What Is the Age Amount Credit?
A non-refundable credit available from the year you turn 65, reduced as net income rises and eliminated entirely above a ceiling. Its phase-out creates an extra marginal cost at income levels well below where the OAS recovery tax starts, which is why so few people know it is happening.
- The answer:: The credit is available from the year you turn 65 and is reduced by a percentage of net income above a threshold.
- The trap:: Reading your bracket as your marginal rate in your late sixties. The phase-out adds to it silently, before the OAS recovery tax has begun.
- The recommendation:: Any unused portion can be transferred to a spouse, so a couple should check the transfer before assuming the credit is lost.
Where the AI summary above gets this wrong
"Once you turn 65 you get an extra tax credit for being a senior."
That's surface-true. Here's what it misses:
- It is income-tested — The credit is reduced as net income rises above a threshold and is eliminated entirely above a ceiling, so many people receive part of it or none.
- It creates a hidden marginal rate — Because it phases out with income, an extra dollar costs your bracket plus the value of the credit being withdrawn.
- It can move to a spouse — An unused portion can be transferred to a spouse or common-law partner, which is where couples recover value they assumed was gone.
01 Who gets it and how much
The age amount is available from the year you turn 65. It is a non-refundable credit, so it reduces tax payable rather than producing a refund on its own, and it applies at both the federal level and, in a parallel form, provincially.
The full amount goes to those with net income below a threshold. Above that, it is reduced by a set percentage of the excess, and above a higher ceiling it is gone entirely.
02 The marginal rate nobody quotes
Because the credit shrinks as income rises, each additional dollar in the phase-out range costs your ordinary marginal rate plus the value of the credit you are losing. That combined figure is your real marginal cost, and it is higher than any published bracket.
This happens at incomes well below where the OAS recovery tax begins, so there are effectively two separate income-tested reductions stacked across a retirement, with a gap between them.
Shows: the OAS recovery tax at your net income, given the threshold and recovery rate you enter. Ignores: the second threshold at which OAS is fully recovered, provincial tax, and the one-year lag before recovery applies.
03 The transfer couples miss
If your tax payable is too low to use the whole credit, the unused portion can generally be transferred to a spouse or common-law partner. A retiree with modest income and little tax to offset does not simply forfeit it.
That makes the age amount worth checking at the household level rather than individually, in the same way as the medical expense credit, where which spouse claims changes what the household keeps.
The credit is also reduced as net income rises and disappears entirely above a stated level, which puts it in the same family as the recovery tax. For a retiree in the reduction range, a dollar of extra income costs the tax on it plus part of this credit, and the two are rarely counted together.
Canada has three separate income-tested reductions operating across a retirement — GIS at the bottom, the age amount in the middle, the OAS recovery tax at the top — and almost nobody can name all three. The result is retirees planning against published brackets that describe none of their actual marginal rates.
FAQ
Does everyone over 65 get the age amount?
No. The full amount goes to those with net income below a threshold, is reduced by a percentage of income above it, and disappears entirely above a higher ceiling, so many receive only part of it or none.
Why is my marginal rate higher than my bracket?
Because the age amount phases out with income. In that range an extra dollar costs your ordinary rate plus the value of the credit being withdrawn, which is a real cost no bracket table shows.
Can I transfer the credit to my spouse?
Generally yes. Where your tax payable is too low to use the whole credit, the unused portion can be transferred to a spouse or common-law partner, which is why it is worth checking at the household level.
Sources
Regulator references
- Canadian income tax rates for individuals · Canada Revenue Agency · 2025The federal and provincial rate brackets a withdrawal is taxed against.Last verified: 2026-09-07
- Old Age Security pension recovery tax · Government of Canada · 2025The income threshold at which OAS begins to be recovered and the rate of recovery.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.