The Old Age Security (OAS) clawback is the common name for the OAS recovery tax. It applies when an OAS recipient’s individual income exceeds the applicable annual threshold. The government then recovers some or, at sufficiently high income, all of the person’s OAS pension. For the July 2026 to June 2027 recovery period, the calculation uses 2025 income. The 2025 minimum recovery threshold is $93,454, and the recovery rate is 15% of income above that amount.
How the OAS Clawback Is Calculated
The basic calculation is straightforward. Subtract the applicable threshold from your income, then multiply the excess by 15%. The repayment cannot exceed the OAS benefits subject to recovery.
For example, someone with $100,000 of income in 2025 is $6,546 above the $93,454 threshold. Multiplying $6,546 by the 2025 recovery rate of 15% produces a repayment of $981.90 for the July 2026 to June 2027 recovery period. The actual tax-return calculation is completed using the federal worksheet, so our example is useful for understanding the mechanic rather than replacing the official calculation.
The income used for the recovery tax is not simply employment income. For Canadian residents, the 2025 tax-return calculation starts with net income before adjustments and makes specified adjustments. Income from sources such as employment, pensions and investments can therefore affect whether you cross the threshold. OAS itself is also taxable income.
When the OAS Clawback Takes Your Entire Pension
There is a second threshold at which the standard OAS pension can be fully recovered. For the July 2026 to June 2027 period, the maximum recovery thresholds based on 2025 income are:
| Age | 2025 income at which standard OAS is fully recovered |
|---|---|
| 65 to 74 | $152,062 |
| 75 and over | $157,923 |
The thresholds differ because people aged 75 and older receive a higher standard OAS pension. These full-recovery figures can also be affected by circumstances such as receiving a partial or deferred pension, so they should not be treated as a personalized cut-off for every recipient.
Why the Clawback Shows Up in Later OAS Payments
The timing is easy to miss because the income year and recovery period are different. The recovery system generally uses income from one calendar year to determine deductions during a 12-month period beginning the following July.
For a Canadian resident whose 2025 income results in a recovery tax, the amount can be withheld from OAS payments from July 2026 through June 2027. Spreading the recovery across monthly payments avoids requiring the whole amount through one payment. An advisory letter is issued before the deductions begin.
This lag also explains why an OAS payment can fall even when your income has recently dropped. The deduction may still reflect the earlier income year. If that is what happened to your payment, we cover the other possible causes separately in why an OAS payment can go down.
The OAS Clawback Is Based on Individual Income
For the recovery tax, the relevant threshold applies to the OAS recipient’s own income rather than a couple’s combined income. A spouse or common-law partner having a high income does not, by itself, cause your OAS pension to be clawed back.
That treatment differs from some other OAS-related benefits that use household circumstances or combined income. Keeping those rules separate matters because applying a couple-based income test to the OAS recovery tax can produce the wrong result.
Questions About the OAS Clawback
Can you still receive OAS while working?
Yes. Employment itself does not disqualify you from OAS. However, earnings form part of the income that can contribute to a recovery-tax liability. We cover the broader interaction between employment and retirement benefits in how much you can earn while collecting CPP and OAS.
What happens if your income drops substantially after a high-income year?
For 2026, you can ask to have the recovery tax withheld at source reduced when your 2026 net income is expected to be substantially lower than your 2025 net income. The request is made using Form T1213(OAS), Request to Reduce Old Age Security Recovery Tax at Source.
Does the OAS clawback apply to people living outside Canada?
It can, but non-residents have separate rules involving net world income, the Old Age Security Return of Income and the tax treatment of Canadian pensions in their country of residence. Some tax-treaty situations can provide an exemption. Those rules should be checked separately if you receive OAS outside Canada.
Does the OAS clawback threshold stay the same every year?
No. The minimum recovery threshold is indexed annually. For example, the confirmed threshold for 2026 income is $95,323, which applies to the July 2027 to June 2028 recovery period. Because the threshold changes, use the income year that corresponds to the recovery period you are checking rather than carrying an older figure forward.
