The Canada Revenue Agency (CRA) administers several income-tested benefit programs that begin reducing payments once a recipient’s income crosses a specific threshold.
These reductions are commonly known as CRA clawbacks, and the income levels that trigger them have shifted for 2026 due to annual inflation indexation.
Whether you are a senior collecting Old Age Security, a family receiving the Canada Child Benefit, or a worker who received Employment Insurance, the CRA uses your tax return to determine whether any portion of your benefits must be repaid.
Understanding exactly where each clawback threshold sits in 2026 can help Canadians make smarter decisions about RRSP withdrawals, pension income splitting, and the timing of capital gains.
The stakes are real because even a modest amount of income above a threshold can result in hundreds or thousands of dollars in lost benefits over a 12-month period.
This guide covers every major CRA clawback threshold in effect for 2026, including the OAS recovery tax, the Canada Child Benefit phase-out, the EI benefit repayment, and the Guaranteed Income Supplement reduction.
Table of Contents
OAS Recovery Tax: The Clawback That Affects Canadian Seniors
The Old Age Security pension recovery tax is the most well-known CRA clawback and the one that affects the largest number of Canadians.
It applies to seniors aged 65 and older whose net world income exceeds a specific annual threshold, and the CRA recovers 15 cents for every dollar above that limit from monthly OAS payments.
The OAS program operates on a July-to-June payment cycle rather than a calendar year, which means two different sets of thresholds are relevant in 2026.
For the July 2026 to June 2027 recovery period, the CRA uses your 2025 net world income from Line 23600 of your tax return to calculate any OAS clawback deductions.
The 2026 income year threshold is a separate figure that will determine your ORS recovery tax for the July 2027 to June 2028 period.
OAS Recovery Tax Thresholds: 2024 to 2026 Comparison
| Income Year | Minimum Threshold | Full Recovery (Age 65-74) | Full Recovery (Age 75+) |
| 2024 (July 2025-June 2026) | $90,997 | $148,451 | $154,196 |
| 2025 (July 2026-June 2027) | $93,454 | $152,062 | $157,923 |
| 2026 (July 2027-June 2028) | $95,323 | ~$154,708 | ~$160,647 |
Seniors aged 75 and older have a higher full-recovery threshold because they receive a permanently larger OAS pension thanks to the 10% enhancement that took effect in July 2022.
How The OAS Clawback Is Calculated
The formula is straightforward: (net world income minus the minimum threshold) multiplied by 15%.
The resulting amount is the total annual recovery tax, which the CRA spreads across 12 monthly OAS payments from July through June.
OAS Clawback Examples For The July 2026-June 2027 Period
| 2025 Net Income | Excess Over $93,454 | Annual Clawback | Monthly Reduction | OAS Retained (65-74) |
| $90,000 | $0 | $0 | $0 | Full ($743.05) |
| $100,000 | $6,546 | $981.90 | $81.83 | $661.22 |
| $110,000 | $16,546 | $2,481.90 | $206.83 | $536.22 |
| $120,000 | $26,546 | $3,981.90 | $331.83 | $411.22 |
| $140,000 | $46,546 | $6,981.90 | $581.83 | $161.22 |
| $152,062+ | $58,608+ | $8,791.20+ | $743.05+ | $0 |
These figures use the maximum OAS pension for the April to June 2026 quarter of $743.05 per month for seniors aged 65 to 74.
The July to September 2026 OAS maximum is expected to rise to approximately $751.97 following the confirmed 1.2% quarterly increase, which would adjust the full-recovery ceiling slightly upward.
How Pension Income Splitting Can Eliminate The OAS Clawback
Consider a couple where Senior A has 2025 net income of $105,000 and Senior B has net income of $45,000.
Without pension splitting, Senior A exceeds the $93,454 threshold by $11,546 and faces an annual OAS clawback of $1,731.90 ($11,546 multiplied by 15%).
That works out to $144.33 less in OAS every month from July 2026 through June 2027.
If Senior A transfers $15,000 of eligible RRIF income to Senior B using CRA Form T1032, Senior A’s reported net income drops to $90,000 and falls safely below the OAS recovery tax threshold.
Senior B’s income rises to $60,000, which is still well below the $93,454 clawback line.
The result is $1,731.90 in annual OAS savings for the household through a simple paper election that requires no actual transfer of money between spouses.
Canada Child Benefit Phase-Out: The Clawback That Affects Families
The Canada Child Benefit is reduced through a two-tier phase-out system once a family’s adjusted net income crosses the first threshold.
The CRA recalculates every family’s entitlement each July based on the previous year’s tax return.
Unlike the OAS clawback, which uses a flat 15% recovery rate, the CCB phase-out uses different reduction percentages depending on the number of children in the household.
CCB Income Thresholds For 2026
| Threshold | July 2025 – June 2026 | July 2026 – June 2027 |
| Full CCB (no reduction) | Below $37,487 AFNI | Below $38,237 AFNI |
| Phase 1 reduction begins | $37,487 | $38,237 |
| Phase 2 reduction begins | $81,222 | $82,847 |
| Max CCB (under 6) | $7,997/year | $8,157/year |
| Max CCB (age 6-17) | $6,748/year | $6,883/year |
CCB Phase-Out Reduction Rates (Phase 1)
| Number Of Children | Phase 1 Reduction Rate |
| 1 child | 7% |
| 2 children | 13.5% |
| 3 children | 19% |
| 4 or more children | 23% |
What A Family With Two Children Under Six Actually Receives
The following table shows the annual and monthly Canada Child Benefit for a family with two children under age six at different income levels for the July 2026 to June 2027 benefit year.
The maximum CCB for this family is $16,314 per year ($8,157 multiplied by 2 children).
| Family AFNI | Phase 1 Reduction | Annual CCB | Monthly CCB | Annual Loss |
| $35,000 | $0 | $16,314 | $1,359.50 | $0 |
| $50,000 | $1,588 | $14,726 | $1,227.17 | $1,588 |
| $65,000 | $3,613 | $12,701 | $1,058.42 | $3,613 |
| $75,000 | $4,963 | $11,351 | $945.92 | $4,963 |
| $100,000 | $8,338+ | ~$7,976 | ~$664.67 | ~$8,338 |
| $150,000 | $8,338+ | ~$3,470 | ~$289.17 | ~$12,844 |
Families earning above $82,847 also face a Phase 2 reduction that further lowers the benefit, which is why the losses accelerate at higher income levels for families receiving CRA benefit payments.
RRSP contributions made before the filing deadline directly reduce adjusted family net income, which can increase CCB payments for families sitting above the first threshold.
Employment Insurance Benefit Repayment: The Clawback That Affects Workers
Higher-income Canadians who receive regular Employment Insurance benefits may be required to repay a portion of those benefits through the EI clawback.
The EI repayment is triggered when your net income for the year exceeds 1.25 times the maximum yearly insurable earnings, and the 2026 CRA payroll deduction tables set the maximum insurable earnings at $68,900.
EI Clawback Thresholds: 2025 vs 2026
| Detail | 2025 | 2026 |
| Max Insurable Earnings | $65,700 | $68,900 |
| Clawback Threshold (1.25x) | $82,125 | $86,125 |
| Repayment Rate | 30% | 30% |
The repayment amount is 30% of the lesser of your total regular EI benefits received during the year or the amount by which your net income exceeds $86,125.
Special EI benefits such as maternity, parental, sickness, compassionate care, and family caregiver benefits are exempt from the EI clawback.
First-time claimants who received fewer than one week of regular EI benefits in the 10 years prior to the current tax year are also exempt from the repayment requirement.
Guaranteed Income Supplement Reduction: The Clawback That Affects Low-Income Seniors
The Guaranteed Income Supplement has the steepest effective clawback rate of any major federal benefit, reducing payments by $1 for every $2 of income above the applicable threshold for low-income seniors collecting OAS and GIS.
That translates to an effective 50% reduction rate, which is far higher than the 15% OAS recovery tax or the 7% to 23% CCB phase-out rates.
For the July 2026 to June 2027 benefit year, GIS eligibility and payment amounts are recalculated using 2025 income data, and seniors who did not file their return by the April 30, 2026 tax deadline risk having GIS payments suspended starting in July.
GIS Income Thresholds For July 2026-June 2027
| Household Type | Max Monthly GIS (Apr-Jun 2026) | Income Threshold For Full GIS |
| Single, widowed, divorced | $1,109.85 | Below ~$22,512 |
| Couple (both receive OAS) | $668.16 each | Below ~$29,760 combined |
How Quickly GIS Disappears As Income Rises
The 50% reduction rate means GIS drops sharply with even small increases in income.
The following table shows the approximate monthly GIS payment for a single senior at different annual income levels for the July 2026 to June 2027 benefit year.
| Annual Income (Excl. OAS) | GIS Reduction (50%) | Approx. Monthly GIS | Annual GIS Lost |
| $0 | $0 | $1,109.85 | $0 |
| $5,000 | $2,500 | $901.52 | $2,500 |
| $10,000 | $5,000 | $693.19 | $5,000 |
| $15,000 | $7,500 | $484.85 | $7,500 |
| $20,000 | $10,000 | $276.52 | $10,000 |
| $22,512+ | $11,256+ | $0 | $13,318 |
A single senior who earns just $5,000 in annual income beyond OAS loses $2,500 in GIS, which means every dollar of part-time work, CPP, or RRIF withdrawal effectively costs 50 cents in lost GIS on top of any regular tax owed.
GIS is not taxable and does not need to be reported as income, but the underlying income that determines your GIS entitlement must be reported through your T1 filing alongside other federal benefit information.
Canada Groceries And Essentials Benefit Phase-Out
The Canada Groceries and Essentials Benefit officially replaced the GST/HST credit in July 2026 under Bill C-19 and uses the same income-testing formula to gradually reduce quarterly payments as household income rises.
The CGEB delivers quarterly payments that are 25% higher than the former GST/HST credit amounts, with the first enhanced payment issued on July 3, 2026.
For a single individual with no children, the maximum annual CGEB is approximately $519 for the July 2026 to June 2027 benefit year.
Payments begin to decrease once adjusted net income exceeds approximately $46,012 for a single individual, with the phase-out rate depending on household composition.
Unlike the OAS clawback, which uses a fixed 15% rate, the CGEB phase-out is designed to taper gradually so that moderate-income Canadians still receive partial payments.
How Multiple Clawbacks Can Stack Against Your Income
The real financial impact of CRA clawbacks becomes significant when multiple clawbacks apply to the same household simultaneously.
A senior aged 65 with dependent children and net income of $100,000 could face the OAS recovery tax, a reduced Canada Child Benefit, and a reduced CGEB all at the same time.
The combined effect of the OAS 15% recovery tax on top of the regular marginal income tax rate can push the effective tax rate on income in the clawback zone above 45% for many retirees.
Every additional dollar of RRIF withdrawal, rental income, or capital gains above the OAS threshold costs 15 cents in lost OAS benefits on top of the regular federal and provincial tax, which is why income planning around CPP and OAS payment dates matters for retirement budgeting.
Key Income Planning Strategies To Reduce CRA Clawbacks
TFSA withdrawals do not count as income on Line 23600 and have no impact on any CRA clawback threshold, which makes the Tax-Free Savings Account one of the most powerful retirement income tools for Canadian workers and retirees alike.
Pension income splitting allows couples to transfer up to 50% of eligible pension income (including RRIF withdrawals after age 65) to a lower-income spouse using CRA Form T1032.
An RRSP meltdown strategy involves making deliberate RRSP withdrawals during lower-income years before age 65 to reduce future mandatory RRIF minimums that could push income above clawback thresholds.
Deferring OAS from age 65 to age 70 increases the monthly OAS pension by 0.6% per month of deferral (36% at age 70) and eliminates the clawback entirely during the deferral period.
Holding dividend-paying investments inside a TFSA rather than a non-registered account avoids the 38% gross-up on eligible Canadian dividends that inflates reported income for clawback purposes.
For newcomers to Canada building their pension contribution history, understanding how these clawback thresholds interact with federal benefit eligibility rules is essential for long-term financial planning.
What Income Counts Toward CRA Clawback Thresholds
The CRA uses net world income from Line 23600 of your T1 tax return for the OAS recovery tax and from Line 23600-derived figures for most other clawbacks.
Not all income is treated equally, and the distinction between reportable and non-reportable income is the foundation of every clawback reduction strategy.
Income Sources That Trigger CRA Clawbacks
The following types of income all count toward Line 23600 and can push you above the OAS, CCB, EI, or GIS clawback threshold.
- Employment income includes all wages, salaries, bonuses, commissions, tips, and taxable benefits received from an employer during the tax year.
- Self-employment income is the net profit from any business, freelance work, or independent contracting activity after allowable business expenses are deducted.
- CPP and OAS pension payments are fully taxable and appear on your T4A(P) and T4A(OAS) slips respectively, both contributing directly to net world income.
- RRSP and RRIF withdrawals are added to income in full for the year they are withdrawn, and mandatory RRIF minimum withdrawals beginning at age 72 are a leading cause of seniors crossing the OAS clawback threshold.
- Workplace pension income from defined benefit or defined contribution pension plans is fully taxable and counts toward net income for all clawback calculations.
- Rental income is the net amount after eligible property expenses are deducted, and a profitable rental property can push a retiree above the OAS threshold even if the cash flow is modest.
- Taxable capital gains are included at a 50% inclusion rate, meaning a $100,000 capital gain from selling an investment property adds $50,000 to your net income in that year, which can trigger a full OAS clawback for the corresponding recovery period.
- Interest income earned in non-registered accounts from GICs, bonds, savings accounts, and other fixed-income investments is fully included in net income.
- Grossed-up Canadian dividend income is one of the most overlooked clawback triggers because eligible dividends are grossed up by 38% for tax purposes, meaning $20,000 in actual dividends adds $27,600 to your net income on Line 23600.
- Foreign pension and investment income from any country is included in the CRA’s definition of net world income, regardless of whether it is also taxed in the source country.
- Employment Insurance benefits received during the year are taxable and count toward net income, which means collecting EI can itself trigger the OAS clawback if your total income is already near the threshold.
Income Sources That Do NOT Trigger CRA Clawbacks
The following types of income and benefits do not appear on Line 23600 and have no impact on any CRA clawback calculation.
- Tax-Free Savings Account withdrawals are completely invisible to the CRA for clawback purposes, making the TFSA the single most valuable account type for retirees managing their income around the OAS recovery tax threshold.
- Guaranteed Income Supplement payments are non-taxable and do not count as income for OAS clawback purposes, though they are subject to their own separate 50% income test.
- Canada Child Benefit payments are tax-free and do not increase your adjusted family net income for CCB phase-out calculations.
- Canada Groceries and Essentials Benefit payments (formerly the GST/HST credit) are non-taxable and excluded from net income.
- Canada Disability Benefit payments are non-taxable and do not count toward net world income, and most provinces have confirmed that CDB payments do not reduce provincial disability support either.
- Workers compensation payments are generally non-taxable and excluded from net income for clawback purposes.
- Lottery and gambling winnings are not considered taxable income in Canada and do not affect any CRA clawback threshold.
The distinction between these two categories matters enormously because moving retirement income from taxable sources like RRIFs into non-reportable sources like TFSAs can eliminate or reduce clawbacks entirely.
The 2026 CRA clawback thresholds have risen modestly due to the annual 2% inflation indexation, giving Canadians slightly more room before benefits begin to shrink.
Seniors, families, and workers who understand where each threshold sits can make more informed decisions about RRSP contributions, TFSA withdrawals, pension splitting, and the timing of income events that affect their CRA benefit payments.
Filing your tax return on time is the single most important step for ensuring accurate benefit calculations, particularly for CPP and OAS recipients and GIS recipients who both require annual income verification.
Frequently Asked Questions (FAQs)
What is the OAS clawback threshold for 2026?
The OAS recovery tax for the July 2026 to June 2027 period begins when your 2025 net world income exceeds $93,454, with full OAS recovery occurring at $152,062 for seniors aged 65 to 74 and $157,923 for seniors aged 75 and older. For the 2026 income year, the threshold rises to $95,323 and will affect OAS payments from July 2027 to June 2028.
At what income does the Canada Child Benefit start getting clawed back?
For the July 2026 to June 2027 benefit year, the CCB begins to decrease once adjusted family net income exceeds $38,237, with the reduction rate depending on the number of children.
Do TFSA withdrawals trigger any CRA clawback?
TFSA withdrawals do not appear on Line 23600 of your tax return and have absolutely no impact on the OAS recovery tax, CCB phase-out, GIS reduction, EI repayment, or any other CRA income-tested benefit.
Can pension income splitting reduce the OAS clawback?
Couples can transfer up to 50% of eligible pension income to a lower-income spouse using CRA Form T1032, which reduces the higher-earning partner’s net income and can lower or eliminate the OAS recovery tax.
What is the EI clawback threshold for 2026?
The EI benefit repayment threshold for 2026 is $86,125, which is 1.25 times the maximum insurable earnings of $68,900, and the repayment rate is 30% of the lesser of total regular benefits received or income above the threshold.
Fact-checked by the editorial team at Immigration News Canada using primary sources including the official CRA benefit payment schedules, the Government of Canada OAS pension recovery tax page, the Canada Child Benefit legislation (canada.ca), and the Employment Insurance Act. All income thresholds, recovery rates, and benefit amounts referenced in this article were verified directly against these government sources at the time of publication.
Disclaimer: This article is published by Immigration News Canada for general informational purposes only and does not constitute financial, tax, legal, or pension planning advice. Readers should consult a qualified financial advisor, licensed tax professional, or certified financial planner before making any decisions based on the information provided. CRA benefit thresholds and recovery rates are subject to annual adjustments and may change.
Something went wrong. Please refresh the page and/or try again.
You may also like: New US Visa Early Appointments Now Available Across Canada
New Minimum Wage In 5 Canadian Provinces Coming In October 2026
New Ontario-OINP Permanent Residence Pathway Intake Is Now Open
New Canada Benefit Payments Still Coming In August 2026