Retirement Tax in Canada
How CPP, OAS, pensions and RRIFs are taxed, and the decisions that cut retirement tax.
The short version
- In retirement, CPP, OAS, pensions, RRIF payments and investment income are all taxable. Very little has tax taken off unless you ask.
- Old Age Security is clawed back by 15% of net income over $95,323 for 2026.
- Credits for 65 and over: the age amount (up to $9,208, reduced above $46,432 of net income) and the pension income amount (on up to $2,000 of eligible pension).
- Couples can split eligible pension income to even out their tax.
- RRSPs must become a RRIF or annuity, or be cashed out, by the end of the year you turn 71; see RRSP to RRIF.
Retirement Tax in Canada
Retirement is supposed to be simpler. The tax return usually goes the other way: one T4 becomes a T4A, a T4A(P), a T4A(OAS), a T4RIF and a couple of T5s, each from a different payer, none of whom talk to each other. Here's how the pieces fit, and the four decisions that matter most.
Where Retirement Income Comes From, and How It's Taxed
| Income | Slip | Tax withheld? |
|---|---|---|
| Employer pension | T4A box 016 | Yes |
| CPP retirement pension | T4A(P) | Only if you ask |
| Old Age Security | T4A(OAS) | Only if you ask, or for the clawback (calculator) |
| RRIF payments | T4RIF | Not on the minimum amount (and at death, see RRSPs and RRIFs at death) |
| Interest, dividends, gains | T5, T3, T5008 | No |
| TFSA withdrawals | None | Not taxable at all |
That's why so many new retirees owe in April; see why do I owe taxes this year. Asking CPP and OAS to withhold tax is the simplest fix.
Every credit for people 65 and over is on tax credits for seniors, starting with the age amount.
The Four Decisions That Matter Most
- Splitting pension income with your spouse: pension income splitting, and the best amount from the pension splitting calculator.
- Drawing down RRSPs early to stay in low brackets: the RRSP meltdown.
- When to start CPP: 60, 65 or 70; see when to take CPP.
- Getting the pension income amount for both spouses, including the $2,000 RRIF strategy: pension income tax credit.
- Staying under the OAS clawback by timing RRSP and RRIF withdrawals and capital gains. See marginal tax rate for why clawbacks act like extra tax, and the retirement income tax calculator for your own numbers.
- Using the TFSA for money you'll want later, since withdrawals don't count as income; see TFSA tax rules.
How much tax will you pay in retirement?
Give the assistant your expected pension, CPP, OAS, RRIF and investment income, your province and your spouse's income. It estimates the tax, the OAS clawback and the best pension split.
Other Credits Worth Checking at 65+
- Medical expenses, including private health premiums.
- Home accessibility credit for renovations to stay at home.
- Disability tax credit, if mobility, vision or memory is markedly restricted.
- Transferring unused age and pension amounts to a spouse: spousal amount.
Retirement Tax Questions
Is CPP taxable in Canada?
Yes. CPP retirement pensions are taxable income, reported from a T4A(P). Tax is withheld only if you ask Service Canada to withhold it.
What is the OAS clawback threshold for 2026?
$95,323 of net income. OAS is reduced by 15% of net income above that amount.
When do I have to convert my RRSP to a RRIF?
By the end of the year you turn 71, when the RRSP must be converted to a RRIF or annuity, or cashed out.
What tax credits do seniors get?
The age amount for those 65 and over, the pension income amount on eligible pension income, and pension income splitting for couples, along with medical, disability and home accessibility credits.
Sources: CRA, 2026 indexation table; Pension income splitting; RRSPs and related plans. Checked October 2026.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.