OAS recovery tax (clawback)

The OAS recovery tax, often called the OAS clawback, is a repayment of the Old Age Security pension by people whose income is above a yearly threshold. According to Service Canada, you repay 15% of your net income above $93,454 for 2025 income, recovered from July 2026 to June 2027. The threshold is $95,323 for 2026 income (July 2027 to June 2028). The whole pension is repaid at $152,062 of 2025 income for ages 65 to 74 and $157,923 for 75 and over.

The income tested is your net income before adjustments, on line 23400 of your tax return. Service Canada deducts the expected repayment from your monthly OAS payments over the following July to June, based on your last return. At tax time you work out the actual repayment on lines 23500 and 42200 and claim the amount already withheld on line 43700.

Example: a 70-year-old with $110,000 of net income in 2025 is $16,546 over the threshold. 15% of that is $2,481.90 a year, deducted at about $206.83 a month from July 2026, leaving $545.14 of the full $751.97 monthly pension paid at 65 to 74 (RightSums engine, 27 September 2026). Each extra $1,000 of income in this range costs $150 of OAS on top of income tax.

Work out your own figure with the OAS and GIS calculator, and read how the OAS clawback works and how to reduce it.