In Canada, the Old Age Security (OAS) pension is a core retirement benefit that is received by seniors 65 years of age or older. If you have a high income, the federal government may reduce your OAS payments through a recovery tax referred to as the OAS clawback.
Please note that these clawback rules and thresholds are being updated in 2026, so it is important to be aware of these changes to properly plan for your OAS and maximize your income during retirement. Read this article to know more on Canada OAS Clawback 2026, how the calculation of it works, how much you can receive, and strategies to reduce or avoid this.
What is Old Age Security (OAS)?
Old Age Security (OAS) is a monthly government pension for most Canadian seniors aged 65 and over who meet basic age, residency, and immigration rules. The pension will be provided automatically as soon as you fulfill all of the requirements for receiving OAS benefits. OAS must be paid back to the Government if you do not meet all Canada OAS 2026 eligibility requirements but the amount of OAS depends on how long you lived in Canada after age 18.
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Therefore, the longer you have lived in Canada (a total of at least 40 years), the maximum amount of money OAS will pay you is $840.00 per month (the base amount) and is taxed as income. If your income is very high, some OAS benefits may be removed by clawback taxes. Seniors who have a very low income can receive extra help via Guaranteed Income Supplement (GIS).
What is the Canada OAS Clawback 2026?
The OAS clawback is a 15% recovery tax applied to your worldwide net income that exceeds a legislated income threshold. The clawback will repay 15 cents for every dollar of income you have over the threshold when your taxable income exceeds the threshold. This clawback can also reduce your benefits received from OAS to $0 depending upon the strength of the recovery at the first day of the taxable year.
The clawback amount paid for benefits received from July 2026/June 2027 will be based on the 2025 net taxable income of the individual receiving the benefit. The annual adjustments made by the government to the OAS clawback threshold will also increase each year based on the consumer price index (CPI) inflation rate, so the threshold for benefits received in 2026 may be higher than that of previous years for the clawback of benefits received in the same years.
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2026 OAS Clawback Threshold and Recovery Levels
Once your net income exceeds $93,654 in 2025 (the net income amount used to calculate your OAS for pay periods starting July 2026 and ending June 2027) then, effective with the month of July 2026, you will lose $0.15 of your OAS payment for every dollar above $93,654 (15% deduction).
Approximate 2026 recovery levels:
- Clawback begins at net income of: around $95,323
- OAS fully eliminated at net income of: about $154,708 (for those 65–74) and $160,647 (for those 75+), depending on the exact maximum OAS amount for that period.
If your income falls below the minimum threshold, you keep 100% of your OAS; if it sits in between, only a portion is clawed back.
How Much Can You Get in 2026?
| Age group | Max OAS per month (2026) | Max OAS per year (approx.) | Details |
|---|---|---|---|
| 65–74 | $743.05 | $8,917 | Full amount if you lived in Canada ≥40 years after age 18. |
| 75 and older | $817.36 | $9,808 | Includes 10% OAS pension increase for seniors 75+. |
| OAS clawback range | Starts at ~$95,323 income | Fully eliminated at $154,700–$160,600 income | 15% of income above the threshold is taken back from OAS. |
If you lived in Canada for fewer than 40 years after age 18, your actual OAS is a lower percentage of these maximums.
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How the Canada OAS Clawback 2026 is Calculated
The CRA OAS Clawback 2026 is calculated using a simple formula based on your net income (line 23600 on your tax return) and the annual clawback threshold. If your net income exceeds this threshold, you will owe 15% of the dollar amount in excess of the threshold, known as the Clawback Recovery Tax, that will lower the amount of OAS you receive for a year by the amount of the Clawback Recovery Tax for the 12-month period.
Basic calculation formula
The OAS recovery tax (clawback) is:
OAS Recovery Tax=15%×(Net Income−Clawback Threshold)
- Net Income = Your worldwide net income reported on your tax return for the relevant year.
- Clawback Threshold for 2026 = $95,323 (for 2026 income, used for the July 2027–June 2028 recovery period).
If the result is higher than your total annual OAS, your OAS is reduced to zero for that recovery period.
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How to avoid the Old Age Security Clawback
While it is not always possible to completely avoid the Pension clawback, but you can reduce or sometimes eliminate by doing proper income and tax planning. The key to minimizing or eliminating your clawback is to keep your net taxable income as low as possible or to just be above the OAS clawback threshold for the year.
- Use Tax-Free Saving Accounts Strategically: Any money that you take out of a TFSA is tax-exempt and doesn’t count as income. Putting your savings into a TFSA will lower your taxable income.
- Split Pension Income: If both you and your spouse can qualify to split pension income, you can reduce your individual tax liabilities by doing this with both of your pensions.
- Delay Old Age Security (OAS) Payments: You have until age 70 to delay receiving OAS payments. By delaying OAS, your payment will increase by 0.6% per month. If you believe that you will have a lower income in the future this could apply.
- Manage RRIF/RRSP Withdrawals: Large withdrawals from your RRSP or RRIF account may place you in a clawback situation. Plan based on gradual withdrawals to keep below the threshold.
- Be Cautious with Capital Gains: To reduce your risk of triggering clawback apply capital gains to multiple years.
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Final Words
The Canada OAS clawback 2026 is a tax of 15% levied on the total amount you would receive from Old Age Security once your income surpasses the threshold level (approximately $95,323). If your income exceeds that threshold, some portion of your OAS will either be reduced or eliminated completely.
Although it cannot always be avoided, careful planning can significantly minimize the Old Age Security clawback’s effect on your overall retirement income, allowing you to keep more money from your OAS.
There are many different ways to effectively manage the clawback, including using Tax-Free Savings Accounts (TFSAs), splitting pension income with a spouse or common-law partner, delaying receipt of OAS, managing RRSP and RRIF withdrawals, and spreading capital gains out over several taxation periods.
Sources
This article is based on official Government of Canada data and verified financial resources to ensure accurate and reliable information about the OAS clawback (recovery tax).
