The OAS clawback — officially called the Old Age Security Recovery Tax — reduces your OAS benefit if your net income exceeds a certain threshold. It affects higher-income retirees and catches many by surprise. This guide explains exactly how it works in 2025 and what you can do to minimize it.
The CRA calculates your OAS recovery tax based on your net income from the previous year's tax return. The mechanism works as follows:
| Net Income Level | OAS Impact |
|---|---|
| Below ~$90,997 | No clawback — full OAS retained |
| $100,000 | Repay 15% × ($100,000 − $90,997) = ~$1,350 |
| $110,000 | Repay ~$2,850 |
| $120,000 | Repay ~$4,350 |
| $130,000 | Repay ~$5,850 |
| ~$148,179+ | Full OAS clawed back (100% repaid) |
The clawback is based on your net income (line 23600) on your tax return, which includes:
Notably, TFSA withdrawals are not included in net income and do not trigger the clawback. This is one of the most powerful reasons to prioritize TFSA savings.
TFSA withdrawals are completely invisible to CRA for OAS purposes. If you need income beyond CPP+OAS, drawing from your TFSA instead of your RRIF keeps your net income lower and reduces or eliminates the clawback.
If your spouse has lower income, splitting up to 50% of eligible pension income (including RRIF withdrawals) moves income to their tax return, reducing your net income and potentially keeping you below the clawback threshold.
If you're working past 65 and have high income, deferring OAS to 67 or 70 means you start collecting only when your income is lower. You also get a larger monthly amount permanently.
Strategic RRSP meltdown before age 65 or 71 can reduce your future RRIF minimum withdrawals — which are the biggest driver of clawback for many retirees. Draw down RRSP when your income is low to shrink future mandatory RRIF income.
If you hold non-registered investments, be strategic about when you realize capital gains. Triggering large gains in a year where other income is high can push you over the clawback threshold. Spread gains over multiple years where possible.
Large charitable donations reduce your net income through the charitable tax credit. If you're planning major giving, coordinating it with high-income years can reduce clawback exposure.
If you still have RRSP room and are under 71, RRSP contributions directly reduce your net income. A $100 RRSP contribution could reduce your net income by $100 and save $1,500 in OAS clawback.
If you know you'll owe a clawback, you can request Service Canada to withhold federal income tax from your OAS payments proactively. This avoids a large lump-sum payment when you file. Contact Service Canada or update your withholding through My Service Canada Account.
The OAS clawback (for high-income seniors) is different from GIS reduction (for low-income seniors). GIS is reduced when income rises above $0 — it's essentially an income-tested supplement for low-income retirees, not a tax on higher-income retirees like the OAS recovery tax.
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Get KOHO Free — Use Code 45ET55JSYANo. The OAS recovery tax only applies to OAS payments. CPP is never clawed back regardless of income level. Both CPP and OAS are taxable as income, but only OAS is subject to the recovery tax.
No. The clawback threshold is indexed to inflation and adjusted annually. In 2024 it was ~$86,912; in 2025 it's approximately $90,997. It rises modestly each year.
If your net income stays below ~$90,997, you face zero clawback. With careful income planning — especially using TFSAs, pension splitting, and strategic RRIF withdrawals — many retirees with substantial savings can stay below the threshold.