Quick Answer
For the 2026 income year, the OAS clawback begins once your net world income passes $95,323. Above that line, the Canada Revenue Agency recovers 15 cents of Old Age Security for every dollar of income. Your OAS is fully clawed back at an estimated $154,753 for ages 65 to 74 and $160,696 for ages 75 and over. This is based on your 2026 income and affects your OAS payments from July 2027 to June 2028. TFSA withdrawals and the sale of your principal residence do not count toward the threshold.
Why More Retirees Are Hitting the OAS Clawback in 2026
The OAS clawback has a reputation as a tax on the wealthy. For a growing number of ordinary retirees, that reputation is misleading. The income threshold for the 2026 year rose to $95,323, yet rising Canada Pension Plan payments, mandatory withdrawals from a registered retirement income fund, and a single large capital gain are pushing more middle-income seniors over the line than before.
If you have spent decades building a retirement income, the idea of handing some of it back can feel unfair. The reassuring part is that the clawback is predictable, it is based only on your own income, and much of it can be planned around. For the wider picture, start with our retirement planning guide.
What the OAS Clawback Actually Is
Despite the alarming name, the clawback is not a separate bill that arrives in the mail. It is a reduction applied to a pension you already receive. The Canada Revenue Agency looks at the net income you report and, if it crosses the threshold, recovers part or all of your OAS.
The recovery happens in two ways. When you file your tax return, any repayment owed for the prior period is settled. Going forward, Service Canada typically reduces your monthly OAS payments in advance, based on your most recent return, so you are not surprised by a large bill later.
Where the 2026 Threshold Sits, and How It Has Climbed
The starting threshold is the same for everyone. The difference between age groups appears only at the top end, because seniors 75 and over receive a larger maximum OAS pension and therefore need a higher income before the entire benefit is recovered.
These thresholds rise most years because the CRA indexes them to inflation, meaning it adjusts them for the rising cost of living. The minimum has climbed from $90,997 on 2024 income to $93,454 on 2025 income, and now $95,323 on 2026 income. The maximum thresholds for the current year are estimates until the CRA finalizes them between October and December, so treat them as a reliable planning guide rather than a settled number.
Quick Start: Pick Your Path
Your next move depends on where your income lands. Find your situation below, then read the section that fits.
How Your OAS Repayment Is Calculated, Step by Step
- 1Find your net world incomeUse line 23600 of your T1 return. This includes most income earned in Canada and abroad.
- 2Subtract the threshold of $95,323If the result is zero or negative, no clawback applies for the year.
- 3Multiply the excess by 15 percentThis figure is your annual recovery tax.
- 4Cap it at your total OASYou can never repay more OAS than you actually received in the year.
- 5Spread it across the payment periodService Canada typically reduces your monthly OAS from the following July through the next June.
Consider a retiree aged 68 with net income of $120,000 in 2026. The excess over the threshold is $24,677, and 15 percent of that is roughly $3,700. Against a maximum OAS of about $8,900 for the year, this retiree would repay close to 40 percent of their pension and keep the rest. As income climbs toward the estimated $154,753 ceiling, the share recovered rises until no OAS remains. Actual amounts may vary, since OAS figures are indexed and adjusted through the year.
What Income Counts Toward the Threshold, and What Doesn’t
This broad definition is why so many retirees are caught off guard. A single large capital gain from selling an investment property, or a mandatory RRIF minimum withdrawal, can lift your net income across the threshold in a single year. Your Canada Pension Plan payments also count, and rising CPP amounts are one reason more seniors are crossing the line. To see why those amounts are increasing, read about your CPP payments.
CPP and other pension income
RRSP and RRIF withdrawals
Rental income
Taxable capital gains
Dividends and interest
Sale of your principal residence
Guaranteed Income Supplement (GIS)
Allowance and Allowance for the Survivor
How Ontario Retirees Can Keep More of Their OAS
There is no single trick that removes the clawback, but several legitimate strategies can lower the net income the CRA measures. The most effective plans usually combine two or three of these.
- →Splitting eligible pension income with a lower-income spouse may bring both partners under the threshold and reduce the total recovered.
- →Drawing from your TFSA first lets you cover spending with money that does not count as income, keeping your reported figure down.
- →Managing RRSP and RRIF timing, such as drawing down an RRSP earlier, can smooth your income and avoid a sharp spike once mandatory withdrawals begin.
- →Spreading a large sale of investments or property over more than one tax year can prevent a single year from crossing the threshold.
- →Deferring OAS past age 65 raises your eventual monthly payment and can make sense if your income is set to fall later in retirement.
Because rising public pension amounts feed into all of this, it helps to understand how CPP enhancement affects your income before you finalize a plan.
Common Mistakes That Trigger the Clawback
A few avoidable errors account for most surprise clawbacks. Watching for these can spare you an unexpected reduction.
- →Forgetting that RRIF minimum withdrawals become mandatory after age 71 and rise each year, quietly lifting net income.
- →Bunching a property or portfolio sale into a single tax year, when spreading the gain could have kept income under the threshold.
- →Assuming the clawback is based on household income, when in fact each spouse is tested on their own net income.
- →Treating the maximum thresholds as final, when the current-year maximums are CRA estimates until late in the year.
- →Overlooking TFSA room and drawing taxable income when tax-free withdrawals were available instead.
- →Waiting until tax-filing season to react, after the income that triggers the clawback has already been earned.
Your OAS Clawback Questions, Answered
At what income does the OAS clawback start in 2026?
How much OAS do I lose for every dollar over the limit?
At what income do I lose all of my OAS?
Does the money I take out of my TFSA count toward the clawback?
Do my CPP payments count toward the OAS clawback?
Is the clawback based on my income or my household’s income?
Will selling my house trigger the OAS clawback?
When will my 2026 income actually affect my OAS cheque?
Plan Ahead So the Clawback Doesn’t Catch You
The OAS clawback is far more manageable when you see it coming. For the 2026 year, the line to watch is $95,323, the rate is 15 percent, and only your own taxable income counts toward it. Because the recovery is based on income you can often shift, time, or shelter, a large clawback and a small one often come down to planning done before year-end rather than at tax time.
Keep More of Your OAS
If you would like help modelling your retirement income against the $95,323 threshold, our team can walk you through your options in plain English.
Book a ConsultationSources & References
- → Government of Canada, Old Age Security pension recovery tax (thresholds, 15 percent rate, recovery periods): canada.ca/en/services/benefits/publicpensions/old-age-security/recovery-tax.html
- → Government of Canada, Old Age Security payment amounts (maximum OAS pension): canada.ca/en/services/benefits/publicpensions/old-age-security/payments.html
- → Income Tax Act, section 180.2, Old Age Security pension recovery tax: laws-lois.justice.gc.ca/eng/acts/i-3.3/
- → Canada Revenue Agency, Line 23600 net income guidance: canada.ca
