Imagine working hard for decades and planning your retirement. You happily watch monthly government cheques roll into your bank account. It feels like a hard-earned victory. But then July rolls around. You discover that your monthly direct deposit is suddenly smaller. This is because the government is taking some of that money back.
OAS clawback is the unofficial name for the Old Age Security pension recovery tax. This tax reduces or stops your benefits if your annual net income crosses a certain threshold. For the 2026 tax year, that limit is $95,323. If you make more than this amount, the Canada Revenue Agency (CRA) decides you don’t need the full government helping hand.
What’s the OAS clawback?
The OAS clawback is a 15% tax on income above a set threshold that reduces your Old Age Security payments.
Old Age Security (OAS) is a monthly cheque for most Canadians aged 65 and older. It’s different from the Canada Pension Plan (CPP). CPP relies directly on what you paid into it while working. OAS is funded entirely by general tax dollars. Because it’s funded by all Canadian taxpayers, the government designed it with a built-in safety valve. This ensures that federal support is directed to the seniors who need it most.
The clawback triggers when your net world income (Line 23400 on your tax return) exceeds a specific limit set by the government. Because the CRA uses your previous year’s tax return to calculate your current monthly payments, there are two numbers you need to know right now:
- If your July cheques just dropped: The CRA is looking at your 2025 income. If you earned more than $93,454 last year, your July 2026 to June 2027 payments are actively being reduced.
- If you’re planning for this year: To protect your benefits for next year, you need to keep your current 2026 net income below $95,323.
Once you cross that line, you must repay 15 cents of every dollar earned above the limit. This repayment reduces your monthly benefit and continues until your OAS balance hits zero, which happens if your income reaches the maximum threshold.
How is the OAS clawback calculated?
For your 2025 incomethe math breaks down into three simple zones:
- The safe zone ($93,454 or less): If your net income is below this amount, you’re safe. You keep every dollar of your OAS.
- The clawback zone ($93,454 to the max limit): Once you pass the safe line, the 15% tax kicks in.
- The zero-benefit zone ($152,062+):If you’re aged 65 to 74 and earn this much, your OAS drops to zero. If you’re 75 or older, your higher baseline benefit means your limit is extended to $157,923.
Example: How much OAS will you lose?
If your income is $100,000 in 2026:
- Threshold: $95,323
- Excess income: $4,677
- Clawback (15%): $701.55
You’d lose about $700 of your annual OAS benefits.
Here are five great ways to keep your net income below the safe limit:
- Max out your TFSA
- Share your pension income.
- Delay your OAS payments.
- Space out big property sales.
- Optimize your RRSP withdrawals.
Navigating the OAS clawback doesn’t have to feel overwhelming. We can help you accurately report your income, identify opportunities to reduce your tax burden, and develop a personalized plan to help protect your OAS benefits.
Book an appointment today.
H&R Block | 613-938-6239 | andrea.fitzgerald@hrblock.ca
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