What Is the OAS Clawback Threshold for 2026 in Canada?

Most Canadians expect their Old Age Security payment to arrive every month once they retire. What surprises many retirees is that the government can start taking some of that money back — quietly and automatically — once income climbs past a certain level. That mechanism is officially called the OAS Recovery Tax, but most people know it as the OAS clawback. For 2026, the clawback begins when your net income exceeds $93,454. Knowing where that line sits, and whether you're approaching it, is one of the most useful things a retiree can track every year.

How the OAS Clawback Actually Works

The clawback is not a penalty — it's a repayment system. Under federal rules, if your net income for the year (the figure on line 23600 of your tax return) goes above $93,454, you must repay 15 cents of OAS for every dollar of income above that threshold.

Say your net income comes in at $103,454 — exactly $10,000 over the limit. You would owe back $1,500 of OAS. The Canada Revenue Agency (CRA) doesn't send you a bill. Instead, it deducts that amount from your monthly OAS payments the following year, spread out over 12 months. For most recipients, OAS is fully repaid somewhere in the $150,000–$152,000 net income range, depending on the size of the annual benefit.

The repayment is tied to the prior tax year. Income you earn in 2026 affects your OAS payments in 2027, which gives retirees a planning window — if you can see where your income is heading before December 31, there may be options worth considering.

Why the 2026 Threshold Is Higher Than Last Year

Each year, the clawback threshold is indexed to inflation. In 2025, it sat at $90,997. For 2026, it moved up to $93,454 — an increase of roughly $2,457.

That shift is generally good news. If your income stayed roughly flat from last year to this year, you now have a bit more room before the clawback begins. However, RRIF minimum withdrawals tend to grow automatically as account balances change, and combined with CPP, OAS itself, and other income, your net income may be rising faster than the threshold.

This is the arithmetic that catches retirees off guard. The threshold applies to your total net income — not just one stream. Every source feeds into the same number.

What Income Counts Toward the Clawback Calculation?

The clawback is calculated on net income — everything that flows through line 23600. That typically includes:

• RRIF withdrawals, including minimum withdrawals you're required to take each year
• CPP payments
• OAS payments you receive
• Employment income, self-employment income, or rental income
• Interest, dividends (at the grossed-up amount for eligible dividends), and realized capital gains

One important exception: TFSA withdrawals do not count. Money drawn from a Tax-Free Savings Account doesn't appear on your tax return, so it has no effect on the clawback calculation. A retiree who takes $15,000 from a RRIF will show $15,000 more in net income than a retiree who takes the same $15,000 from a TFSA — even though the cash in hand is identical. That difference matters when you're already near the $93,454 line.

The July 2026 OAS Increase and What It Means for Planning

OAS benefits are adjusted quarterly based on changes in the Consumer Price Index. In July 2026, payments increased by 1.2%, with the new amount reflected on the July 29 deposit. That's a welcome bump.

At the same time, higher OAS income adds to your net income. Retirees in the $85,000–$95,000 income range should be aware that rising benefit amounts, layered on top of RRIF minimums and CPP, can push total income toward — or over — the threshold without any change in lifestyle or deliberate action.

Some retirees in this range have options worth exploring: drawing strategically from TFSA accounts, reviewing whether pension income splitting applies, or thinking carefully about the timing of RRSP-to-RRIF conversions. None of these is a blanket answer — the right approach depends on your account structure, income mix, ages, and goals.

Talk to a Retirement Planner About Where You Stand

If your income is anywhere near $93,454 — or if growing RRIF minimums are slowly moving you closer — it's worth getting a clear picture before the end of the year rather than after. Marc Pineault is a retirement planner in London, Ontario who works with retirees to map out how CPP, OAS, RRIF withdrawals, and TFSA accounts interact in practice. Understanding the clawback is one piece of a broader retirement income conversation. To explore what your numbers look like, book a consultation with Marc at calmmoney.ca.

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This article is for educational purposes only and does not constitute personalized financial advice. Please consult a qualified financial planner before making any financial decisions.