OAS Recovery Tax (clawback) math.
OAS clawback amount
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Net OAS after clawback
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The recovery tax is a 15 percent surtax on income above a line
Old Age Security is income-tested at the top end through what the CRA formally calls the OAS recovery tax, and what everyone else calls the clawback. Once your net world income passes a threshold, set at $90,997 for the 2026 income year in this tool, you repay 15 cents of OAS for every dollar above that line. The repayment is capped at the OAS you actually received, so you can never lose more than you were paid. This calculator takes your net income and your annual OAS and returns the clawback and the net OAS you keep.
Where OAS disappears entirely
Because the clawback runs at 15 percent of income over the threshold, OAS is fully recovered once your income climbs far enough that the 15 percent repayment equals your whole OAS entitlement. With the threshold at $90,997, full recovery lands around $148,065 of net income for a typical OAS amount. That upper point is not fixed, though: it shifts with how much OAS you receive, which depends on your age and on annual indexation. A 75-plus recipient receiving a larger OAS reaches full clawback at a slightly higher income than someone receiving the base amount.
A retiree at $100,000 of income
Take a retiree with $100,000 of net income who received $8,732 of OAS for the year. Only the income above the threshold is exposed to the 15 percent rate.
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This retiree repays $1,350 and keeps $7,382 of OAS. Note the hidden sting: that 15 percent recovery sits on top of your ordinary marginal income tax rate, so a dollar of extra income in this zone can effectively be taxed at well over 40 percent once you combine the two. That stacked rate is exactly why income smoothing in retirement matters so much.
Managing the line in retirement
This calculator is built for Canadians at or near retirement who are trying to keep their net income below the recovery line, and the planning payoff is real. The most powerful lever is the order in which you draw down accounts. Pulling spending from a TFSA in a high-income year, deferring or accelerating a RRIF withdrawal, timing a capital gain so it does not land in the same year as a large pension payment, and splitting eligible pension income with a spouse can all keep you under the threshold. A subtle trap catches people who delay OAS to age 70 for the larger payment: the bigger OAS amount also raises the income point before it is fully clawed back, which helps, but the larger benefit is itself more exposed if your other income is high. Because the threshold and the full-recovery point both move with annual indexation and with your own OAS amount, treat the figures here as a planning snapshot for the current year and recheck them each year as the indexed numbers update.
Retirement planning questions
Does TFSA income trigger the OAS clawback?
No, and this is the single most useful fact for managing the clawback. Withdrawals from a TFSA are not income for tax purposes, so they do not count toward the net income figure that drives the recovery tax. Drawing retirement spending from a TFSA rather than a RRIF in a high-income year can keep you under the threshold. By contrast, RRIF and RRSP withdrawals, CPP, pension income, and even the grossed-up amount of Canadian dividends all count and can push you over.
How does the CRA actually collect the clawback?
Through a monthly reduction, based on a lag. Your prior year tax return sets a recovery amount, and Service Canada then reduces your OAS payments over the following July to June period to recover it in advance. If your income later drops, you can request a reduction in the withholding so you are not over-collected. The number this tool shows is the annual recovery; in practice it is spread across twelve reduced monthly cheques rather than billed in a lump sum.