Old Age Security is often described as a universal pension, but for higher-income retirees, that universality has a catch: the OAS recovery tax, better known as the OAS clawback. If your income exceeds a set threshold, you have to repay part or all of your OAS pension. Here is exactly how the clawback works for 2026.
The 2026 Clawback Threshold
For the 2026 income year, the OAS clawback begins once your net income exceeds $92,817. Above that threshold, you repay 15 cents of OAS for every dollar of income over the limit. Your OAS is fully eliminated once your net income reaches $151,420 (for pensioners aged 65 to 74) — beyond that point, you receive no OAS at all.
| Net income | OAS clawback |
|---|---|
| Up to $92,817 | No clawback — full OAS payable |
| $92,817 – $151,420 | 15% of income over $92,817 repaid |
| Above $151,420 | OAS fully eliminated |
How the Recovery Tax Actually Works
The clawback is not deducted from your OAS payment in real time based on your current income — it is calculated based on your previous year's tax return, and if applicable, deducted from your OAS payments throughout the following year as a recovery tax withheld at source. This means a high-income year can trigger reduced OAS payments the year after, which catches some retirees off guard if their income drops in the meantime.
What Counts as Net Income
The clawback is based on your net income before adjustments, which includes employment income, CPP and other pension income, RRSP and RRIF withdrawals, investment income, and — importantly — capital gains. It does not include the OAS payment itself. This means large one-off events, like cashing in an RRSP or selling investments with significant capital gains, can push you over the threshold even if your typical annual income is well below it.
Worked Example
Say your net income for the year is $110,000. That is $17,183 above the $92,817 threshold. At the 15% clawback rate, you would repay $2,577.45 in OAS for that year — reducing your annual OAS by that amount, spread across your monthly payments the following year.
Use our GIS and OAS calculator alongside your income projections to see how close you are to the threshold before a major income event, like an RRSP withdrawal, tips you over it.
Strategies to Reduce Clawback Exposure
Some retirees use income-splitting with a spouse, timing RRSP or RRIF withdrawals carefully across tax years, or using a Tax-Free Savings Account (TFSA) for investment income specifically because TFSA withdrawals do not count towards net income for clawback purposes. If you are approaching the threshold, it is worth reviewing your withdrawal strategy with a financial advisor well before the income event happens, since the clawback is based on the calendar year, not the date you apply for OAS.
The Age 75 Increase Does Not Change the Threshold
OAS payments increase automatically once you turn 75, but the clawback threshold and rate remain the same regardless of age — only the full elimination point differs slightly, since a higher base OAS payment for those 75 and over means it takes a bit more income to fully claw it all back.
The Bottom Line
The OAS clawback catches more retirees than you might expect, particularly those with substantial RRSP or RRIF balances, rental income, or investment portfolios generating significant taxable income. Knowing the $92,817 threshold — and the fact that it is based on last year's return, not real-time income — gives you a real chance to plan around it rather than being surprised by a reduced OAS payment.