If your retirement income is comfortable, you may have heard that the government can take back some of your Old Age Security. That is the OAS clawback. The good news: it only affects higher-income seniors, it follows clear rules, and with a little planning you can often keep more of your pension. Here is exactly how it works in plain language, with the current Canadian numbers.
What is the OAS clawback?
The OAS clawback is an extra tax, officially called the Old Age Security pension recovery tax, that asks higher-income seniors to repay part or all of their OAS pension. Once your net income passes a set threshold, you repay 15 cents for every dollar above it. The repayment can never be more than the total OAS you received that year, so you can never owe back more than you were paid.
It is worth knowing the plain truth up front: the clawback only applies to higher incomes. It does not start until your net income passes about $93,000 (for 2025), so if your income is below the threshold in the next section, the clawback simply does not apply to you.
When does the OAS clawback start? Current income thresholds
For the 2025 tax year, the OAS clawback begins once your net income passes $93,454. Every dollar of income above that line triggers a 15% repayment. The threshold rises a little each year with inflation, so the figure to watch depends on the year.
| Tax year | Income where clawback begins | Notes |
|---|---|---|
| 2024 | $90,997 | Affects OAS paid July 2025 to June 2026 |
| 2025 | $93,454 | Affects OAS paid July 2026 to June 2027 |
| 2026 | $95,323 | Government estimate, to be finalized late in the year |
These thresholds come from the Government of Canada. The 2024 and 2025 figures are final. The 2026 figure is the government's latest estimate and may be adjusted, so treat it as a guide rather than a locked-in number.
What income counts toward the clawback
The clawback looks at your net income, which is your income from most sources after certain deductions. It is based on your own income alone, not your household or your spouse's income. That is an important difference from the Guaranteed Income Supplement, which does look at a couple's combined income.
Income that counts toward the clawback includes:
- Employment and self-employment income
- Pensions, including OAS, the Canada Pension Plan, and workplace pensions
- RRSP and RRIF withdrawals
- The taxable portion of capital gains
- Eligible Canadian dividends (these are "grossed up," so they count for more than the cash you receive)
- Interest, rental, and foreign income
Income that does not count includes:
- TFSA withdrawals (always tax-free, and they never affect the clawback)
- The Guaranteed Income Supplement, the Allowance, and the Allowance for the Survivor
- Gifts, inheritances, and life insurance payouts
The single most useful fact here: money you take out of a TFSA does not count toward the clawback, while money you take out of an RRSP or RRIF does.
How the OAS clawback is calculated
The math is simple once you know the threshold. You take your net income, subtract the threshold for the year, and repay 15% of what is left.
Here is the official Government of Canada example for the 2025 tax year:
- Your 2025 net income is $100,000.
- Subtract the 2025 threshold of $93,454. That leaves $6,546 above the line.
- Multiply by 15%: $6,546 x 0.15 = $981.90.
So you would repay $981.90 of your OAS. Rather than a single bill, that amount is spread out and collected from your monthly OAS payments over the following year, at roughly $82 a month in this example.
How much can you earn before OAS is fully clawed back?
Partial clawback happens between the lower and upper thresholds. Once your income reaches the upper threshold, your entire OAS pension is recovered and your net OAS drops to zero.
For the 2025 tax year, OAS is fully clawed back once net income reaches:
- $152,062 for ages 65 to 74
- $157,923 for ages 75 and over
The threshold is higher for people 75 and over because they receive a larger OAS pension (seniors 75+ have received a 10% higher payment since July 2022), so it takes more income to recover all of it. For context, full OAS in the July to September 2026 quarter is up to about $752 a month at ages 65 to 74 and up to about $827 a month at 75 and over. OAS amounts are adjusted every quarter for the cost of living.
How to reduce or avoid the OAS clawback
Because the clawback is based on your taxable income, most strategies come down to managing how much taxable income lands in a given year, and how it is split between spouses. These are common, legal options to discuss with a tax professional or financial advisor, not personal advice:
- Pension income splitting. Couples can move up to 50% of eligible pension income to the lower-income spouse, which can pull the higher earner back under the threshold.
- CPP pension sharing. Spouses can apply through Service Canada to share their CPP retirement pensions, rebalancing taxable income between them.
- Lean on your TFSA. Money withdrawn from a TFSA is tax-free and never counts toward the clawback, so a TFSA is a useful source of income in years when you are close to the threshold.
- Time your RRSP and RRIF withdrawals. A large one-time withdrawal can spike your income for the year. Spreading withdrawals out, or drawing down RRSPs earlier before the clawback range, can help smooth things.
- Consider deferring OAS. You can delay starting OAS up to age 70 in exchange for a higher monthly amount. If your income between 65 and 69 would be fully clawed back anyway, delaying can make sense.
- Prescribed-rate loans. Within Canada Revenue Agency rules, some couples shift investment income to a lower-income spouse using a prescribed-rate loan.
No single move fits everyone. The right mix depends on your income sources, your age, and your spouse's situation, which is exactly why a quick conversation with a tax professional is worth it before you act.
Frequently asked questions
Is the OAS clawback based on household or individual income? It is based on your individual net income, not your household's. Each spouse is assessed on their own income. This is different from the Guaranteed Income Supplement, which uses a couple's combined income.
Do RRSP or RRIF withdrawals affect the clawback? Yes. RRSP and RRIF withdrawals are fully taxable and count toward your net income, so large withdrawals can push you into or further through the clawback range. TFSA withdrawals do not count.
Does income splitting really lower the clawback? It can. Pension income splitting and CPP pension sharing move taxable income from the higher-income spouse to the lower-income spouse. Because the clawback is individual, lowering the higher earner's income can reduce or remove their repayment.
When do I actually pay it back? The repayment is calculated on your tax return, then collected gradually from your monthly OAS payments over the following July-to-June period, rather than as a lump sum.
Does the clawback apply to everyone? No. It only applies to net income above the yearly threshold, about $93,000 for 2025. If your income is under that line, you keep your full OAS and the recovery tax does not apply to you.
The bottom line
The OAS clawback sounds alarming, but it is predictable and manageable. It only touches income above the yearly threshold, it is capped at the OAS you received, and a few planning choices around TFSAs, withdrawal timing, and income splitting can soften or remove it. Because the exact figures change every year, always confirm the current thresholds on the Government of Canada website before you make a decision.
Old Age Security is just one piece of your retirement income. For the full picture, read our guides on when to start taking CPP and how to apply for the Guaranteed Income Supplement. If you are helping a parent sort out their benefits, the Disability Tax Credit guide is another one many families miss.
This article is general information, not financial or tax advice. Figures are current as of 2026 and change yearly. Confirm the latest numbers with the Government of Canada or a tax professional.
