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 OAS clawback?
The OAS clawback, officially called the OAS recovery tax, applies when net world income exceeds the threshold for the relevant income year. The recovery amount is 15% of the income above that threshold, and the reduction is then withheld from OAS payments on a monthly basis.
A simple way to explain it is this: if income is $1,000 above the threshold, the clawback is $150 because the government recovers 15 cents for every extra dollar of income. If the total recovery amount is larger than the annual OAS pension otherwise payable, OAS can be reduced to zero for that recovery period.
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Official 2026 thresholds
The official thresholds published by the Government of Canada distinguish between 2 different 2026 contexts, and that distinction matters for accuracy.
1. OAS payments from July 2026 to June 2027
This recovery period is based on 2025 income. The minimum income threshold is $93,454, the maximum income threshold for age 65 to 74 is $152,062, and the maximum income threshold for age 75 and over is $157,923.
This means clawback starts once 2025 net world income exceeds $93,454. OAS is fully eliminated at $152,062 for seniors age 65 to 74 and at $157,923 for seniors age 75 and over during this July 2026 to June 2027 payment period.
2. OAS payments from July 2027 to June 2028
This later recovery period is based on 2026 income. The minimum income threshold is $95,323, the estimated maximum income threshold is $154,753 for age 65 to 74, and the estimated maximum income threshold is $160,696 for age 75 and over.
From January to September of the current tax year, the government notes that the maximum income thresholds for that later period are estimates based on maximum OAS pension amounts, with final values published from October to December.
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)
For example, if a senior’s relevant net income is $100,000 and the threshold is $93,454, the excess income is $6,546. The clawback is then $981.90, because $6,546 multiplied by 15% equals $981.90.
Age-based examples
Example 1: Age 68, partial clawback in the July 2026 to June 2027 period
Assume net income for 2025 is $100,000 and the senior is age 68. Because the 2025 threshold is $93,454, the excess income is $6,546 and the clawback is $981.90. Using the April to June 2026 maximum pension rate of $743.05 per month as a reference point, annual OAS at that rate is about $8,916.60 before any reduction. After a $981.90 clawback, the remaining annual OAS would be about $7,934.70, although actual monthly payments can change with quarterly CPI adjustments.
Example 2: Age 72, full clawback in the July 2026 to June 2027 period
Assume net income for 2025 is $155,000 and the senior is age 72. That income is above the full recovery threshold of $152,062 for seniors age 65 to 74, so OAS would be fully eliminated for that recovery period.
Example 3: Age 76, partial clawback in the July 2026 to June 2027 period
Assume net income for 2025 is $120,000 and the senior is age 76. The excess over the $93,454 threshold is $26,546, which produces a clawback of $3,981.90. Using the April to June 2026 maximum pension rate of $817.36 per month as a reference point, annual OAS at that rate is about $9,808.32 before any reduction. After a clawback of $3,981.90, the remaining annual OAS would be about $5,826.42, subject to normal quarterly OAS adjustments.
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How to reduce 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).
FAQ’s
What is the OAS clawback in Canada?
OAS clawback, also referred to as the OAS recovery tax, is 15% deducted from the OAS benefits when the net income of the recipient exceeds the annual limit determined by the CRA.
At what income, the OAS clawback applies in 2026?
In 2026, the threshold for applying the clawback is an estimated income of $93,454 (based on 2025 income)
How is the OAS clawback calculated?
It is quite easy to calculate the clawback:
Clawback = 15% × (Net income – threshold)
If the calculated value is more than the annual OAS benefit, your entire OAS benefit may be reduced to zero.
Is the OAS income taxable in Canada?
Yes the OAS income is considered taxable in Canada.
Ritika's writing philosophy is built on one core principle: every person deserves access to clear, accurate, and actionable benefit information — without having to wade through confusing government language. Her guides are trusted by seniors, working families, and low-income households across North America who rely on timely payment updates and eligibility information.
All content written by Ritika is thoroughly research-based, sourced from official government portals including SSA.gov, Canada.ca, and CRA publications.