

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