An RRSP or RRIF withdrawal is added to your income and taxed at your marginal rate — typically 20% to 45% for retirees in 2026, depending on your province and other income. The 10%, 20% or 30% your bank withholds on an RRSP lump sum is only a prepayment; the real bill is settled when you file.
Withholding vs. the Tax You Actually Owe
When you cash out part of an RRSP, your financial institution must hold back tax and send it to the CRA. The rate depends only on the size of that single withdrawal — not on your income:
| Withdrawal amount | Withheld (outside Quebec) | Withheld (Quebec, federal + QC) |
|---|---|---|
| Up to $5,000 | 10% | 5% + 14% |
| $5,000.01 – $15,000 | 20% | 10% + 14% |
| Over $15,000 | 30% | 15% + 14% |
Because withholding ignores your other income, it rarely matches your real tax. Someone with $40,000 of other income who takes $5,000 out has only $500 withheld but actually owes closer to $950 — the rest arrives as a balance due in April. Splitting a large withdrawal into several small ones lowers the amount withheld up front, but it does not lower your tax; it just moves more of the bill to filing time.
How much tax on an RRSP withdrawal in 2026? (Real examples)
The table below uses our calculator for a 60-year-old with $40,000 of other income and no other credits:
| Withdrawal | Withheld | Actual tax — ON | Actual tax — BC | Actual tax — AB |
|---|---|---|---|---|
| $5,000 | $500 | $953 | $980 | $1,100 |
| $10,000 | $2,000 | $2,055 | $1,960 | $2,200 |
| $20,000 | $6,000 | $4,306 | $4,218 | $4,496 |
| $50,000 | $15,000 | $13,351 | $12,678 | $13,622 |
Small withdrawals tend to be under-withheld (you owe at filing); large ones are often over-withheld (you get some back).
RRSP Lump Sum vs. RRIF Payment: Why the Label Matters
The same dollar can be taxed differently depending on which account it comes out of:
- Pension income credit. RRIF payments received at age 65 or older count as eligible pension income. The first $2,000 earns a federal credit worth $280 (14%), plus a provincial credit. RRSP lump sums never qualify, at any age.
- Pension income splitting. Up to 50% of eligible pension income — including RRIF payments at 65+ — can be shifted to a spouse or common-law partner on your returns (Form T1032). This can pull both of you into lower brackets and away from the OAS clawback.
- Withholding. There is no withholding on the RRIF minimum payment. Anything above the minimum is withheld at the same 10/20/30% rates as an RRSP.
- Contribution room. An RRSP withdrawal permanently uses up that room; it is not restored when you withdraw (unlike a TFSA).
The Two Hidden Taxes on Seniors' Withdrawals
Most calculators apply the published bracket rate and stop. For anyone 65 or older, two income-tested benefits quietly add to the cost of every extra dollar withdrawn:
1. The age amount shrinks as income rises
The 2026 federal age amount is $9,208, but it is reduced by 15% of net income above $46,432. Every provincial age amount has a similar clawback. In that income range, each extra $1,000 withdrawn costs about $21 of lost federal credit plus the provincial equivalent — adding roughly 2.7 to 3.7 percentage points to your marginal rate.
2. The OAS clawback (recovery tax)
If your 2026 net income exceeds $95,323, 15% of the excess is repaid from your OAS. It is collected through reduced OAS cheques from July 2027 to June 2028, but it is calculated on your 2026 return. OAS is fully clawed back at about $155,100 of income for ages 65–74 (about $161,100 for 75+).
Here is what these layers do to the marginal rate of an Ontario retiree aged 70 who receives OAS:
| Net income before the next $100 | Marginal rate on next $100 | What's driving it |
|---|---|---|
| $30,000 – $45,000 | 19.1% | Lowest federal (14%) and Ontario (5.05%) brackets |
| $60,000 – $80,000 | 32.5% | 20.5% federal bracket + age-amount clawback |
| ≈ $100,000 | 43.5% | OAS clawback + Ontario surtax + age-amount clawback |
| ≈ $120,000 | 47.2% | 26% federal bracket + all of the above |
| ≈ $140,000 | 51.9% | Higher Ontario surtax tier while OAS is still being clawed back |
Calculated with 2026 federal and Ontario rates, the Ontario Health Premium and surtax, assuming $8,900 of OAS.
Worked Example: Ontario Retiree, Age 70
Margaret lives in Ontario and receives $12,000 CPP, $8,900 OAS and a $20,000 workplace pension. She plans a $25,000 RRIF withdrawal in 2026 to renovate her kitchen.
| Item | Without withdrawal | With $25,000 RRIF |
|---|---|---|
| Total income | $40,900 | $65,900 |
| Federal tax after credits | $1,854 | $6,242 |
| Ontario tax after credits | $999 | $2,895 |
| Ontario Health Premium | $450 | $600 |
| OAS clawback | $0 | $0 |
| Total tax | $3,302 | $9,737 |
| Tax caused by the withdrawal | $6,435 (25.7%) — she keeps $18,565 | |
Two details matter. First, about $550 of that cost is lost age-amount credit, which a bracket-only calculator would miss. Second, because this is a RRIF payment at her minimum, nothing is withheld — she must set the $6,435 aside or ask her RRIF provider to withhold voluntarily. Otherwise she will owe it in April 2027, and the CRA may ask for quarterly instalments the following year.
If Margaret had taken the same $25,000 as an RRSP lump sum, her bank would have withheld $7,500 (30%), and she would get about $1,065 back when she files.
2026 Retirement Tax Credits by Province
Provinces set their own basic personal amount, age amount and pension amount, so the same retirement income is taxed differently across Canada. Values below are the 2026 amounts used by this calculator (credit = amount × lowest provincial rate):
| Jurisdiction | Lowest rate | Basic personal | Age amount | Age clawback starts | Pension amount |
|---|---|---|---|---|---|
| Federal | 14% | $16,452 | $9,208 | $46,432 | $2,000 |
| Alberta | 8% | $22,769 | $6,345 | $47,234 | $1,753 |
| British Columbia | 5.6% | $13,216 | $5,927 | $44,119 | $1,000 |
| Manitoba | 10.8% | $15,780 | $3,728 | $27,749 | $1,000 |
| New Brunswick | 9.4% | $13,664 | $6,158 | $45,844 | $1,000 |
| Newfoundland & Labrador | 8.7% | $11,188 | $7,142 | $39,138 | $1,000 |
| Nova Scotia | 8.79% | $11,932 | $5,826 | $30,828 | $1,173 |
| Ontario | 5.05% | $12,989 | $6,342 | $47,210 | $1,796 |
| Prince Edward Island | 9.5% | $15,000 | $6,510 | $36,600 | $1,000 |
| Saskatchewan | 10.5% | $20,381 | $5,901 | $43,927 | $1,000 |
| Northwest Territories | 5.9% | $18,198 | $8,902 | $46,432 | $1,000 |
| Nunavut | 4% | $19,659 | $12,550 | $46,432 | $2,000 |
| Yukon | 6.4% | $16,452 | $9,208 | $46,432 | $2,000 |
Quebec runs its own system (retirement income amount, amount for persons 65+ and a 16.5% federal abatement) and is not covered by this calculator.
RRIF Minimum Withdrawal Table
You must convert your RRSP to a RRIF (or annuity) by December 31 of the year you turn 71. From the following year, you must withdraw at least a minimum percentage of the January 1 balance. Under age 71 the factor is 1 ÷ (90 − age).
| Age on Jan 1 | Minimum % | On a $300,000 RRIF | Age on Jan 1 | Minimum % | On a $300,000 RRIF |
|---|---|---|---|---|---|
| 65 | 4.00% | $12,000 | 76 | 5.98% | $17,940 |
| 70 | 5.00% | $15,000 | 78 | 6.36% | $19,080 |
| 71 | 5.28% | $15,840 | 80 | 6.82% | $20,460 |
| 72 | 5.40% | $16,200 | 85 | 8.51% | $25,530 |
| 73 | 5.53% | $16,590 | 90 | 11.92% | $35,760 |
| 75 | 5.82% | $17,460 | 95+ | 20.00% | $60,000 |
You can base the minimum on a younger spouse's age to withdraw less — but only if you choose that when the RRIF is opened.
Seven Ways to Pay Less Tax on Retirement Withdrawals
- Fill low brackets early. Withdrawing in your 60s — before CPP, OAS and mandatory RRIF minimums stack up — lets you use the 14% federal bracket and your full age amount instead of paying 30%+ later.
- Stay under $95,323. If a large expense is coming, compare taking it over two calendar years versus one; keeping net income under the OAS threshold avoids a 15% surcharge.
- Split pension income. At 65+, RRIF payments can be split with a spouse. The biggest savings come when one partner's income is far higher.
- Use the $2,000 pension credit. A small RRIF at 65 captures it every year.
- Refill a TFSA. Withdrawals you do not need to spend can move into a TFSA; future growth and withdrawals are tax-free and never affect OAS or the age amount.
- Consider deferring OAS. Delaying OAS to 70 raises it 36% and removes it from your income during the years you draw down your RRSP.
- Ask for extra withholding. For RRIF payments, request voluntary withholding so you are not hit with a lump-sum bill and instalment requests.
Related Tools & Guides
Frequently Asked Questions
Your bank withholds 20% ($2,000) immediately. Your real tax depends on your other income and province: with $40,000 of other income in Ontario, the withdrawal adds about $2,055 of tax (20.6%). With $90,000 of other income it costs about $3,060 (30.6%). Use the calculator above with your own numbers.
No. Withholding is a prepayment based only on the withdrawal size. When you file, the withdrawal is added to your total income and taxed at your marginal rate. If that is lower than the amount withheld, you get a refund; if higher, you owe the difference.
They can. Withdrawals count as income, and if your 2026 net income exceeds $95,323 you repay 15% of the excess as OAS recovery tax. Withdrawals can also reduce the age amount credit once net income passes $46,432, and they count toward income-tested benefits such as the Guaranteed Income Supplement.
Yes. CPP, QPP and OAS are all taxable income. No tax is withheld on them by default, which is why many retirees owe at filing. You can request voluntary withholding through My Service Canada Account.
You must close your RRSP by December 31 of the year you turn 71 by converting it to a RRIF, buying an annuity, or withdrawing it (fully taxable). Most people convert to a RRIF. Minimum withdrawals start the following year, and you can still contribute to a spousal RRSP if your spouse is 71 or younger.
Smaller withdrawals are withheld at a lower rate (10% up to $5,000), but the total tax is the same once everything is added to your return. Spreading withdrawals across different calendar years is what actually lowers tax, because each year starts at the bottom of the brackets again.
No tax is withheld and they are not taxable when withdrawn, as long as you repay them on schedule. Missed repayments are added to your income for that year.
Estimates 2026 tax using federal and provincial brackets, basic personal, age and pension amounts, Ontario surtax and Health Premium, and the OAS recovery tax. It does not include low-income tax reductions (e.g. Ontario and BC), the Manitoba BPA phase-out above $200,000, pension splitting, dividend or capital-gains treatment, or Quebec. Confirm with CRA-certified software or a tax professional before acting.