OAS clawback 2026: starts at $95,323, gone by $155,320

OAS recovery tax thresholds by income year

The recovery tax (the clawback) is 15% of net world income above the threshold for the year, and it keeps going until the whole pension is repaid. ESDC publishes the figures by income year, and each income year funds the recovery period that starts the following July canada.ca.

The upper limits for the current income year are estimates from January to September, built on the maximum OAS amounts, and become final from October. As of October 2026, ESDC's October to December 2026 table gives the 2026 range as $95,323 to $155,320 for ages 65 to 74 and up to $161,320 at 75 and over, and confirms that net world income includes the OAS pension itself canada.ca.

You'll still see $90,997 quoted as the 2026 threshold. That figure is the 2024 income threshold, which drives the deductions running from July 2025 to June 2026. When a client asks about "the 2026 clawback", check whether they mean their 2026 income or the payments they receive in 2026.

How the July to June recovery period works

Service Canada doesn't wait for the return to collect. It takes the income from the client's last return, estimates the year's repayment, splits it into 12 monthly deductions from the OAS cheque, and sends a letter. ESDC's own example: $100,000 of 2025 income minus $93,454 leaves $6,546, so the client repays $981.90, about $82 a month from July 2026 ($981.90 divided by 12) canada.ca.

The legal mechanism is Part I.2 of the Income Tax Act. Section 180.2 sets the withholding off a "base taxation year": for payments in the last six months of a calendar year, that is the year that ended the previous December 31, and for the first six months, the year that ended two Decembers back laws-lois.justice.gc.ca. So the deductions in a client's 2026 cheques come from two different returns: January to June from 2024 income, July to December from 2025 income.

What was withheld is only a prepayment. It appears in box 22 of the T4A(OAS) and is claimed on line 43700 as tax deducted, not on line 23200 canada.ca. If 2025 income was over the threshold but 2026 income will be much lower (retirement from a job, a one time capital gain that won't repeat), the client can ask the CRA in writing on Form T1213(OAS) to reduce the withholding from July 2026 canada.ca.

Where it lands on the T1: lines 23400, 23500 and 42200

The income tested isn't line 23600. It's line 23400, minus lines 11700 and 12500, plus line 21300 and any RDSP income repayment included on line 23200. If that result is over $93,454 for 2025, the client may have to repay part or all of the OAS on line 11300 canada.ca.

The chart for line 23500 on the Federal Worksheet produces the repayment. The same amount goes on line 42200, where it adds to total payable on line 43500, and on line 23500 as a deduction, so the clawed back OAS isn't also taxed as income canada.ca.

A client who also has an EI benefits repayment (T4E box 15 at the 30% rate, with a separate $82,125 threshold for 2025) runs both through the same chart and enters the total on line 23500 canada.ca.

Worked example: $110,000 of net income

Take a client aged 72 with adjusted line 23400 income of $110,000 in 2024, 2025 and 2026. The pension stays well under the full recovery limit in every year, so the 15% formula applies straight through.

Now reconcile the 2026 return. On 2024 income the repayment was $19,003 times 15%, or $2,850.45, about $237.54 a month. The 2026 cheques carry six months of that (about $1,425.23) plus six months at the 2025 rate (about $1,240.95), roughly $2,666.18 in box 22. The 2026 repayment owing is $2,201.55, so about $464.63 comes back on the return. Use the actual box 22 figure; the monthly amounts here are the annual figure divided by 12.

The pattern holds for any client with flat income above the threshold: the threshold rises each year, the withholding lags it, and the T1 refunds the difference. A client whose income jumps gets the opposite, a balance owing on line 42200 that withholding never covered.

How the 10% increase at age 75 changes the cut off

The OAS pension was permanently increased by 10% for seniors aged 75 and over in July 2022 canada.ca, and the increase starts the month after the 75th birthday canada.ca. For October to December 2026 the maximum is $762.50 a month at 65 to 74 and $838.75 at 75 and over canada.ca.

The threshold doesn't change with age. Both groups start repaying at $93,454 on 2025 income and $95,323 on 2026 income, and both repay the same 15%. The only difference is that a bigger pension takes more income to wipe out, so the full recovery point moves up: $157,923 instead of $152,062 for 2025 income, and $161,320 instead of $155,320 for 2026.

That matters only near the top. At $110,000 the repayment is $2,481.90 whatever the client's age. At $155,000 of 2025 income, a 72 year old is past $152,062 and repays the whole pension, while an 80 year old is still $2,923 under $157,923 and keeps about $438.45 of it (15% of that gap).

A client who turns 75 partway through the year gets the higher rate only for the months after the birthday month, so the pension received that year falls between the two columns.

Planning levers and the rules behind them

Pension income splitting moves income off the higher earner's return. Spouses file a joint election on Form T1032 and can allocate up to 50% of eligible pension income. Once the transferring spouse is 65 or older at the end of the year, RRIF and annuity payments qualify, but OAS and CPP or QPP benefits are not eligible canada.ca. Because each spouse's own net income drives the clawback, a split can pull the higher earner under $95,323 for 2026.

TFSA money sits outside the test. Income earned in a TFSA and withdrawals from it don't affect OAS or GIS canada.ca. RRIF payments do: they are taxable on receipt, and the minimum must be paid starting the year after the RRIF is entered into canada.ca. So the timing of RRIF withdrawals above the minimum decides which year's line 23400 they land on, while TFSA withdrawals land on none. See the RRIF minimum withdrawal table for the yearly floor.

Deferral changes the size of the pension, not the threshold. Each month of delay past 65 raises the pension by 0.6% (7.2% a year), up to 36% at age 70, with no gain for waiting past 70 canada.ca. A client still working at 65 with income above the threshold would repay much of the pension anyway, which ESDC itself flags as a factor when choosing a start date.

None of these change the 15% rate or the thresholds. They change which dollars appear on line 23400, and in which year.