Updated Checked by the Tax-Services.ca editorial team How we check
Pension income on your Canadian tax return is money from an employer pension plan, an annuity or, once you’re 65, a RRIF. CPP and OAS don’t count as pension income for the $2,000 pension income amount, even though everyone calls them pensions. That single point catches more retirees than any other.
Which payments earn the pension credit?
The CRA describes a non-refundable credit on the first $2,000 of eligible pension income, and its line 31400 page sets out who qualifies. What counts depends on your age, and the gap is big.
| Type of income | Under 65 | 65 or older |
|---|---|---|
| Lifetime benefits from an employer pension plan | Qualifies | Qualifies |
| RRIF or RRSP income | Only when it comes from a spouse’s death | Qualifies |
| Annuity payments | Only when it comes from a spouse’s death | Qualifies |
| Foreign pension (not exempt under a treaty) | Qualifies | Qualifies |
| CPP, QPP and OAS | Does not qualify | Does not qualify |
| Retiring allowance | Does not qualify | Does not qualify |
So if you retire at 60 with only RRSP withdrawals, you don’t get the pension amount yet. Wait until the year you turn 65 and the same withdrawals start to count.
How much is the pension income amount worth?
Federally you claim the lesser of your eligible pension income and $2,000. That’s the amount, not the saving. The credit is a fraction of it, and your province adds its own. The CRA’s 2025 page lists these provincial amounts, and no 2026 figures were out when this was written.
| Province or territory | Provincial amount (2025) |
|---|---|
| Yukon, Nunavut | $2,000 |
| Ontario | $1,762 |
| Alberta | $1,719 |
| Nova Scotia | $1,173 |
| BC, Manitoba, New Brunswick, Newfoundland and Labrador, PEI, Saskatchewan | $1,000 |
Claim it on your pension income line of the return (line 31400). Here’s what it’s worth in real money. Margaret in Ottawa has a $24,000 employer pension, so she claims the full $2,000. The federal credit is 14% of that, which is $280. Ontario’s lowest rate is 5.05%, and 5.05% of $1,762 is about $89. Together that’s roughly $369 off her tax bill. Not a fortune, but a few hundred bucks is a few hundred bucks, and it’s easy to miss when your pension is the only thing on a T4A.
Can you split pension income with a spouse?
Often, yes, and it can matter more than the credit itself. Couples can elect to move part of one person’s eligible pension income onto the other person’s return, which helps when one of you sits in a much higher bracket. You both complete Form T1032, and the person giving up the income reports the full amount on line 11500 and claims a deduction on line 21000, as the CRA’s line 11500 page explains. CPP and OAS can’t be split this way, so check the type of income before you start.
What will a mixed retirement income cost in tax?
Take someone aged 67 in Ontario with $30,000 from an employer pension, $12,000 from CPP and $8,500 from OAS. That’s $50,500 of income. Our retirement income tax calculator shows federal tax of $3,283 and Ontario tax of $2,494. Total tax is $5,777, about 11.4% of income, and $44,723 stays in your pocket, roughly $3,727 a month.
Two limits on that result. It includes the federal age amount and the $2,000 pension amount, but not the provincial age and pension credits, so the real Ontario bill may be a little lower. And it leaves out pension income splitting. Treat it as a ceiling, not a forecast.
When does high pension income cost you OAS?
OAS is clawed back at 15% of net income above a threshold. For the 2026 income year the threshold in our data is $95,323. The CRA recovery page still showed the 2025 figure, $93,454, for payments from July 2026 to June 2027, so the two sources don’t match yet. Check which one applies before you plan around it.
| Item | Amount |
|---|---|
| Maximum monthly OAS, age 65 to 74 (Oct to Dec 2026) | $762.50 |
| Maximum monthly OAS, age 75 and over (Oct to Dec 2026) | $838.75 |
| Maximum monthly CPP at 65 (January 2026) | $1,507.65 |
| OAS recovery rate | 15% |
Most people never get near the recovery threshold. If a large RRIF withdrawal or a one-off payout could push you past it, stop and check first, because the clawback comes out of the very payment you were counting on. The OAS calculator shows what a bigger RRIF withdrawal would do to your payment. Use the CPP calculator to compare start ages for your own CPP.
Mistakes that cost retirees money
Counting CPP or OAS as pension income is the classic one. The credit gets claimed on money that never qualified.
Another is forgetting that RRIF and RRSP money is fully taxable when it comes out. Our RRSP withdrawal tax calculator shows the gap between what the bank withholds and what you owe at filing. To see where pension income sits in your whole return, run the numbers in the income tax calculator too.
And if you’re under 65 and widowed, read the CRA wording closely. RRIF and annuity income that comes from a spouse’s death can qualify before 65, which most under-65 retirees can’t say.
How the figures were checked
The pension amount and its eligibility rules come from the Canada Revenue Agency‘s line 31400 page for the 2025 tax year. CPP and OAS maximums and the recovery threshold come from Employment and Social Development Canada and Service Canada pages, read in September 2026. Tax figures in the example come from our calculator, which uses 2026 federal and Ontario rates. This site isn’t connected to any government body.
Frequently asked questions
Is CPP pension income for the pension credit?
No. The CRA lists CPP, QPP and OAS as government benefits that don't qualify for the pension income amount.
How much is the federal pension income amount?
You claim the lesser of your eligible pension income and $2,000. The credit is worked out on that amount.
Does RRIF income count before age 65?
Only when it comes from a spouse's death. From 65, RRIF and RRSP income qualifies.
Is pension income taxed at a special rate?
No. It's added to your other income and taxed at your normal rates, with the credit on top.
At what income does OAS start to be clawed back?
Our data shows $95,323 for 2026 income, at 15%. The CRA page still showed $93,454 for payments from July 2026, so check which one applies.
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