OAS Clawback 2026: Threshold, How It Works and How to Plan Around It

The OAS clawback, formally the OAS recovery tax, may apply when your own net income passes a threshold set by the Government of Canada, which is $93,454 for 2025 income. The recovery tax is 15% of the income above that line, up to the OAS received, and it is generally deducted from OAS payments between July and June.

OAS clawback threshold: the cutoff for 2025 and 2026 income

The threshold is indexed each year, so the figure depends on which income year is being measured. The first table sets out the minimum threshold, where repayment can begin, and the maximum thresholds, where the recovery tax can reach the full OAS pension. The maximums answer the common question about the cutoff. They differ for ages 65 to 74 and age 75 and over because OAS is higher from age 75.

Source: Government of Canada, Old Age Security pension recovery tax and Repayment of Old Age Security pension, both showing a modified date of September 29, 2026, and checked on October 18, 2026. The Government of Canada notes that maximum amounts for the current income year are estimates until October, so it is worth rechecking the 2026 maximums on that page.

The minimum threshold is where repayment starts, not where OAS stops. Between the minimum and maximum thresholds, OAS is reduced gradually, by 15 cents for each dollar of net income above the minimum, so many retirees who cross the line repay part of their OAS rather than all of it.

What counts toward the threshold, and when repayment is deducted

The test uses your own net income before adjustments, which is line 23400 of the tax return, so it is measured person by person rather than as a household total. That income can include employment income, CPP, workplace pension income, RRSP and RRIF withdrawals, interest, dividends, taxable capital gains, rental income and the OAS pension itself. TFSA withdrawals are not taxable income, so they are not counted. This is one reason a TFSA and a RRIF of a similar size can have very different effects on the threshold.

The recovery tax is not charged the moment income crosses the line. The income reported on your tax return for one year sets the deduction for the following July to June period, so income from 2025 may affect OAS paid from July 2026 to June 2027. The amount is spread across the 12 monthly OAS payments instead of being collected as a lump sum at tax time, and Service Canada sends a letter describing any deduction. If a deduction causes financial hardship, the Government of Canada says you may ask the CRA to review your situation. The recovery tax generally cannot exceed the OAS you actually received.

A hypothetical OAS clawback example

The example below is hypothetical and for illustration only. It follows the calculation shown by the Government of Canada: subtract the threshold from net income, then take 15% of the difference. The retiree is the same person described at the top of this page.

The calculation works the same way whichever sources make up the total. CPP, OAS, RRIF withdrawals, pension income and investment income are added together and compared with one threshold. A different mix with the same total gives the same result, which is why the total, rather than any single source, is what the threshold responds to. The Government of Canada presents its own version of this calculation as a reference only, and your actual amount is set through your tax return.

What can change net income in a planning year

Some of the factors below may be worth exploring, depending on your situation. None applies to everyone, and each involves trade offs.

RRIF withdrawals. The required minimum percentage rises with age, so a RRIF can add more taxable income over time even when spending stays the same. Our table of RRIF withdrawal rates by age shows how the minimum climbs. Taking more than the minimum in a lower income year, or spreading a large withdrawal across two calendar years, may change which year the income lands in, and it can also add income to a year that is already close to the threshold. We look at that choice in whether to take more than the RRIF minimum, and at the wider effects in the RRIF withdrawal tax chain reaction.

Pension income splitting. When one spouse or common law partner has much higher income, eligible pension income may be allocated to the other on the tax return, which can change each person's net income. Because the threshold is applied to each person, a couple may see a different result than a single household total would suggest. Our post on income splitting in retirement walks through an illustration.

CPP and OAS start dates. The Government of Canada describes a larger monthly OAS payment for each month the pension is delayed after age 65, up to age 70 (see When to start your retirement pension). Delaying keeps OAS out of net income during the early years of retirement, when pension and RRIF income may be highest relative to spending. It does not move the threshold or lower other income, and a larger OAS pension later may still be exposed if income stays high. The same trade off appears with CPP, which we explored in why waiting until 70 to start CPP can be the quiet winner and in what the maximum CPP retirement benefit is.

What a scenario model can show before income crosses the line

A threshold on its own is a single line. A scenario model shows how several moving parts relate to that line across the years: RRIF minimums that climb with age, CPP and OAS start dates, workplace pension income and a spouse's income. Seeing them side by side may show how close net income comes to the threshold, in which years, and what each change could trade away. In some cases a partial recovery tax may be a smaller cost than giving up other advantages, and in others a small change in timing may matter more. We explore that with clients in real time, adjusting the assumptions until the trade offs are visible. How our process works describes the first 30 minute conversation, and our page on who we help describes the retirees we tend to work with.

For related reading, see our guide to RRSP and RRIF withdrawal strategy, average Canadian retirement income, our retirement readiness guide and our approach to investment management.

None of this is a reason to avoid RRIF income or to assume the clawback applies to you. Many retirees have income below the threshold. The right approach depends on your total income picture, your age and your other guaranteed income, and it is worth modelling before assuming that any strategy applies to you.

This content is for general information only and is not personalized tax, legal, or financial advice. OAS clawback thresholds and rates are published annually by the Government of Canada and Service Canada and are subject to change. Examples are hypothetical and for illustration only. For advice tailored to your situation, speak with a qualified professional.