OAS clawback
Old Age Security is clawed back at 15.0% of every dollar of net world income above $95,300. Because it stacks on top of your ordinary marginal rate, the true cost of a taxable dollar in that band is far higher than the bracket suggests.
- 15% recovery tax
- Threshold headroom
- TFSA substitution
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Where your OAS goes
- OAS you keep$8,819
- Recovered$0
| Pension income | $38,000 |
|---|---|
| RRIF and RRSP withdrawals | $32,000 |
| Other taxable income | $9,000 |
| OAS received | $8,819 |
| Net world income | $87,819 |
| Excess over $95,300 | $0 |
| Recovery tax at 15.0% | $0 |
| OAS retained | $8,819 |
| TFSA withdrawals (excluded)Not part of net world income, so they never trigger recovery | $0 |
The clawback band
- OAS kept
- OAS recovered
| Clawback begins | $95,300 |
|---|---|
| OAS fully eliminated at roughlyDepends on your OAS amount, so deferral widens the band | $154,096 |
| Width of the band | $58,796 |
Levers that lower net world income
| Withdraw from a TFSA instead of a RRIFThe single cleanest fix — TFSA income is invisible to the recovery tax | Excluded |
|---|---|
| Pension income splitting with a spouseMoves eligible pension and RRIF income to the lower-income spouse | Up to 50% |
| Draw down the RRSP before 71Smaller RRIF balance means smaller mandatory minimums later | Pre-emptive |
| Defer OAS to 70A larger pension, but a wider clawback band and higher income | +36.0% |
| Hold bonds in registered, equities in the TFSALowers reported interest income without lowering total return | Structural |
The recovery tax applies 15.0% to net world income (line 23600, with a few adjustments) above $95,300 for the 2026 period, capped at the OAS you actually received. Full elimination happens around $154,100 for someone taking OAS at 65.
Deferring OAS increases the pension 0.6% a month to age 70, which also widens the income band over which the clawback operates — a larger pension takes more income to erase.
The “true rate on the next dollar” adds the recovery tax to your combined federal and provincial marginal rate. It applies only while some OAS remains to be recovered; once the pension is fully clawed back, the rate returns to the ordinary marginal rate.
These results are illustrative estimates based on published 2026 rates and typical lender rules. They are not financial, tax, or legal advice, and they are not a mortgage or credit approval. See the methodology and disclaimer.
Mandatory minimums from 71 onward, and how long the portfolio lasts.
Take CPP at 60, 65 or 70 — and find the age where deferring wins.
Contribution room since 2009, wrapper comparison, and the FHSA deduction.
Take-home pay with federal and provincial tax, CPP, EI, and RRSP impact.