What Is the OAS Clawback? The 2026 Threshold and How the Recovery Tax Works

The OAS clawback is not a separate tax and it does not touch your CPP, RRSP, RRIF, or other savings directly. It only affects OAS itself. Once your net income for a given year passes a threshold published annually by the Government of Canada, Service Canada may reduce your future OAS payments to recover part of what you received, at a rate of 15% of the amount above that threshold.

How much income triggers the clawback changes every year, since the threshold is indexed to inflation. For income earned in 2025, the minimum threshold is $93,454, a Government of Canada figure that determines the recovery tax applied to OAS payments from July 2026 through June 2027. For income earned in 2026, Service Canada's early estimate of that threshold is $95,323, though the final figure is not confirmed until later in the year. The table below sets out the minimum threshold and the higher maximum thresholds, where OAS is reduced to zero, for the three most recently published years.

The clawback does not appear the moment your income crosses the threshold. It is assessed after the fact, based on the income you report on your tax return, and it can apply any year you receive OAS, not only starting at 65. If your net income for a tax year exceeds the threshold, the CRA calculates a recovery tax amount, and Service Canada divides that amount into monthly deductions taken from your OAS payments the following July through the June after that. In other words, income earned in 2025 could reduce your OAS cheques starting in July 2026, not immediately in 2025.

Income sources that count toward the OAS clawback go well beyond a paycheque. What counts toward the threshold is your net world income, a broader measure than a paycheque. It generally includes employment and self-employment income, CPP and other pension income, RRSP and RRIF withdrawals, interest, dividends, taxable capital gains, rental income, and OAS itself. It generally does not include TFSA withdrawals or growth inside a TFSA, since that money is not taxable in the first place, or the GIS, which is calculated separately. That distinction is part of why some retirees can hold a large TFSA balance and stay well under the clawback threshold, while a similar-sized RRIF can push them past it.

How the OAS clawback calculation works

The math itself is straightforward once you know your net income for the year: subtract the threshold from that income, then multiply what is left by 15%. Say your 2025 net income came to $110,000. That is $16,546 above the $93,454 threshold, and 15% of that is $2,481.90, the amount that could be recovered from your OAS payments over the following July-to-June period. The recovery tax generally cannot exceed the total OAS you actually received in the year, so it can reduce a payment to zero but should not create a balance owing beyond that.

Consider a hypothetical couple we will call Ron and Carol, both 72. Between CPP, a small workplace pension, and their RRIF minimum withdrawals, Carol's net income for the year comes to roughly $88,000, comfortably under the threshold. Ron's RRIF is larger, and once his CPP, pension, and RRIF minimum withdrawal are added up, his net income lands around $105,000, about $11,500 over the 2025 threshold. On paper, that could mean roughly $1,725 recovered from his OAS over the following year. Because RRIF withdrawals are fully taxable and required once the account is running, income like this can drift past the threshold gradually as the mandatory withdrawal percentage climbs with age, even without any change in spending.

A scenario like this is easiest to see with a full breakdown of where the income comes from. Say a retiree we will call Denise, 69, has a net income for the year that combines CPP of about $14,000, RRIF withdrawals of about $35,000, pension income of about $40,000, and investment income of about $16,000, for a total of $105,000. Measured against the $93,454 threshold for 2025 income, that is $105,000 minus $93,454, or $11,546 above the line. Multiplying $11,546 by 15% works out to $1,731.90, the amount that could be recovered from Denise's OAS payments over the following July to June period. The calculation works the same way no matter which sources make up the total: CPP, RRIF withdrawals, pension income, and investment income are simply added together and compared against the single threshold, and it is this kind of scenario, run with your own numbers, that shows whether the OAS clawback is actually a risk for you or a non-issue.

Strategies that may help reduce the OAS clawback vary by situation. One option some retirees weigh is deferring OAS itself. Like CPP, OAS can be delayed past 65, up to age 70, and each year of delay can increase the payment by roughly 7.2%, for a maximum of about 36% more at 70. Delaying OAS does not lower your other income or move the threshold, but it can keep OAS out of the income mix during the years, often the mid-60s to 70, when RRIF and pension income tends to run highest relative to spending needs. For someone who expects to sit well above the clawback threshold in those early years regardless, deferring OAS may mean less of it is ever exposed to the recovery tax in the first place, though the trade-off is giving up an income stream you would otherwise be entitled to sooner.

OAS and CPP are separate programs, but deciding when to start each is worth looking at together rather than in isolation. We explored the CPP side of this trade-off in our companion post on why waiting until 70 to start CPP can be the quiet winner: a similar logic, a larger guaranteed amount later in exchange for less now, applies to OAS. How large that eventual CPP amount could be also depends heavily on your own contribution history, which we cover in what the maximum CPP retirement benefit is and what it takes to qualify. Whether it makes more sense to defer one, both, or neither depends on your income sources, your health, and how each is likely to interact with the OAS clawback threshold in your own years.

Because RRIF withdrawals are one of the more common ways retirees find themselves crossing the OAS threshold, it is worth revisiting how those withdrawals are structured. The RRIF minimum withdrawal rule can quietly cost you later looks at how the required minimum climbs with age and why that can push income into a higher bracket, closer to clawback territory, exactly when there is less room to manage it. Our RRSP-to-RRIF guide goes further into the withdrawal schedule and the trade-offs between drawing more or less than the minimum, which is often the actual lever available for managing OAS clawback exposure over a retirement. Our post on RRIF withdrawal rates by age has the complete CRA table, and how a RRIF withdrawal can set off a wider tax chain reaction looks at how one withdrawal can affect more than just your tax bracket.

Seeing how CPP timing, RRIF withdrawals, pension decisions, and the OAS clawback interact together, rather than one at a time, is the kind of scenario based work we do with clients. If you are trying to see where your own household income lands relative to national figures, our look at average retirement income in Canada is a useful companion read. Our page on who we help describes the retirees we tend to work with, and our approach to investment management explains how withdrawal strategy and portfolio decisions can work together.

None of this is a reason to avoid RRIF income or to assume the clawback will apply to you. Most Canadians' retirement income sits below the threshold, and for those who do cross it, a partial recovery tax on OAS is often still a smaller cost than giving up the tax deferral of leaving money inside a registered account longer. The right approach depends on your total income picture, your age, and what other guaranteed income you have coming in, and it is the kind of trade-off worth modelling out before assuming any particular 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. For advice tailored to your situation, speak with a qualified professional.