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What is OAS Clawback 2026?
The OAS clawback is a mechanism through which the Canada Revenue Agency (CRA) gradually recovers Old Age Security payments from retirees whose net world income exceeds a defined threshold.
Key Points: How the Clawback Is Applied
- It reduces your monthly OAS pension directly, not as a separate tax assessment.
- It applies only to individual income, not household or combined spousal income.
- The CRA uses net world income from line 23600 of your tax return.
- OAS receipt begins at age 65 but can be deferred to age 70.
OAS Clawback Threshold 2026
Threshold Table
| OAS Period | Income Basis | Min Threshold | Full Clawback (65–74) | Full Clawback (75+) |
|---|---|---|---|---|
| Jan – Jun 2026 | 2024 income | $90,997 | $148,451 | $154,196 |
| Jul 2026 – Jun 2027 | 2025 income | $93,454 | $152,062 | $157,923 |
| 2026 Tax Year | 2026 income | $95,323 | ~$154,900* | ~$160,700* |
*Projected figures based on inflation indexing.
How the OAS Clawback Works in Canada
Calculation Formula
Clawback Amount = (Net World Income – Minimum Threshold) × 15%
Step-by-Step Breakdown
Step 1: Calculate Net World Income
Includes CPP, pensions, RRIF/RRSP withdrawals, employment income, capital gains, and investment income.
Step 2: Compare With Threshold
If income exceeds the threshold, the excess amount is subject to a 15% recovery tax.
Step 3: Timing Adjustment
Income from one year affects OAS payments from July of the following year.
How Much OAS Can Be Reduced in 2026?
Example Impact Table
| Net Income (2025) | Excess Above Threshold | Annual Clawback (15%) | Monthly OAS Impact |
|---|---|---|---|
| $93,454 | $0 | $0 | No clawback |
| $110,000 | $16,546 | $2,481.90 | $206.83/month deducted |
| $130,000 | $36,546 | $5,481.90 | $456.83/month deducted |
| $152,062+ | Full clawback | $8,907.72 (max) | All OAS recovered |
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Key Changes to OAS Clawback in 2026
What Has Changed
- Minimum threshold increased to $95,323
- 2025 income threshold set at $93,454
- Higher limits for seniors aged 75+
- No change to 15% recovery rate
- TFSA contribution room remains $7,000
Strategies to Minimise OAS Clawback
Pension Income Splitting
Split up to 50% of eligible pension income with a lower-income spouse.
TFSA Maximisation
TFSA withdrawals are tax-free and do not affect clawback.
RRIF Withdrawal Sequencing
Avoid large lump-sum withdrawals in a single year.
OAS Deferral
Delay OAS up to age 70 for a 36% higher benefit.
Capital Gains Timing
Spread gains across multiple years to reduce income spikes.
How to Plan Your Retirement Income Around OAS Clawback
Start Planning Early
Begin 3–5 years before retirement.
Ask the Right Questions
- Which income sources are flexible?
- What withdrawal order works best?
- Can RRSP withdrawals be optimized?
For Couples: Income Splitting
Equalize income to reduce individual tax exposure.
Focus on Tax Efficiency
Staying below the threshold often matters more than higher returns.
Conclusion
With thresholds at $93,454 and $95,323, more retirees face OAS clawback than ever before. Proper planning can help reduce or eliminate this risk entirely.
