What is the OAS clawback?

The Old Age Security recovery tax reduces OAS payments by 15 cents for every dollar of net income (line 23400) above the threshold ($93,454 in 2025). At incomes around $151,668 (under 75) or $157,490 (75+), OAS is fully clawed back. Officially called the OAS recovery tax, it is sometimes called the OAS clawback.

Why does the marginal rate go above 50%?

Because the 15% OAS clawback stacks on top of the existing federal + provincial marginal rates. At $130,000 of net income in Ontario, the marginal personal tax stack is 26% federal + 11.16% Ontario base + 0.75% Ontario surtax = 37.91%. Add the 15% OAS clawback and the effective marginal becomes 52.91% — meaning every additional $100 of income leaves only $47 in your pocket once OAS is reduced.

Does the 15% clawback apply on RRSP, RRIF, dividend, and capital gain income equally?

Mostly yes — anything that goes onto line 23400 (net income before adjustments) triggers it. RRSP/RRIF withdrawals and pension income hit at 100% of the dollar amount. Capital gains hit at 50% (the inclusion rate). Eligible Canadian dividends hit at 138% of the cash dividend (because of the gross-up), so $100 of eligible dividend = $138 added to line 23400. TFSA withdrawals do not affect line 23400 and are clawback-free.

Are there workarounds?

Yes — the highest-leverage planning moves are documented in OAS Clawback in 2025: How It Works and How to Minimize It . The shortlist: (1) pension-split eligible pension up to 50% with a lower-income spouse via Form T1032, (2) draw down RRSPs in the low-income early-60s years, (3) use TFSA for any income above the threshold, (4) defer OAS to 70 if your 65-70 income would clawback most of the benefit, (5) avoid stacking large capital gains in clawback-band years.

Does the 75+ threshold help?

Slightly. At age 75 OAS is increased by 10%, which raises the income at which OAS is fully clawed back to approximately $157,490 (vs $151,668 under 75). The clawback rate is still 15%, the lower threshold is the same — so the clawback band is wider, not gentler. The 10% top-up itself is also subject to clawback.

How wide is the clawback band?

For 2025: about $58,214 wide for those under 75 ($93,454 to $151,668), and about $64,036 wide for those 75+ ($93,454 to $157,490). For couples splitting eligible pension, these are per-individual thresholds — splitting can keep both spouses below the threshold even when one earner alone would breach it.

What's the dollar cost of the clawback for a typical retiree?

For a 67-year-old with line 23400 of $130,000, the clawback is 15% × ($130,000 − $93,454) = $5,482 of OAS lost in 2025. The full OAS of about $8,840/year would otherwise be paid. So clawback alone reduces OAS by 62% at this income. At $151,668 of income, OAS is fully gone.

Can I cite this analysis?

Yes. Published under CC-BY 4.0 . Please link back to this URL so corrections propagate. Federal and provincial marginal rates are from CRA published 2025 tables . OAS recovery-tax mechanics are from canada.ca .

OAS Clawback Effective Marginal Rate — The 50–60% Band Through Recovery Tax

Original analysis of the effective marginal tax rate Canadian retirees face in the OAS recovery-tax band. The 15% clawback stacks on top of federal + provincial marginal rates, creating a 50–60%+ effective marginal rate band that persists across roughly $58,000 of income.

Effective marginal rate by province (2025, before vs. after clawback)

Province / Territory	$100k base marginal	$100k effective (incl. clawback)	$130k base	$130k effective	$150k base	$150k effective
Alberta	30.5%	45.5%	36.0%	51.0%	42.0%	57.0%
British Columbia	28.2%	43.2%	38.3%	53.3%	40.7%	55.7%
Manitoba	33.3%	48.3%	39.4%	54.4%	43.4%	58.4%
New Brunswick	29.0%	44.0%	38.5%	53.5%	42.5%	57.5%
Newfoundland & Labrador	36.3%	51.3%	41.8%	56.8%	43.8%	58.8%
Nova Scotia	35.5%	50.5%	41.5%	56.5%	47.0%	62.0%
Ontario	29.6%	44.6%	37.9%	52.9%	43.4%	58.4%
Prince Edward Island	32.4%	47.4%	38.7%	53.7%	44.4%	59.4%
Quebec	36.1%	51.1%	41.1%	56.1%	47.5%	62.5%
Saskatchewan	32.5%	47.5%	38.0%	53.0%	42.0%	57.0%
Northwest Territories	28.6%	43.6%	34.6%	49.6%	38.4%	53.4%
Nunavut	27.5%	42.5%	33.0%	48.0%	36.5%	51.5%
Yukon	30.5%	45.5%	36.0%	51.0%	41.8%	56.8%

Marginal rates are combined federal + provincial including provincial surtaxes where applicable. The 15-point bump applies across the entire $93,454–$151,668 (under 75) clawback band. Quebec figures include the federal abatement adjustment but exclude separate Revenu Québec credits — actual Quebec effective rate is slightly lower in practice.

Why this matters

The OAS clawback is the second-most-aggressive marginal-rate event in the Canadian retirement-tax landscape, after the GIS clawback (which can reach 50% on its own and up to 75% when stacked with other low-income clawbacks). Unlike GIS — which affects only retirees with low incomes — the OAS clawback hits exactly the income range many middle-class retirees occupy: high enough to have meaningful RRSP/RRIF balances, low enough that they assumed OAS would be a stable supplement.

For couples, the 50% federal pension-splitting election under Form T1032 is the single most powerful OAS-clawback planning tool. Splitting up to 50% of eligible pension income to a lower-income spouse can lift the higher-earner below the $93,454 threshold while leaving the lower-earner well under it. The result: full OAS preserved on both sides.

Because TFSA withdrawals do not appear on line 23400, the practical implication for late-career savers is to maximize TFSA over RRSP from age ~50 onward if you expect to be in the clawback band in retirement — even if your contribution-year marginal rate is moderately high.

Try the relevant calculators

OAS Clawback Calculator — recovery tax by net income
OAS + GIS Retirement Income — combined OAS, GIS, CPP, Allowance by marital category
Pension Income Splitting — savings from splitting up to 50% of eligible pension to a spouse
CPP & OAS Start Age — when deferring OAS to 70 makes sense
Income Tax Calculator — federal + provincial marginal rates at any income

Re-publishable under CC-BY 4.0. Please link back to this URL so corrections propagate.