OAS Clawback
Calculator Canada 2025-2026

The OAS Clawback — officially the 'OAS recovery tax' under Income Tax Act §180.2 — is a special tax that reduces Old Age Security (OAS) payments for higher-income retirees. The clawback rate is 15% of every dollar of net income exceeding the minimum recovery threshold, which is $93,454 for the 2025 income year and $95,323 for the 2026 income year (indexed annually).

It is technically a tax, not a benefit reduction — Service Canada keeps paying OAS in full during the year, then CRA assesses recovery tax on your return, and that assessment reduces your OAS payments over the following July-June period. So 2025 income drives the OAS you receive from July 2026 to June 2027.

The recovery applies separately to each individual, not per household: couples can both receive OAS without each other's income affecting the clawback.

There are two thresholds per income year, and they are indexed annually. For the 2025 income year (recovery period July 2026 to June 2027): the minimum recovery threshold is $93,454, and OAS is fully recovered at $152,062 if you are 65-74 or $157,923 if you are 75 or older.

For the 2026 income year (recovery period July 2027 to June 2028): the minimum threshold rises to $95,323, and OAS is fully recovered at $155,109 if you are 65-74 or $161,088 if you are 75 or older. Service Canada marks those two 2026 maximums as estimates from January to September, because they are derived from quarterly OAS rates that are not final until later in the year; they become final in October.

The minimum threshold is not an estimate. Earlier minimums for reference: $90,997 for 2024 income and $86,912 for 2023 income.

Net income means T1 line 23600 — income after RRSP contributions, deductible employment expenses, union dues, child care expenses, support payments made and other §60 deductions, but BEFORE non-refundable tax credits. Capital gains, grossed-up eligible dividends, RRIF withdrawals, CPP, OAS itself, employment income and pension income all count toward net income.

TFSA withdrawals do NOT count.

The minimum threshold is indexed every year: $79,845 for the 2021 income year (OAS reduced July 2022 – June 2023), $81,761 for 2022, $86,912 for 2023 and $90,997 for 2024 — then $93,454 for 2025 and $95,323 for 2026. The rate has been 15% throughout.

So for a 2021 reassessment with $100,000 of net income, the recovery tax was 15% × ($100,000 − $79,845) = $3,023.25, spread over the July 2022 – June 2023 payments and capped at the OAS actually received in 2021. The full table for 2019–2026 is below the calculator.

Using the 2025 income year (threshold $93,454) and a 65-74 recipient: at $93,454, nothing is recovered. At $100,000, $6,546 over the threshold × 15% = $982 recovery tax, which trims about $82/month off OAS from July 2026.

At $120,000: $26,546 × 15% = $3,982. At $135,000: $41,546 × 15% = $6,232 — most of a year's OAS.

At $152,062, the full year of OAS is recovered and net OAS drops to $0 for the July 2026-June 2027 period. For a recipient 75 or older, the same full-recovery point is $157,923, because the Bill C-12 10% boost gives a larger OAS base to recover.

The tax is computed on net income rather than gross, so an RRSP contribution is the most direct lever; pension income splitting also lowers each spouse's individual net income.

Two phases: (1) Annual: shown on your T1 line 23500 as 'Recovery of social benefits' — net of any income tax you owe; reduces your refund or increases tax owed in the year of assessment. (2) Future OAS reduction: Service Canada uses the assessed recovery tax to reduce your OAS payments for the following July-June period. Example: 2025 tax return filed April 2026 shows $3,000 recovery tax → Service Canada reduces July 2026-June 2027 OAS by $3,000 ÷ 12 = $250/month.

If recovery is more than 100% of OAS, Service Canada may stop OAS entirely until your income drops below threshold. The recovery tax appears as both a tax (line 23500) AND as reduced future OAS payments — but it's the SAME amount, not double-charged.

RRSP contribution — $-for-$ deduction from net income. Each $1 contributed = $0.15 of OAS preserved (federal tax saving on top of that).

Other levers: (1) Pension income splitting with spouse via Form T1032 — split up to 50% of eligible pension income (RRIF, RPP, annuity, LIF). (2) Spousal RRSP — split future RRSP income between spouses pre-retirement. (3) Hold investments inside TFSA (withdrawals don't count in net income). (4) Hold Canadian dividend-paying stocks outside non-registered accounts — eligible dividend gross-up + dividend tax credit reduces net income. (5) Defer RRSP→RRIF conversion to year 71 if income is high earlier in retirement. (6) Time large capital gains in low-income years. (7) Charitable donations — reduce net income via the donation tax credit.

Yes. OAS payments can be deferred up to 5 years past age 65 (i.e., start any month between 65 and 70).

Each month of deferral adds 0.6% to the monthly amount — maximum 36% increase at age 70. Strategic use: defer if your 65-69 income is high (already above OAS threshold) — receive enhanced OAS at 70 when income may be lower (after RRSP→RRIF transition timing).

Combined with strategic income planning, deferring can mean receiving full enhanced OAS at 70 vs zero net OAS at 65-69. Caveat: you must apply explicitly to defer — Service Canada starts OAS automatically at 65 if you don't actively defer.

No — only OAS has a clawback. CPP is a contributory pension based on your lifetime contributions; it is taxable income but never recovered or clawed back regardless of income level.

OAS is a residency-based universal benefit; the clawback applies only to OAS. Both CPP and OAS payments contribute to your net income, which can trigger the OAS clawback.

So a high-CPP recipient may inadvertently push themselves into OAS clawback territory through their own CPP income. This is one of the most common surprises for retirees who maxed out CPP contributions in their working years.

Effective 1 July 2022 (Bill C-12), OAS recipients aged 75 and over receive an automatic 10% increase in their monthly OAS. For the July-September 2026 quarter the maximums are $751.97/mo at 65-74 and $827.17/mo at 75+ — exactly 1.10 times the younger rate.

The boost is itself subject to recovery tax if income exceeds the threshold; it does NOT come with a separate higher exemption. The recovery tax simply applies to a larger OAS base, so full recovery is reached at a slightly higher income: $157,923 rather than $152,062 for the 2025 income year.

Note that OAS is re-indexed every quarter, so the amount you are paid today is not the amount the recovery-tax calculation uses for a past income year.

GIS is income-tested rather than clawed back. It is reduced as your income other than OAS and GIS rises — broadly $1 of GIS lost per $2 of additional income for a single recipient — until it reaches zero at the maximum income for your family situation.

Maximum GIS amounts and the income cut-offs differ for single, widowed or divorced recipients versus those with a spouse or common-law partner, and both are re-indexed every quarter alongside OAS, so check the current quarter's figures on the Service Canada GIS benefit-amount page rather than relying on a fixed number. In practice GIS and the OAS clawback never overlap: anyone with enough income to trigger the recovery tax is far above the GIS cut-off.

The Allowance and the Allowance for the Survivor are separate income-tested benefits for ages 60-64.

Several legitimate planning approaches: (1) Pension income splitting via T1032 — up to 50% of eligible pension income can be allocated to the lower-income spouse, often bringing both incomes below the clawback threshold. (2) Spousal RRSP contributions — high earner deposits to spousal RRSP during working years; income comes out in lower spouse's name in retirement. (3) Carry-forward unused RRSP room into retirement and contribute when needed to manage net income year-by-year. (4) Coordinate RRIF withdrawal age — use spouse's age (if younger) when starting RRIF for lower mandatory withdrawal percentage. (5) Capital gains timing across both spouses, so each partner uses their own federal basic personal amount — up to $16,129 for 2025 and $16,452 for 2026 — and their own lower brackets. (6) Hold income-producing investments in the lower-earner's name (no income attribution if cleanly funded with their own contributions).