Old Age Security (OAS) is taxable income in Canada, but that does not mean a standard percentage of income tax automatically comes off every OAS payment. For Canadian residents in 2026, regular income tax is not automatically deducted from OAS unless you request withholding. The actual tax you ultimately owe on OAS depends on your total taxable income, available deductions and credits, and your province or territory of residence.
How OAS Is Taxed on Your Income Tax Return
Your OAS pension is included in your taxable income for the year. The amount is reported on your T4A(OAS) Statement of Old Age Security. Box 18 shows the taxable pension paid, which Canadian residents report on line 11300 of their income tax return.
OAS therefore does not have its own flat income tax rate. It becomes part of your overall tax calculation alongside other taxable income. Someone whose OAS is their main taxable income can consequently have a very different tax bill from someone receiving OAS plus employment income, Canada Pension Plan (CPP) benefits, Registered Retirement Income Fund (RRIF) withdrawals or a workplace pension.
This also means the gross OAS amount you receive is not necessarily the amount you keep after filing your return. The pension can create additional tax owing even when the full payment arrived in your bank account during the year.
How Much Income Tax Can Be Deducted From OAS Payments?
You can choose to have tax withheld each month rather than waiting until you file your return. In 2026, My Service Canada Account (MSCA) allows you to start, change or stop voluntary OAS income tax deductions. From the OAS dashboard, select Profile, followed by Manage voluntary income tax deductions.
The amount is not predetermined by the OAS program. You can request a specific dollar amount or percentage to be withheld from each monthly payment. That flexibility matters because the appropriate withholding depends on your wider tax situation rather than the size of the pension alone. A person with several taxable retirement-income sources may need more withheld than someone receiving little other income.
A mail option is also available using the Request for Voluntary Federal Income Tax Deductions form, or you can arrange withholding by contacting Service Canada. Any income tax actually deducted appears in box 22 of your T4A(OAS) and is claimed as tax already paid on line 43700 of your return.
OAS Recovery Tax Is Different From Regular Income Tax Withholding
A reduction caused by the OAS recovery tax, commonly called the clawback, should not be confused with voluntary income tax withholding. For the July 2026 to June 2027 recovery period, OAS recovery is based on 2025 income and can apply when the relevant net income exceeds $93,454.
Recovery tax can therefore be deducted from monthly OAS payments even when you never requested ordinary voluntary withholding. We explain its separate 15% calculation and income limits in what the OAS clawback is and how it works.
Tax Deductions Are Different When You Live Outside Canada
Canadian residents and non-residents do not have the same withholding rules. When OAS is paid to someone living outside Canada, non-resident tax is generally withheld at 25% or less, depending on the applicable tax rules and treaty.
Some non-residents can qualify for a reduced withholding rate. Because the treatment depends on the country of residence and applicable treaty, our article on whether OAS is taxable outside Canada covers that situation separately.
Other Questions About Tax Deductions From OAS
Is the Guaranteed Income Supplement taxed the same way as OAS?
No. The Guaranteed Income Supplement (GIS) is reported separately as a net federal supplement and is not included in taxable income in the same way as the OAS pension. This matters when a deposit contains both benefits because the entire deposit should not be treated as taxable OAS.
Can you have too much tax withheld from OAS?
Yes. Voluntary withholding is a prepayment toward your eventual income tax liability, not the final calculation of what you owe. Excess tax paid during the year can contribute to a refund after your income tax return is assessed.
Could you owe tax even after having tax deducted from OAS?
Yes. The amount withheld from OAS may be insufficient if your total tax liability is higher. Other taxable income can affect the final calculation, so withholding from one pension does not guarantee a zero balance when you file.
Do you receive a tax slip for OAS every year?
Yes. A T4A(OAS) is issued annually. Electronic tax slips can be accessed through government online services, while paper slips are issued by the end of February for the preceding tax year.
