OAS Recovery Tax
OAS is reduced when net income is above a threshold. For 2026 that line is $95,323. The reduction is 15% of income above the line, and it stops once the OAS for the year is gone.
Current for the 2026 tax year · Updated 21 Oct 2026 · Source linked below
What Income Does the Threshold Use?
The recovery tax uses net income, not the OAS payment itself. Employment income, pension income, RRSP and RRIF withdrawals, and taxable investment income can all push a return toward $95,323. A TFSA withdrawal generally does not.
The tax is calculated on the return and then collected later, usually by reducing OAS payments. It is not a separate bill you choose to pay or skip.
| Piece | Figure | What it means |
|---|---|---|
| Threshold | $95,323 | Net income above this line starts the reduction. |
| Rate | 15% | Applied to income above the threshold, not to the whole OAS pension. |
| Cap | The OAS you receive | The reduction does not exceed the OAS paid for the year. |
Why Does an RRIF Make This Show Up Later?
An RRIF has a minimum withdrawal that rises with age. A large RRSP left untouched until then can create taxable income in the same years OAS is being paid. The recovery tax is one result. The tax on the withdrawal itself is another.
Splitting eligible pension income with a spouse can move some of that income to the other return. The threshold is individual, so two people can each sit under the line when one person alone would not.
What Does This Page Leave Open?
Drawing an RRSP down earlier can shrink the later RRIF. Those earlier withdrawals are taxed in the year you take them. Whether that trade is worth it depends on the rates in each year, other income, and how long OAS is paid.
The calculator estimates recovery tax for one person on an RRIF path. A household plan is where pension splitting and a second income belong.
Source: Government of Canada, Old Age Security pension recovery tax.
See OAS Against Your Other Income
Start a free plan and put OAS next to pensions, RRIF withdrawals, and spending. The OAS clawback calculator is the narrower view of one RRSP path.
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