OAS Clawback Explained: How to Avoid Losing Your Old Age Security in 2025

Old Age Security (OAS) is meant to be a universal pension for Canadian seniors — but it is not unconditional. If your retirement income climbs high enough, the government claws part of it back through what is officially called the OAS Recovery Tax, and informally known as the “OAS clawback.”

For retirees with a paid-off mortgage, a defined-benefit pension, and RRSP withdrawals stacking up, this threshold can arrive faster than expected.

How the Clawback Formula Works

For the 2025 income year, the recovery tax kicks in once your net income exceeds $93,454. Above that line, you repay 15% of every dollar of income above the threshold, up to a maximum income level where OAS is reduced to zero.

Worked Example

Suppose a retiree has net income of $105,000 in 2025, made up of a company pension, RRIF withdrawals, and CPP:

• Income above threshold: $105,000 − $93,454 = $11,546
• Repayment: $11,546 × 15% = $1,731.90

That $1,731.90 is deducted directly from OAS payments over the following benefit year (July to June), typically spread across monthly payments rather than taken as one lump sum.

2025 Clawback Reference Table

Full OAS is clawed back entirely once net income reaches roughly $151,668 for recipients aged 65–74 (the figure is slightly higher for those 75+, who receive a higher base OAS amount).

Strategies to Reduce the Clawback

• Prioritize TFSA withdrawals. Money withdrawn from a TFSA is not counted as income anywhere, so it never touches the clawback calculation — unlike RRSP/RRIF withdrawals.
• Split eligible pension income with a spouse. Canada allows retirees to allocate up to 50% of eligible pension income to a lower-income spouse, which can pull your individual net income back under the threshold.
• Smooth out RRSP/RRIF withdrawals. Large one-time withdrawals can push a single year's income well past the threshold. Spreading withdrawals across more years, starting earlier if needed, keeps each year's income lower.
• Consider deferring OAS. Deferring OAS past age 65 (up to age 70) increases your monthly payment by 0.6% per month deferred, and reduces the number of years your OAS is exposed to a potential clawback if you expect high income only in early retirement.