OAS Clawback
Calculator Canada 2025-26

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 recovery threshold ($93,454 for 2025-26, indexed annually). It is technically a tax not a benefit reduction — Service Canada continues paying OAS at full amount during the year, then CRA assesses recovery tax on your tax return, which reduces your OAS payments for the following July-June period. The recovery applies separately to each individual (not household). Couples can both receive OAS without each other's income affecting the clawback.

$93,454 net income (2025-26 — adjusted annually for inflation, up from $90,997 in 2024-25 and $86,912 in 2023-24). Net income = T1 line 23600, which is income after RRSP contributions, deductible employment expenses, union dues, child care expenses, support payments paid, and other §60 deductions, but BEFORE non-refundable tax credits. RRSP contributions reduce net income $-for-$, making them the most direct OAS clawback mitigation tool. Capital gains, dividends grossed-up to taxable amount, RRIF withdrawals, CPP, OAS itself, employment income, pension income — all count toward net income. TFSA withdrawals do NOT count (tax-free, not included in income).

At $93,454 (threshold): 0% reduction. At $100,000 net income: $6,546 over threshold × 15% = $982 recovery tax, reduces next year's OAS by ~$82/month. At $120,000: $26,546 × 15% = $3,982 reduction. At $135,000: $41,546 × 15% = $6,232 reduction (most of OAS gone). At $151,668 (~full clawback under 75): all OAS recovered, $0 net OAS received next July. At $157,488+ (75+ super OAS): all of the 75+ enhanced OAS recovered. The clawback is calculated on net income (not gross), so reducing net income via RRSP contribution is the most direct lever. Pension income splitting between spouses can also reduce each spouse's individual 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+ receive an automatic 10% increase in their monthly OAS. 2025-26 indicative: $727.67/mo under 75 vs $800.44/mo at 75+. The 10% boost is also subject to clawback if income exceeds the threshold — it does NOT come with a separate higher exemption. Combined with regular OAS, the recovery tax simply applies to the higher base, with full clawback reached at slightly higher income (~$157,488 vs ~$151,668 for under-75).

GIS is income-tested but works differently — it's not a 'clawback' per se but an income-based eligibility. 2025-26 GIS thresholds (single, single survivor, common-law/married partner) vary by family situation; GIS reduces as combined income (excluding OAS and GIS itself) rises, typically with $1 GIS reduction per $2 of additional income up to a maximum income, beyond which GIS = $0. Maximum GIS (single, 2025-26): $1,098.66/mo plus enhanced top-up for very low income. GIS is for low-income seniors and is mutually exclusive with OAS clawback territory — anyone in OAS clawback range earns far too much to qualify for any GIS. The Allowance and 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 to use both Personal Amount $15,705 (2025) and lower brackets. (6) Hold income-producing investments in the lower-earner's name (no income attribution if cleanly funded with their own contributions).