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The OAS Clawback: The Threshold, the Maths, and How to Stay Under It

Where the threshold sits, what a dollar over it actually costs you, and what you can still change.

By Nate Sorensen Reviewed for accuracyUpdated Oct 202611 min read
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Your Old Age Security arrives every month, and then someone tells you it can be taken back. Some of it can, once your income passes $93,454 for the 2025 tax year. Above that you repay 15 cents for each extra dollar. If you go over by a few thousand, you're repaying a few hundred dollars out of next year's payments. You lose the pension altogether only once your income is past about $152,000.

Key takeaways

  • For the 2025 tax year the threshold is $93,454. Under it you keep every dollar of your pension, however much you've saved.
  • Over it you hand back 15 cents of each extra dollar you earn, and you've repaid the whole pension by $152,062 at 65 to 74, or $157,923 at 75 and over.
  • You're measured on your net income before adjustments, line 23400 on your return. It's yours alone, not your household's.
  • Money withdrawn from a tax-free savings account, or TFSA, doesn't count toward the test at all.
  • Eligible dividends count for 138% of what you were paid, so they'll push you over sooner than you'd expect.
  • You don't pay it at tax time. It's taken out of your monthly payments the following July through June.

How much can you earn before they start taking it back?

For the 2025 tax year your threshold is $93,454.1 Under it you keep the whole pension, whatever your savings look like, because the test is on what you earn and not on what you've got. Over it you give back 15 cents out of every extra dollar, and the amount keeps growing until you've repaid the pension in full. You reach that at $152,062 if you're 65 to 74, and at $157,923 if you're 75 or over.2

Two numbers get quoted for this and they belong to different years, which is where most of the confusion starts. Your 2025 income was measured against $93,454, and that sets what you receive from July 2026 through June 2027. What you earn during 2026 gets measured against $95,323, and that one sets July 2027 to June 2028.2 If you're planning anything around this, the second number is yours.

Where the 15% starts, and where it finishes
The income band in which Old Age Security is repaidAn income scale from sixty thousand dollars to one hundred and seventy thousand dollars. Below ninety-three thousand four hundred and fifty-four dollars of net income, the whole pension is kept. Between that figure and one hundred and fifty-two thousand and sixty-two dollars, fifteen cents of every extra dollar is repaid. Above one hundred and fifty-two thousand and sixty-two dollars the pension has been repaid in full, so nothing is received.You keep it allnothing to repay15 cents of every extradollar goes backthe repayment grows as your income doesNone leftfully repaid$93,454the threshold$152,062pension fully repaid$60,000$170,000Net income for the year, before the repayment itself is taken off.
Net income for the 2025 tax year, at ages 65 to 74. The upper figure is $157,923 if you're 75 or over, and both move a little each year.
Source Service Canada, Old Age Security pension recovery tax: thresholds for the 2025 income year. Accessed 2026-09-03.

If your income is nowhere near $93,454, then none of this is about you. A big balance in a registered retirement income fund doesn't put you over on its own. The amount you draw from it each year is a different question, and the RRIF minimum sets the part of that you can't avoid.

Which parts of your income get counted

The test is your net income before adjustments, line 23400 on your return.1 That's your income after your deductions, worked out before the pension repayment itself comes off. A couple of small adjustments get made on the chart at line 23500, and hardly anyone meets any of them.6

Nearly everything you live on in retirement is in there. Your company pension, RRIF withdrawals, Canada Pension Plan, or CPP, the Old Age Security itself, interest, the taxable part of any capital gain, and whatever you still earn from working.

Nothing withdrawn from a TFSA is in there.3 You can pull $30,000 out for a new roof and your line 23400 won't move a dollar.

One kind of income counts for more than it pays you. If you hold Canadian shares or funds that pay eligible dividends, your return doesn't show the cash that landed in your account. It shows that amount multiplied by 138%.4 You receive $10,000 of eligible dividends, and you report $13,800 on line 23400.

You get that back on your tax bill through the dividend tax credit, and none of it back here, because the repayment is worked out before the credit is applied. Take an illustrative case. You've got $88,000 of other income and $10,000 of eligible dividends, so your line 23400 reads $101,800 rather than $98,000. You repay 15% of $8,346, which is $1,251.90. On the cash you actually received you'd have repaid $681.90. So $570 of what you hand back is on money that never arrived.

What $10,000 of eligible dividends looks like on your return
Cash received against the amount counted on the returnTwo bars. The first shows ten thousand dollars of eligible dividends actually paid into the account. The second shows thirteen thousand eight hundred dollars, the same dividends multiplied by one hundred and thirty-eight per cent, which is the figure reported on line twenty-three thousand four hundred and tested against the Old Age Security threshold. The difference of three thousand eight hundred dollars is counted as income although it never arrived.Paid into your account$10,000Counted on line 23400$13,800$3,800 you never received
Illustrative. The 138% gross-up is a fixed rule on eligible dividends. The $10,000 is a round number, chosen to make it easy to follow.
Source CRA, Lines 12000 and 12010, taxable amount of dividends from taxable Canadian corporations. Accessed 2026-09-03.

What the next dollar over the threshold really costs you

The 15% isn't instead of income tax. You pay both, though not quite as simply as adding the two together.

Take the 2026 tax year, when your threshold is $95,323.2 Once you're past it, you do two things with an extra dollar you earn. You hand 15 cents of it back as pension, and you claim that same 15 cents as a deduction on line 23500, so you only add 85 cents of it to taxable income.6 In Alberta in 2026 the combined federal and provincial rate is 30.5% on taxable income from $61,201 to $117,045.5 You come out with about 59 cents of that dollar, against about 69.5 cents if you were still under it.

Your own province sets its own rate, so the figure will differ. The 15% won't. It isn't a tax bracket and you won't find it on any rate table. What it does is cost you roughly another 10 cents on every dollar you earn above $95,323, until there's no pension left to hand back.

That comparison holds while your taxable income and your net income sit close together, which they usually do once you've retired and your deductions are small. If you're still claiming large ones, the two numbers separate and you'd want your own return rather than a rule of thumb.

When it actually comes out of your payments

You don't get a bill in April. You repay it out of your monthly pension, starting the July after you file.1

The worked example published alongside the rule runs like this. Your income in 2025 was $100,000, which puts you $6,546 over. 15% of that is $981.90. So from July 2026 through June 2027 your payments drop by roughly $82 a month, until you've repaid the whole $981.90.1

You want to know about that lag before you decide something, not afterwards. If you sell a property or clear out a RRIF in one year, you'll feel it in your payments a year and a half later, long after you've spent the money.

The eighteen months between earning it and repaying it
The lag between earning the income and repaying the pensionA timeline drawn to scale across thirty months, from January 2025 to June 2027. The first twelve months are the 2025 calendar year, the year in which the income is earned. The return is filed by the thirtieth of April 2026, sixteen months in. The monthly recovery tax starts in July 2026, eighteen months in, reducing each pension payment by about eighty-two dollars in the published example. The twelve deductions finish in June 2027, thirty months in. Most of the elapsed time sits before the first deduction and during the twelve months of repayment, not between filing and the first deduction.2025, the year you earn itApril 2026you fileJune 2027fully repaidJuly 2026your payments start droppingtwelve payments, about $82 a month in the published example
Drawn to scale across thirty months. The repayment for one tax year is collected from the following July through to the June after that.
Source Service Canada, Repayment of Old Age Security pension: the worked example and the July to June recovery period. Accessed 2026-09-03.

You'll get a letter telling you a deduction is on the way. Whatever's already been taken shows up in box 22 of your T4-OAS slip, the one for your Old Age Security, and you claim it on line 43700 of your return for that year.1 Putting it on line 23200 instead is a common slip, and the filing instructions say specifically not to.6

What moves the number, and by when

Four things move your net income enough to matter here. Two of them have to happen before December 31. The other two happen when you file, or later.

  1. Splitting eligible pension income with a spouse. From 65 you can shift up to 50% of your eligible pension income onto your spouse's or common-law partner's return, on Form T1032 filed with both.7 Yours goes down, theirs goes up. The instructions say plainly that this changes the repayment of Old Age Security, because you work that repayment out on one person's income and not on the two of you together.7 You elect it at filing time, so it's still open to you after the year has ended. If one of you is over and the other is well under, nothing else you can do compares.

  2. Which account your spending comes out of. The same $20,000 of spending costs you $3,000 of pension if you take it from a RRIF and nothing at all if you take it from a TFSA. That one is a December 31 decision, and it's why a TFSA is worth having in your seventies even when there's less in it than in everything else you hold.

  3. Which year the big one falls in. A property sale, a large lump sum out of a RRIF, or clearing an account can put an otherwise steady income far over for a single year, and where it lands in the calendar changes what it costs you. You've still got to take your RRIF minimum, and that part isn't yours to move, though the part on top of it is your choice.

  4. Asking for the deduction to be cut when your income drops. If this year's income will be a lot lower than last year's, you can ask in writing to have the recovery tax reduced at source, on Form T1213(OAS).2 That one carries no year-end deadline, because it is about the payments rather than the income. Without it you spend a year handing back pension on income you're no longer receiving, and you wait until you file to get it back.

None of this settles whether your own numbers land close enough to be worth any effort. Your last notice of assessment carries your net income on it, and your RRIF statement will tell you what next year's minimum forces out. With those two in front of you, you'll know in a few minutes whether this is your problem or somebody else's.

Run your own numbers with the figures off your last assessment.

Is it worth reshaping your income to stay under?

Most people who land a little over leave it where it is. Being $2,000 over costs you $300 of pension across the year, and rearranging where your retirement income comes from is a bigger job than that's worth.

People with a spouse well under usually do split the pension income, because the form takes an evening and the saving repeats every year that both of them are here to claim it.

People who can see one large year coming tend to work out which calendar year it lands in before they look at anything else, since that single choice moves more money than every other lever put together.

A lot of people take the extra income anyway. On the Alberta figures, $20,000 more costs you $3,000 of pension on top of the tax, and you still finish the year with about $11,800 of it in hand.

?

Common questions

How much can I earn in 2026 before OAS is clawed back?

Your 2026 income gets measured against $95,323, and that sets what you receive from July 2027 to June 2028. The figure governing your payments right now is $93,454, which was the threshold for the 2025 tax year.

Do TFSA withdrawals count toward the OAS clawback?

No. A tax-free savings account withdrawal doesn't appear on your return at all, so it can't push you over. Neither does the growth inside it.

Is the clawback based on my income or my household's?

Yours alone. Your spouse or partner could be well over while you're well under, and your own pension wouldn't be touched. That's why splitting eligible pension income across two returns works so well.

Do RRIF withdrawals count toward the threshold?

Yes, in full. That includes the minimum you're required to take, which is the part you can't do anything about. Whatever you take on top of the minimum is a choice, and it's the piece worth thinking about if you're anywhere near $95,323.

What happens if I retire abroad?

The rules change and so does the paperwork. Each January you're sent an Old Age Security Return of Income form, and it has to be filed by April 30 or your payments stop that July. You're also tested on your net world income rather than the resident measure, so it's worth getting advice on the country you're moving to before you go.

Further reading

  • Your Retirement Income Blueprintby Daryl Diamond🍁 Canadian

    A Canadian six-step plan for turning savings into income, built around the order you draw from your accounts. The order you choose decides whether any of this ever applies to you.

Sources

  1. Service CanadaRepayment of Old Age Security pension. The $93,454 threshold for the 2025 tax year, the 15% repayment rate, net income before adjustments at line 23400, the worked example of $100,000 giving $981.90 at about $82 a month from July 2026, box 22 of the T4-OAS and line 43700. Page last modified 2026-06-29. Accessed 2026-09-03.
  2. Service CanadaOld Age Security pension recovery tax. The threshold table by income year: $93,454 for 2025 with upper limits of $152,062 and $157,923, and $95,323 for 2026. Also Form T1213(OAS), the request to reduce the recovery tax at source, and the Old Age Security Return of Income filed by non-residents each April 30. Page last modified 2026-06-29. Accessed 2026-09-03.
  3. CRAThe Tax-Free Savings Account: TFSA income and withdrawals have no effect on Old Age Security, the Guaranteed Income Supplement or Employment Insurance. Accessed 2026-09-03.
  4. CRALines 12000 and 12010, taxable amount of dividends from taxable Canadian corporations: eligible dividends are reported at 138% of the amount received. Page last modified 2026-06-12. Accessed 2026-09-03.
  5. CRAFederal income tax rates for 2026: 20.5% on taxable income from $58,523 to $117,045. The 30.5% used here adds Alberta's 10% rate on the band from $61,201 to $117,045, and every figure drawn from it is illustrative for one province. Accessed 2026-09-03.
  6. CRALine 23500, social benefits repayment: the income tested, the repayment as an allowable deduction at line 23500 alongside the amount payable at line 42200, and the instruction to claim recovery tax already withheld on line 43700 rather than line 23200. Page last modified 2026-01-20. Accessed 2026-09-03.
  7. CRAPension income splitting: up to 50% of eligible pension income may be allocated on Form T1032, and the page states that splitting affects credits and benefits calculated on one taxpayer's net income, naming the repayment of Old Age Security benefits. Page last modified 2026-01-20. Accessed 2026-09-03.

Educational, not financial advice. Figures verified against primary sources on the date shown.

See it in a story: Joanne works out how much of her own pension is actually at risk. If you're still choosing your dates, there's when to start CPP, and the whole retirement hub when you want the rest of it.

Related guide

When to Start CPP: Taking It Early vs Late