At What Income Does My OAS Start Getting Clawed Back?
Once your net world income passes the annual threshold, the recovery tax takes 15 cents of every dollar above it. The part that surprises people is the timing: the reduction is applied to payments a year later, based on the return you have already filed.
- The answer:: Net world income above the threshold is subject to a 15% recovery. For 2025 the threshold is $93,454.
- The trap:: The lag. Recovery is applied to the following payment period using the income you reported, so a one-off spike reduces payments a year after the money arrived.
- The recommendation:: Plan discretionary income — a large RRIF withdrawal, a realised gain, a conversion — against the threshold before the year ends, not after.
Where the AI summary above gets this wrong
"If your income is too high you lose your Old Age Security entirely."
That's surface-true. Here's what it misses:
- It is gradual, not all-or-nothing — Recovery is 15 cents per dollar above the threshold, so a small excess costs a small amount. Full recovery only happens far above it.
- The reduction arrives late — It is applied to the following payment period based on the return you filed, so the cost lands a year after the income that caused it.
- Only some income counts — Net world income drives the calculation, so a TFSA withdrawal does not affect it while a RRIF withdrawal of the same size does.
01 The threshold and the rate
The recovery tax applies to net world income above an annual threshold, at 15 cents per dollar of the excess. For 2025 that threshold is $93,454, and the government's own worked example shows income of $100,000 producing a repayment of $981.90.
That structure matters more than the headline. Crossing the threshold by a little costs a little, so the common fear of losing the pension outright applies only at incomes far above the line.
02 Why it arrives a year late
The reduction is applied to payments in the following period, calculated from the income you reported on your return. So the income that triggers recovery and the payments it reduces are separated by roughly a year.
The practical effect is that the damage is already done by the time you notice it. A large one-off withdrawal in one year quietly reduces the following year's payments, which is why the planning has to happen before the year closes.
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 What you can change
The lever is which income enters the calculation. A TFSA withdrawal does not, a RRIF withdrawal does, and the difference between them is exactly the recovery rate on the amount — the arithmetic set out in TFSA income and the clawback.
Where a large withdrawal is unavoidable, splitting it across two tax years can keep both years below the threshold, and deferring OAS entirely may be better for someone still working.
Where a couple's incomes are unequal, pension income splitting moves the calculation as well, because the recovery tax is assessed on each person's own net income rather than on the household's. Splitting to bring the higher earner below the threshold can preserve a benefit that the household total would have wiped out.
The lag is what makes this feel unfair rather than merely expensive. People take a large withdrawal in a year they can afford it, and the reduction lands twelve months later when the money is gone and the reason has been forgotten. Checking the threshold in November costs nothing and removes the whole surprise.
FAQ
What is the OAS clawback threshold?
The recovery tax applies to net world income above an annual threshold, which for 2025 is $93,454. Income above that is subject to a 15% recovery.
Do I lose all my OAS if I go over?
No. Recovery is 15 cents per dollar of income above the threshold, so a small excess costs a small amount. Losing the pension entirely requires income far above the line.
When is the clawback actually applied?
To payments in the following period, calculated from the income on the return you filed. The reduction therefore lands about a year after the income that caused it, which is why planning has to happen before the year ends.
Sources
Regulator references
- 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
- 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
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.