Canada OAS Clawback Calculator: Old Age Security Recovery Tax
Work out the Canadian OAS clawback — the Old Age Security 'recovery tax' that takes back 15% of net income above a yearly threshold — and how much of that above-threshold income you keep.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | OAS clawback | Income above threshold you keep |
|---|---|---|
| 15% of $20,000 above ($3,000) | 3,000 | 17,000 |
| 15% of $5,000 above | 750 | 4,250 |
| 15% of $50,000 above (likely full clawback) | 7,500 | 42,500 |
| 15% of $10,000 above | 1,500 | 8,500 |
How This Calculator Works
Subtract the OAS recovery-tax threshold from your net world income, enter the excess, and use the rate (15%). The calculator returns the clawback and the above-threshold income you keep. The clawback is collected by CRA either through monthly OAS reductions (based on prior-year income) or as a recovery-tax line on your return.
The Formula
Percentage of an Amount
Amount is the base value, Percentage is the rate applied to it
Worked Example
On $20,000 of net income above the threshold at 15%, the OAS clawback is $3,000 a year. OAS (Old Age Security) is Canada's universal-type pension paid to most seniors, but higher-income seniors lose part or all of it through the recovery tax: 15% of net world income above an annual threshold is taken back, with full clawback once income reaches a much higher upper limit. CRA usually deducts the estimated clawback monthly from your OAS, based on your prior-year income, and reconciles it on your return.
Key Insight
The OAS clawback is a key consideration in Canadian retirement-income planning, and a few details matter. The mechanics: it's a 'recovery tax' of 15% on net world income (line 23400) above an annual threshold set by CRA; income below the threshold attracts no clawback, and once income reaches a much higher upper limit, your entire OAS for the year is recovered. The base is net world income — which includes employment income, RRSP/RRIF withdrawals (a common driver of clawback), CPP, OAS itself, taxable investment income, capital gains and foreign pensions — so anything that lifts net income (like a large lump-sum RRIF draw, or realising big capital gains) can trigger or worsen the clawback. Collection is timing-shifted: based on your prior tax year's income, CRA reduces your monthly OAS by an estimated amount (the 'OAS recovery tax' deducted at source) for the next OAS period, then your tax return for the current year reconciles the actual figure. Planning techniques (not modelled here) include: smoothing income across years to stay below the threshold, splitting eligible pension income with a lower-income spouse, holding investments in TFSAs (TFSA withdrawals don't count as net income) and FHSAs/RRSPs (where deductions reduce net income), realising capital gains gradually, and timing RRIF withdrawals carefully. Note the OAS itself counts toward net income, which can compound the effect at the margin, and that the program is separate from CPP and the income-tested GIS top-up for low-income seniors. This calculator computes the 15% on the above-threshold income you enter and shows the rest of that excess; for your real recovery tax, use the current year's threshold, cap the clawback at the actual OAS you receive (it can't exceed your OAS), and remember the monthly deduction is based on the prior-year income with reconciliation at filing.
2026 thresholds: where the clawback begins and where it ends
The OAS recovery tax is calculated on prior-year net world income. For the July 2026-June 2027 OAS benefit period, the relevant income year is 2025. The minimum threshold (clawback begins): $93,454 for the July 2026-June 2027 period. The maximum threshold (full clawback — entire OAS recovered): $152,062 for those aged 65-74, or $157,923 for those aged 75+.
Between these thresholds, OAS is reduced by 15 cents for every dollar of income above the minimum. So someone with $120,000 of 2025 net income loses $0.15 × ($120,000 − $93,454) = $3,982 of OAS for the July 2026-June 2027 period. Someone with $152,062 income loses the entire OAS benefit.
Critical timing: the clawback operates on a one-year lag, so 2025 income determines 2026-2027 OAS. A retiree planning their 2025 finances to avoid 2026 clawback must work with prior-year tax planning. The age-75+ higher threshold reflects the 10% OAS top-up introduced for older seniors in 2022 — their clawback ceiling is correspondingly raised.
What counts as 'net world income' — and what doesn't
Net world income (Line 23400 on the T1 return) includes essentially all sources of income from anywhere in the world. Counted: employment income, self-employment income, CPP/QPP benefits, OAS itself (yes, OAS counts toward its own clawback), private pensions, RRSP/RRIF withdrawals, taxable investment income (interest, eligible/non-eligible dividends with gross-up), capital gains (50% inclusion), foreign pensions, rental income.
NOT counted toward OAS clawback (the strategic exclusion list): TFSA withdrawals (tax-free, don't appear on the return at all), return of capital from non-registered investments, principal residence sale (excluded as personal use), gift income, lottery winnings, life insurance proceeds. This makes TFSAs the most valuable retirement asset for managing OAS clawback exposure.
Dividend gross-up trap: Canadian eligible dividends receive a 38% gross-up before applying the dividend tax credit. So $10,000 of cash dividends shows as $13,800 of grossed-up income on Line 23400 — pushing $13,800 (not $10,000) into the OAS clawback calculation. This is why high-dividend portfolios can unexpectedly trigger clawback for retirees. Capital gains (50% inclusion rate) and interest income don't have this gross-up problem.
Practical strategies to avoid or minimize OAS clawback
Strategy 1: Aggressive use of TFSA. Withdrawals don't count toward Line 23400 income, so a retiree drawing $30,000/year from TFSA effectively gets that money tax-free AND avoids clawback. Building substantial TFSA balances during working years is the single most powerful clawback defense.
Strategy 2: Income smoothing with RRSP/RRIF. Rather than starting RRIF withdrawals at 71 with minimum (5.28% × balance), some retirees draw down RRSP voluntarily earlier (e.g. ages 65-70) to flatten lifetime income. Smaller, regular withdrawals can keep each year below the clawback threshold, vs a large mandatory RRIF withdrawal at 80 (6.82% × growing balance) that triggers heavy clawback.
Strategy 3: Pension income splitting. Eligible pension income (RRIF withdrawals after 65, RPP, annuity income) can be split up to 50% with a lower-income spouse on the T1 return. This shifts taxable income to the lower-earning spouse, often below their clawback threshold. Strategy 4: Capital gains realization timing — bunch large gains into a single year (one big clawback year) rather than spread over multiple years (multiple smaller clawback events).
OAS clawback by net world income (July 2026-June 2027 period)
Based on 2025 net world income. The clawback reduces OAS by 15 cents per dollar above the $93,454 minimum threshold, until the entire OAS is recovered.
| 2025 net world income | Income above threshold | Annual OAS clawback | % of OAS retained |
|---|---|---|---|
| $93,454 (at threshold) | $0 | $0 | 100% |
| $110,000 | $16,546 | $2,482 | ~75% |
| $120,000 | $26,546 | $3,982 | ~58% |
| $140,000 | $46,546 | $6,982 | ~26% |
| $152,062+ (age 65-74) | $58,608+ | Full OAS | 0% |
OAS for 2026 is approximately $9,500/year for age 65-74, higher with the 10% top-up for age 75+. CRA collects the recovery tax through reduced monthly OAS payments and reconciles at year-end on your tax return.
Frequently Asked Questions
How is the OAS clawback calculated?
It's 15% of net world income above the OAS recovery-tax threshold. On $20,000 of income above the threshold, the clawback is $3,000 a year. Income below the threshold isn't clawed back; once income reaches a much higher upper limit, your entire OAS is recovered.
What is the OAS recovery tax?
The official name for the OAS clawback — a 15% tax on net income above a CRA-set threshold that reduces or eliminates higher-income seniors' Old Age Security. It's collected by reducing the monthly OAS payment (based on prior-year income) and reconciled on the tax return.
What income counts toward the clawback?
Net world income (line 23400), which includes employment income, RRSP/RRIF withdrawals, CPP, OAS itself, taxable investment income, capital gains and foreign pensions. TFSA withdrawals are not counted, which is why TFSAs are valuable in retirement-income planning.
How can I reduce the clawback?
Common strategies include splitting eligible pension income with a lower-income spouse, smoothing income across years to stay below the threshold, holding investments in a TFSA (TFSA withdrawals don't count), realising capital gains gradually, and timing RRIF withdrawals so they don't bunch into a single high-income year.
Can the clawback be more than my OAS?
No — the clawback can't exceed the OAS you actually receive that year. Once your income is high enough that the full 15% clawback equals your OAS, all your OAS is recovered but no more is taken. This calculator gives the raw 15% on the above-threshold income; the real cap is your OAS amount.
References & Authoritative Sources
- CRA — Canada Revenue Agency — Old Age Security pension recovery tax · consulted May 31, 2026 · Official thresholds, calculation method, and recovery tax administration
- Service Canada — Old Age Security benefit amounts and clawback · consulted May 31, 2026 · OAS benefit administrator — quarterly benefit adjustments, age 75 top-up
- Income Tax Act — Section 180.2 — Recovery tax on OAS — statutory basis · consulted May 31, 2026 · Statute defining the 15% recovery rate and threshold indexation methodology
Related Calculators
Embed this calculator
Add this calculator to your website for your readers. The embed includes a neutral attribution link to the original CalcDomain page for methodology, updates, and source notes.
Attribution uses rel="nofollow" by default and is included for transparency, not ranking manipulation.
Suggest an improvement
Found a calculation issue, outdated source, unclear assumption, or missing edge case? Send a short note so we can review it.
Methodology & Review
The clawback is 15% applied to net income above the OAS recovery-tax threshold (enter only the income above the threshold). It does not pick the year's threshold for you, cap the clawback at the OAS amount you actually receive, or model the full income test for GIS and other benefits.
Reviewed according to the CalcDomain Editorial Policy & Calculator Methodology. We document formulas, edge cases, sources, update dates, and correction paths for calculator pages.
Updated