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Pensions

How Pension Income Is Taxed in Canada

Pension income such as CPP, OAS and workplace pensions is taxable and is added to your other income at your normal tax rates. Tax may be withheld at source; you can reduce what you owe with the pension income amount, pension income splitting, and other credits for seniors.

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What's taxable

OAS (T4A(OAS) slip), CPP (T4A(P)), and workplace and private pensions (T4A) are reported as income. Your federal and provincial rates depend on your total taxable income: see the 2026 federal tax brackets.

Tax withheld at source

Pension payers deduct tax from payments; for pension income, the CRA tells payers to use its Payroll Deductions Online Calculator. If too little is withheld, you'll owe at tax time.

Ways to lower the tax

Related

Pension Income Amount (Line 31400): The Up-to-$2,000 Tax Credit If you receive eligible pension, superannuation or annuity income, you can claim the pension income amount on line 31400: the lesser of $2,000 or your eligible pension income. What counts as eligible depends on whether you are under 65 or 65 and older. Federal Income Tax Brackets 2026 and How Much Tax Comes Off Your Pay For 2026, federal tax is 14% on income up to $58,523, 20.5% up to $117,045, 26% up to $181,440, 29% up to $258,482, and 33% above that. Provincial tax is added on top. Employers work out how much to take off each pay with the CRA's Payroll Deductions Online Calculator. OAS Clawback 2026: Recovery Tax Thresholds Explained If your net income is above the threshold, you repay 15% of the excess from your Old Age Security. For July 2026 to June 2027, the threshold is $93,454 (based on your 2025 income); OAS is fully clawed back at $152,062 for ages 65 to 74 and $157,923 for 75 and over.

Sources

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