OAS Clawback 2026 Canada — Thresholds + How to Avoid It

If your net income exceeds $95,323 in 2026, the government starts taking back your OAS — 15 cents for every dollar over the threshold. At $155,243, your entire OAS is gone. That's up to $8,988/year lost.

What's RetireZest? A Canadian retirement-planning platform built for the rules retirees actually face — CPP, OAS, GIS, RRSP, RRIF, TFSA, and corporate (CCPC) accounts. It's a planning tool, not a bank or a financial advisor: you enter your numbers, the engine runs a year-by-year simulation under current CRA rules, and you see your retirement laid out from today through your 90s. Free to use; advanced features (PDF reports, Monte Carlo stress testing, the timing optimizer) are an optional paid upgrade.

Quick Reference: OAS Clawback Thresholds (2026)

Net Income	OAS Clawback	OAS You Keep
$95,323 or less	$0	$8,988 (full)
$100,000	$702	$8,286
$110,000	$2,202	$6,786
$120,000	$3,702	$5,286
$130,000	$5,202	$3,786
$140,000	$6,702	$2,286
$155,243+	$8,988	$0 (fully clawed back)

Most retirees don't realize that RRIF withdrawals, CPP, and even OAS itself count toward this threshold. A couple can lose over $17,000/year combined.

See how clawback affects your plan. Try RetireZest free — the simulation shows your OAS clawback year by year and tests strategies to reduce it.

⚠️ How the OAS Clawback Works

OAS is a universal benefit for Canadians aged 65+. In 2026, the maximum OAS payment is approximately $749/month ($8,988/year) for those aged 65–74.

The clawback kicks in when your net income exceeds a threshold. For the 2026 tax year:

• Clawback starts: $95,323
• OAS fully eliminated: approximately $155,243 (age 65–74)
• Recovery rate: 15 cents per dollar of income above the threshold

📊 Example

If your net income is $110,000:

• Amount over threshold: $110,000 - $95,323 = $14,677
• Clawback: $14,677 x 15% = $2,202
• Your OAS is reduced from $8,988 to $6,786

At $155,243 or above, your entire OAS payment is clawed back — you get nothing.

🤔 What Counts as "Net Income" for OAS?

This is where many retirees get tripped up. Your net income for OAS purposes includes:

• Employment and self-employment income
• RRIF and RRSP withdrawals
• CPP and OAS payments themselves
• Pension income
• Interest, dividends, and rental income
• Capital gains (50% taxable portion)
• Foreign income

What does NOT count:

• TFSA withdrawals
• Return of capital from investments
• GIS payments
• Loans or gifts

This is why where you draw income from matters enormously.

💰 The Hidden Cost of the Clawback

The clawback acts like an extra 15% tax on income between ~$95K and ~$155K. Combined with your marginal tax rate — which varies by province — you could face an effective rate of 45–55% in that zone.

For a couple where both partners face the clawback, the combined cost can exceed $17,000 per year.

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Are you on track to lose OAS to the clawback? RetireZest projects your net income year by year — through CPP, RRIF minimums, and dividend timing — so you can see exactly when you'll cross the threshold and which strategies actually move the needle.

→ Try RetireZest free — no credit card required.

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🛡️ 7 Strategies to Minimize the OAS Clawback

🏦 1. Draw Down RRSPs Before Age 65

A commonly recommended approach for many retirees. If you retire before 65, convert RRSP/RRIF to income during your low-income years. You'll pay tax at a lower bracket now and have a smaller RRIF balance later — reducing taxable income when OAS kicks in. This also reduces your future RRIF mandatory minimums.

🛡️ 2. Maximize TFSA Contributions

TFSA withdrawals don't count as income for OAS purposes. Shifting wealth from RRSPs to TFSAs over time (by withdrawing from RRSP, paying the tax, and contributing to TFSA) reduces your future OAS-exposed income.

👥 3. Pension Income Splitting

If you have eligible pension income (RRIF withdrawals after 65, company pensions), you can split up to 50% with your spouse. This can bring both partners below the clawback threshold instead of having one partner far above it.

⏰ 4. Time Your Capital Gains

If you plan to sell investments or property, consider timing the sale to spread gains across multiple years. A $200,000 capital gain in one year triggers a huge clawback; spreading it over 3–4 years may keep you below the threshold each year.

🏦 5. Use Corporate Structures Wisely

Business owners with holding companies can control the timing and type of income (salary vs. dividends vs. capital gains). Careful planning of corporate withdrawals can keep personal income below the OAS threshold.

⏰ 6. Delay OAS to Age 70

If you're going to lose most of your OAS to clawback in your late 60s anyway, consider delaying OAS to age 70. Your payment increases by 0.6% per month (36% total increase). If your income drops by 70, you may collect a larger OAS with less clawback.

📝 7. Choose the Right Withdrawal Strategy

The order in which you draw from accounts (RRIF, TFSA, non-registered, corporate) has a massive impact on OAS clawback. For example:

• TFSA-first: Preserves RRIF for later, but delays RRIF drawdown
• RRIF meltdown: Draws down RRIF early to reduce future mandatory minimums
• Balanced: Draws proportionally from all accounts

The optimal strategy depends on your specific balances, income, and tax situation.

✅ How RetireZest Helps

RetireZest's simulation engine calculates your OAS clawback year by year based on your actual income sources. The strategy comparison tool tests 8 different withdrawal strategies and shows you which one minimizes your lifetime clawback.

You can also use the CPP/OAS Timing Optimizer to find the combination of benefit start ages that maximizes your net income after clawback.

Try it free — it takes about 5 minutes to see your personalized results.

📝 Key Takeaways

• The OAS clawback starts at $95,323 of net income (2026) and recovers 15 cents per dollar
• TFSA withdrawals don't count toward the threshold — use this to your advantage
• Early RRSP/RRIF drawdown before age 65 is a commonly recommended avoidance approach
• Pension income splitting can help couples stay below the threshold
• The right withdrawal strategy can save you thousands per year in clawback

Planning around the OAS clawback isn't just for the wealthy — anyone with a decent RRIF, pension, and CPP can find themselves in the clawback zone. A few hours of planning now can save you tens of thousands over your retirement.