What is the OAS clawback threshold?

For July 2025 to June 2026, the OAS clawback begins at $90,997 in net world income (2024 tax year income). You repay 15% of every dollar above the threshold. OAS is fully clawed back at approximately $148,451 (ages 65–74) or $154,196 (ages 75+). These thresholds are indexed to inflation annually.

How can I avoid the OAS clawback?

Keep your net income below the clawback threshold by using TFSA withdrawals (tax-free, not counted as income), splitting eligible pension income with a spouse, timing RRSP/RRIF withdrawals strategically, and considering deferring OAS to age 70 (36% higher payment) if you expect to be above the threshold at 65.

Is OAS Taxable in Canada?

Q: Is OAS taxable in Canada?

Yes. Old Age Security (OAS) is fully taxable income. It is reported on your T4A(OAS) slip and added to your total income. Additionally, if your net world income exceeds $90,997 (2025 threshold), you must repay part or all of your OAS through the OAS recovery tax (clawback) at a rate of 15 cents for every dollar above the threshold.

OAS Tax Treatment

OAS Detail	Information
Taxable?	Yes — fully taxable
T slip	T4A(OAS)
Reported on	Line 11300 (OAS pension)
Tax withheld at source?	Yes — based on your tax withholding request
Clawback (recovery tax)	15% on net income above threshold

OAS Payment Amounts (2026)

Age Group	Maximum Monthly	Maximum Annual
65–74	~$727	~$8,724
75+	~$800	~$9,600

Amounts indexed quarterly to CPI. Actual amounts depend on years of Canadian residency (40 years for full OAS).

OAS Clawback (Recovery Tax)

How It Works

Threshold	Amount (2025 Income Year)
Clawback starts at	$90,997 net world income
Clawback rate	15% of income above threshold
Full clawback (ages 65–74)	~$148,451
Full clawback (ages 75+)	~$154,196

Clawback Calculation Examples

Net Income	Amount Over Threshold	Clawback (15%)	Annual OAS Received	OAS After Clawback
$85,000	$0	$0	$8,724	$8,724
$90,997	$0	$0	$8,724	$8,724
$100,000	$9,003	$1,350	$8,724	$7,374
$110,000	$19,003	$2,850	$8,724	$5,874
$120,000	$29,003	$4,350	$8,724	$4,374
$130,000	$39,003	$5,850	$8,724	$2,874
$140,000	$49,003	$7,350	$8,724	$1,374
$148,451+	$57,454+	$8,618+	$8,724	$0 (fully clawed back)

Total Tax on OAS (Including Clawback)

Total Income	Marginal Rate (ON)	Tax on OAS	OAS Clawback	OAS After Tax + Clawback
$30,000	20.05%	$1,749	$0	$6,975
$50,000	29.65%	$2,586	$0	$6,138
$75,000	33.89%	$2,956	$0	$5,768
$95,000	43.41%	$3,787	$600	$4,337
$110,000	43.41%	$3,787	$2,850	$2,087
$150,000+	46.41%+	N/A	Full	$0

Income That Counts Toward the Clawback

Income Type	Counts Toward Clawback?
Employment income	✅ Yes
CPP/QPP pension	✅ Yes
OAS pension itself	✅ Yes
RRSP/RRIF withdrawals	✅ Yes
Eligible pension income	✅ Yes
Rental income	✅ Yes
Capital gains (taxable 50%)	✅ Yes (50% inclusion)
Interest and dividends	✅ Yes
TFSA withdrawals	❌ No
Tax-free portion of principal residence sale	❌ No
GIS (Guaranteed Income Supplement)	❌ No

Strategies to Reduce or Avoid the Clawback

Before Age 65

Strategy	How It Helps
Draw down RRSP/RRIF early (60–64)	Reduces future RRIF mandatory withdrawals that trigger clawback
Maximize TFSA contributions	Build tax-free income source that doesn’t count toward clawback
Shift investments to TFSA	Move from taxable/RRSP to TFSA over time
Defer OAS to age 70	36% higher payment; may be worth it if income will be lower at 70

After Age 65

Strategy	How It Helps
Use TFSA for spending needs	TFSA withdrawals don’t increase net income
Pension income splitting	Shift up to 50% of eligible pension to lower-income spouse
Capital gains timing	Realize capital gains in years with lower other income
Minimize RRIF withdrawals	Take only the mandatory minimum
Consider corporate retained earnings	Business owners can control when to pay dividends
Keep taxable investments tax-efficient	Return of capital distributions reduce taxable income

OAS Deferral (Age 65–70)

Factor	Detail
Deferral increase	0.6% per month deferred (7.2% per year)
Maximum deferral bonus	36% higher payment if deferred to age 70
Break-even age	Approximately 82–83 (if you live past this, deferral pays off)
When to defer	High income at 65 (clawback would erode OAS anyway)
When NOT to defer	Low income, need the money, poor health

Deferral Example

Start Age	Monthly OAS	Annual OAS	Increase vs 65
65	$727	$8,724	—
66	$779	$9,352	+7.2%
67	$832	$9,981	+14.4%
68	$884	$10,610	+21.6%
69	$936	$11,238	+28.8%
70	$989	$11,864	+36.0%

Tax Withholding on OAS

Default	Detail
Recovery tax	If you owed clawback last year, Service Canada automatically deducts it from future payments
Voluntary withholding	Request additional tax withholding using Form ISP-3520
Recommended	Request withholding to avoid a large tax bill at filing