By OAS Clawback 2026: The $95,323 Line and How Retirees Stay Under It
For the 2026 income year, the Old Age Security clawback — officially the OAS pension recovery tax — starts at $95,323 of individual net income. Cross that line and you repay 15 cents of OAS for every dollar above it, on top of your regular income tax. At $105,323 of income the clawback is $1,500 a year; at about $155,320 (for ages 65 to 74) your OAS is gone entirely. The good news: the clawback is one of the most plannable numbers in Canadian retirement, because it is based on your net income — not your household’s — and several legal levers can keep you under the line.
The 2026 numbers at a glance
| Item (2026) | Amount |
|---|---|
| Clawback starts: individual net income above | $95,323 |
| Recovery rate on income above the line | 15% |
| Full clawback, ages 65–74 (approx.) | $155,320 of income |
| Full clawback, ages 75+ (approx.) | $161,320 of income |
| Maximum OAS, Oct–Dec 2026, ages 65–74 | $762.50 per month |
| Maximum OAS, Oct–Dec 2026, ages 75+ | $838.75 per month |
| Which income year? | 2026 income sets the recovery tax on payments from July 2027 to June 2028 |
Three features of the test matter. First, it is individual: two spouses with $90,000 each keep every dollar of OAS, while a single retiree with $180,000 loses all of theirs, even though the household incomes are identical. Second, it uses net income (line 23400 of your return) — income after deductions like RRSP contributions, but before most tax credits. Third, it works with a lag: the CRA reads your 2026 tax return and adjusts your OAS cheques starting the following July. That lag is why a one-time income spike — selling a rental property, for example — ambushes people a year later. Deciding when to start OAS interacts with all of this; our comparison of CPP at 60 vs 65 vs 70 walks through the sister decision on the CPP side.
The clawback math, worked three ways
| 2026 net income | Amount over $95,323 | Annual clawback (15%) | Per month |
|---|---|---|---|
| $95,323 | $0 | $0 | $0 |
| $100,000 | $4,677 | $702 | $58 |
| $105,323 | $10,000 | $1,500 | $125 |
| $120,000 | $24,677 | $3,702 | $308 |
| $155,320 (ages 65–74) | $59,997 | Full OAS recovered | All of it |
Notice what the clawback does to your real tax rate. A retiree in Ontario earning between $95,323 and about $117,000 already pays a combined marginal tax rate in the low-to-mid 40% range on extra income (see the full tables in our guide to Canada’s 2026 tax brackets). Add the 15% recovery tax and an extra dollar of RRIF income in that band can effectively cost well over 50 cents in combined tax and lost OAS. That is why the clawback zone is the most expensive neighbourhood on the Canadian tax map for retirees — and why the strategies below concentrate on keeping income out of it.
6 ways retirees stay under the line
1. Split pension income with your spouse
Because the test is individual, moving income from the higher-income spouse to the lower-income one can rescue two OAS cheques at once. Pension income splitting lets you shift up to 50% of eligible pension income (RRIF payments and pensions from age 65, among others) to your spouse on your tax returns. Example: one spouse at $115,000 and the other at $75,000 faces a $2,952 clawback on the first spouse alone. Splitting $20,000 of pension income puts them at $95,000 each — both under the line, and the clawback drops to zero. Nothing changes hands in real life; it is an election on the return.
2. Draw the RRSP/RRIF down early, before OAS starts
RRIF minimum withdrawals are forced income, and they grow as a percentage with age. Retirees who retire at 60 or 62 often have low-income years before CPP and OAS begin — the perfect window to withdraw RRSP money deliberately at low tax rates, shrinking the RRIF before its forced withdrawals can push them over $95,323 later. This “meltdown” only works if you start before the wall of mandatory income arrives, which is why the RRSP deadline and contribution playbook matters in the contribution years too.
3. Take spending money from the TFSA, not the RRIF
TFSA withdrawals are not income. They do not appear on line 23400, do not affect the clawback, and do not affect income-tested benefits generally. A retiree who needs $10,000 more than planned can take it from a TFSA and stay at the same clawback position, while the same $10,000 from a RRIF could cost $1,500 of OAS if they are already over the line — plus the tax on the withdrawal itself. In clawback years, the TFSA is the pressure valve.
4. Spread big capital gains over more than one year
Only the taxable portion of a capital gain counts toward net income, but a single large sale — a cottage, a rental, a lifetime of non-registered investing — can still vault you over the line for one year and cost a full year of OAS. Where a sale can be staged across a December and the following January, or a portfolio rebalanced gradually, the same total gain can fit under the threshold in two years instead of smashing through it in one. Run the scenarios with the free calculators at MyFinancesGuru Tools before the sale, not after.
5. Consider deferring OAS to 70 — carefully
OAS grows by 0.6% for each month you delay it past 65, up to 36% more at 70. Deferral can help twice: no OAS to claw back during high-income working years at 65 to 69, and a larger pension later. But deferral is not automatically right — the larger pension is clawed back at the same 15% if your income stays high, and years of payments given up take a long time to recover. It is a math exercise, not a slogan; do it with your actual income projection.
6. Use RRSP deductions while you still can
Net income is after RRSP deductions. A retiree under 71 with contribution room and earned income can still make RRSP contributions that pull line 23400 down — sometimes the difference between a clawback and none. Spousal RRSP contributions can also build the lower-income spouse’s account, setting up better splitting later. The window closes at 71, so this lever belongs to the young-retiree years.
The donation trap: a popular move that does not work here
Charitable donations do not reduce the OAS clawback. Donations are a non-refundable tax credit, applied after net income is calculated — and the clawback reads net income. Donating $10,000 lowers your tax bill, genuinely, but your line 23400 does not move, so your OAS recovery does not move either. Give because you want to give; do not give expecting it to rescue your OAS. The deductions that do help are the ones above the line: RRSP contributions, pension splitting’s reallocation, and choosing which account your spending money comes from.
Common mistakes
- Thinking in household income. The test is per person. A couple can have $190,000 of household income and zero clawback — or $180,000 and a total clawback — depending entirely on how it is split between the two returns.
- Forgetting the one-year lag. A spike in 2026 income cuts OAS from July 2027. People blame the wrong year and miss the planning window for the next one.
- Taking a lump sum from the RRIF to “get it over with.” A big voluntary withdrawal in the clawback zone can face an effective rate over 50% once tax plus 15% recovery are combined. TFSA money or staged withdrawals usually cost less.
- Starting OAS at 65 while still working full-time. Employment income plus OAS is a classic way to hand a large slice of the pension straight back. Deferral exists for exactly this case.
- Assuming the threshold is the whole story. Other amounts are income-tested too — the age amount, for example, phases out at a much lower income — so “just under $95,323” is a target, not the only target.
Frequently asked questions
What is the OAS clawback threshold for 2026?
$95,323 of individual net income. Above that line, the OAS pension recovery tax takes back 15% of the excess. For ages 65 to 74, OAS is fully recovered at about $155,320 of income; for ages 75 and over, at about $161,320, because the pension itself is larger.
How much OAS do I lose at $100,000 of income?
About $702 a year. The excess over the threshold is $100,000 − $95,323 = $4,677, and 15% of that is $702 — roughly $58 a month off your OAS during the affected payment year (July 2027 to June 2028 for 2026 income).
Is the OAS clawback based on household income?
No — it is based on each individual’s net world income. That is what makes pension income splitting so powerful: equalizing two spouses’ incomes can keep both under $95,323 even when the household total is well above twice that amount.
Do TFSA withdrawals count toward the clawback?
No. TFSA withdrawals are not income and do not appear on your tax return’s net income line. Drawing spending money from a TFSA instead of a RRIF is one of the simplest ways to stay under the threshold.
Do charitable donations reduce the OAS clawback?
No. Donations produce a tax credit, which is calculated after net income. The clawback is based on net income (line 23400), so donations reduce your tax but not your OAS recovery tax.
Can I get clawed-back OAS back if my income drops?
Yes, in effect. The recovery tax is recalculated every year from the latest tax return. If your income falls below the threshold in a later year, the withholding from your monthly OAS stops in the following July cycle. If your income drops sharply — for example, you retire after a high-income year — you can ask for the recovery withholding to be recalculated using an estimate of your lower current-year income instead of waiting for the next cycle.
The bottom line: the 2026 clawback starts at $95,323 of individual net income and takes 15% of every dollar above it, on top of regular tax. Stay under it the legal way — split pension income, melt the RRIF down in low-income years, spend TFSA money in clawback years, stage big capital gains, and never count on donations to move a number they cannot touch.
