Seeing a smaller Old Age Security (OAS) deposit does not necessarily mean the government lowered OAS rates. In fact, OAS rates do not decrease when the Consumer Price Index falls. An OAS payment can go down because of the OAS recovery tax, income tax withheld from your pension, non-resident tax, or recovery of a previous overpayment. If your deposit also includes the Guaranteed Income Supplement (GIS), a change to GIS can make the total deposit smaller even when your OAS pension itself has not decreased.
Higher Income Can Trigger the OAS Recovery Tax
One of the main reasons an OAS recipient can see a lower monthly payment is the OAS recovery tax, commonly called the OAS clawback.
For the July 2026 to June 2027 recovery period, the calculation is based on your 2025 income. The 2025 minimum recovery threshold is $93,454. When the applicable net income exceeds that threshold, the repayment is generally calculated at 15% of the amount above it. The resulting recovery tax can then be withheld from monthly OAS payments rather than collected entirely as a lump sum. The Old Age Security Act provides the legislative basis for this recovery mechanism.
This timing can make a July decrease seem unexpected. The income that caused it may have been earned during the previous calendar year rather than in the month when the smaller payment appears. Our detailed guide to the OAS clawback covers the calculation and income rules separately.
There is also a useful option when the historical income no longer reflects your situation. If your 2026 income is expected to be substantially lower than your 2025 income, you can ask for a reduction in the recovery tax withheld at source by submitting Form T1213(OAS).
More Income Tax May Be Withheld From Your OAS
OAS is taxable income, and you can have federal income tax voluntarily deducted from your monthly pension. If the amount being withheld changes, your bank deposit can fall even though your gross OAS entitlement stays the same.
You can review or change voluntary federal tax deductions through My Service Canada Account, by contacting Service Canada, or by using the federal income tax deduction process for CPP and OAS. When investigating a smaller deposit, we would compare the gross pension and tax withheld rather than looking only at the amount that reached the bank account. That quickly separates a pension reduction from a tax deduction.
Moving Outside Canada Can Change the Amount You Receive
Living outside Canada can introduce non-resident tax into your OAS payment. Under the 2026 rules, the standard withholding rate on Canadian pension income for non-residents is 25%, although a tax treaty can reduce or eliminate the rate that applies in a particular country.
The tax is deducted directly from the benefit, so the net amount received can drop after becoming a non-resident. The applicable rate depends on your country of residence and Canada’s tax arrangements with that country. Current non-resident pension tax rules provide country-specific rates.
A move abroad can have a separate effect on OAS eligibility itself. Under the 2026 OAS rules for absences from Canada, someone without the required residence history can have the pension suspended after being outside Canada for the permitted period. That is a suspension rather than a smaller monthly pension, so we cover the eligibility side separately in receiving OAS outside Canada.
A Previous OAS Overpayment Can Be Recovered
Another possibility is that too much OAS was paid previously. Government tax records specifically account for OAS benefits overpayments recovered from earlier periods, so repayment of an outstanding overpayment can affect what you receive.
This cause is worth checking when the decrease does not line up with an income-tax or recovery-tax change. Your OAS records and correspondence should identify deductions or adjustments affecting the payment. You can review your information through My Service Canada Account for OAS or contact Service Canada about your OAS when the reason is unclear.
Your GIS May Have Changed Rather Than Your OAS Pension
A bank deposit can be misleading when you receive more than one benefit. The Guaranteed Income Supplement (GIS) is income-tested, and its amount depends on your income and, where applicable, your spouse’s or common-law partner’s income and circumstances. Therefore, a lower combined deposit can come from the GIS portion rather than OAS.
The current GIS payment calculation uses income information to determine entitlement. If your deposit combines both benefits, check the breakdown before concluding that your OAS pension was reduced. Our OAS and GIS comparison explains how the two benefits differ.
Other Questions About a Lower OAS Payment
Can inflation cause my OAS payment to decrease?
No. Under the 2026 indexing rules, OAS amounts are reviewed four times a year using the Consumer Price Index. Rates can increase when the measured cost of living rises, but they do not decrease when it falls. We explain the quarterly adjustment separately in how OAS increases with inflation.
Can a corrected tax return change my OAS recovery tax?
Yes. Because recovery tax depends on income information, a reassessment that changes the relevant income can affect the amount you are required to repay. The effect depends on the revised tax information and the applicable recovery period.
Can my entire OAS pension be recovered because my income is too high?
Yes. For the July 2026 to June 2027 recovery period, the maximum recovery threshold based on 2025 income is $152,062 for ages 65 to 74 and $157,923 for ages 75 and older. At the applicable maximum threshold, the OAS pension can be fully recovered. These thresholds differ because the maximum OAS payment is higher from age 75.
What should I check first when my OAS deposit suddenly drops?
Check the payment breakdown and any recent OAS or tax correspondence rather than comparing bank deposits alone. Look specifically for recovery tax, voluntary income-tax withholding, non-resident tax, an overpayment adjustment, or a separate GIS change. If none explains the difference, contact Service Canada with the affected payment date and amount.
