OAS Clawback Explained
The OAS recovery tax: 15% over $95,323 for 2026, when it comes off your payments, what income counts and seven ways to keep more.
The short version
- The OAS clawback (officially the OAS recovery tax) takes back 15% of your net income above a threshold: $95,323 for 2026 income, $93,454 for 2025.
- All of it is gone at about $155,320 of 2026 income if you're 65 to 74, and $161,320 if you're 75 or older.
- It's based on your net income (line 23400), which includes OAS itself, CPP, pensions, RRIF payments, grossed-up dividends and taxable capital gains. Pension splitting and RRSP deductions lower it.
- 2026 income sets the amount held back from each OAS payment from July 2027 to June 2028. Income drops? Form T1213(OAS) asks for less to be held back.
- The repayment is deductible, so the real cost is less than 15%, but in the clawback zone the combined bite on extra income in Ontario runs about 44% to 52%.
OAS Clawback Explained
Old Age Security is the only pension that sends a bill once you do well. Earn over the threshold and Service Canada starts helping itself to 15 cents of every extra dollar, on top of regular tax. It's not a penalty; it's a means test with a friendlier name. The good news: most of the income that triggers it can be timed, split or moved. Here's how it works and the moves that keep more of it.
The Numbers
| Income year | Clawback starts above | All OAS gone at (65 to 74) | All OAS gone at (75+) | Taken from payments |
|---|---|---|---|---|
| 2025 | $93,454 | $152,062 | $157,923 | July 2026 to June 2027 |
| 2026 | $95,323 | $155,320 | $161,320 | July 2027 to June 2028 |
Maximum OAS for October to December 2026: $762.50 a month at 65 to 74, $838.75 at 75 and over.
Example
A 68-year-old in Ontario has 2026 net income of $110,000: a pension, CPP, OAS and some RRIF.
- Over the threshold: $110,000 – $95,323 = $14,677.
- Recovery tax: 15% = $2,201.55, repaid on the 2026 return (line 42200) and deducted on line 23500.
- From July 2027 to June 2028, about $183 is held back from each monthly OAS payment, based on that 2026 income.
- The next $100 of income costs about $34 of income tax plus $15 of OAS, less the tax saved by deducting that $15: roughly $44 in all. At $130,000, roughly $52.
Your own figure, either year, is in the OAS clawback calculator. The tax side is in the income tax calculator.
Close to the threshold?
Give the assistant your pension, CPP, OAS, RRIF, investment income, your spouse's income and province. It shows how much OAS you lose and which of the moves below helps most.
Ways to Keep More OAS
- Split pension income with a lower-income spouse; up to half of eligible pension moves to their return. See pension income splitting.
- Draw RRSPs down before 65. Withdrawals in your early 60s at a lower rate can mean smaller RRIF payments later, inside the clawback zone. See RRSP.
- Use the TFSA. TFSA withdrawals aren't income at all. Moving investments there over time shrinks the taxable income that triggers the clawback; see TFSA.
- Watch Canadian dividends. Eligible dividends are grossed up 38% for net income, so $10,000 of dividends counts as $13,800 toward the threshold.
- Spread capital gains. One big sale can claw back a whole year of OAS; selling over two or three years may not. See capital gains tax.
- Defer OAS. Each month you wait after 65 adds 0.6%, up to 36% at 70. If 65 to 70 are high-income years anyway, deferring can avoid clawing back money you'd have lost.
- Time CPP too. A bigger CPP at 70 adds to net income for life; see is CPP taxable?
When the Holdback Is Wrong
Service Canada sets the monthly holdback from your income two years earlier. Retire, sell a business, or have a one-time gain, and next year's holdback can be far too high. File form T1213(OAS) with CRA, showing your expected lower income, to reduce it. Over-withheld amounts come back as a refund when you file anyway; the form just stops you waiting for it. Senior credits that also shrink with income are on tax credits for seniors and the age amount.
OAS Clawback Questions
What is the OAS clawback threshold for 2026?
$95,323 of net income for the 2026 income year. You repay 15% of income above it, and OAS is fully clawed back at $155,320 for ages 65 to 74 and $161,320 for 75 and older. Deductions based on 2026 income apply from July 2027 to June 2028.
What income counts for the OAS clawback?
Your net income on line 23400 of your return, which includes OAS, CPP, pensions, RRIF withdrawals, grossed-up dividends and taxable capital gains, after deductions such as RRSP contributions and pension splitting. TFSA withdrawals do not count.
How is the OAS clawback paid?
It is calculated on your tax return and then withheld from your OAS payments for the following July to June period. Any difference is settled when you file.
Can I avoid the OAS clawback?
You can often reduce it: split pension income with your spouse, draw down RRSPs before 65, move savings to a TFSA, spread capital gains over several years, or defer OAS to as late as 70.
Can I reduce the OAS recovery tax withheld if my income dropped?
Yes. Form T1213(OAS) asks CRA to reduce the recovery tax withheld at source based on your expected lower income.
Is OAS taxable in Canada?
Yes. Old Age Security is taxable income, reported on a T4A(OAS) slip and taxed at your marginal rate. Tax is not withheld unless you ask, apart from clawback deductions for higher incomes.
Sources: Service Canada, OAS recovery tax; OAS payment amounts. Checked October 2026. The example uses our 2026 Ontario rules engine for income tax, rounded; age and pension credits are already used up at these incomes. The combined rates are estimates for Ontario only.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.