The OAS Recovery Tax (commonly called the "clawback") reduces your Old Age Security benefit if your net income exceeds a threshold set by the CRA. In 2026, the clawback begins at approximately $90,997 net income and eliminates OAS entirely at approximately $148,000.
| Net Income | Annual OAS Clawback | Monthly OAS Kept |
|---|---|---|
| Below $90,997 | $0 | ~$700 (full) |
| $100,000 | ~$1,350 | ~$588 |
| $110,000 | ~$2,850 | ~$463 |
| $120,000 | ~$4,350 | ~$338 |
| $130,000 | ~$5,850 | ~$213 |
| $140,000 | ~$7,350 | ~$88 |
| $148,000+ | Full clawback | $0 |
The clawback is based on your net income (Line 23600) on your tax return — before most deductions, but after RRSP contributions, union dues, and childcare expenses. Income sources that count include: employment income, self-employment income, CPP, pension income, RRIF withdrawals, rental income, investment income, and capital gains.
Notably, GIS and OAS itself are included in net income for the clawback calculation (though GIS is tax-free). TFSA withdrawals are NOT included — a major reason TFSAs are the preferred savings vehicle for high-income seniors.
TFSA withdrawals don't add to net income, so they don't trigger the OAS clawback. Prioritize drawing from your TFSA over RRIF/RRSP in high-income years. If you have significant RRSP/RRIF savings, consider shifting savings to a TFSA before age 65.
If you have a spouse, you can split up to 50% of eligible pension income (including RRIF withdrawals after age 65). This reduces your net income — possibly bringing you below the $90,997 threshold. See pension income splitting.
If you're still working at 65, defer OAS until 70. You avoid the clawback during high-earning years and receive a 36% higher benefit. Use the deferral period to convert RRSP to RRIF strategically.
Withdraw from your RRSP gradually before age 71 (before mandatory RRIF conversion), spreading taxable income over multiple years to stay below the clawback threshold each year.
Realize capital gains in years when your other income is lower — before RRIF minimums kick in at 71 — or spread dispositions across multiple tax years.
CRA uses your prior-year net income (from your tax return) to estimate whether you'll owe the recovery tax. If your prior year income exceeded the threshold, CRA instructs Service Canada to withhold a portion of your monthly OAS payments throughout the current year. This is why your OAS deposit amount may be lower than expected if you had a high-income year.
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