Saving & retirement · guide

Pension Income Splitting Calculator: how it works in 2026, with a worked example

Verified for tax year 2026: Updated By Nishant Malik

Find the pension income split that saves your household the most tax. Enter each spouse's pension, RRIF, CPP, OAS and other income; the optimiser scores every split from 0% to 50% with 2026 federal and provincial tax, the age and pension amounts and the OAS recovery tax, and reports the best percentage as a range when the curve is flat.

Open the Pension income splitting calculator

How this calculator works

This page finds the best split; the strategy guide, Pension income splitting (Form T1032) and CPP pension sharing, explains what qualifies, the election itself and why 50% is often too much.

For every split from 0% to 50% in 1% steps, the optimiser rebuilds both returns:

  1. Net income for each spouse after the transfer: pension, RRIF, CPP, OAS, other income, eligible dividends at 38% gross-up and 50% of capital gains.
  2. OAS recovery tax: 15% of net income above $95,323 (2026 income), up to the OAS received; the repayment is then deducted from taxable income.
  3. Income tax from the 2026 federal and provincial tables, with the age amount ($9,208, reduced by 15% of net income over $46,432, from age 65) and the pension income amount (up to $2,000 federally, $1,796 in Ontario). Unused age and pension amounts of one spouse transfer to the other (Schedule 2).

The best split is the one with the lowest combined bill. When neighbouring splits are within $25 of it, the tool reports the whole range: the curve is often flat, and the exact percentage matters less than staying in the band.

Worked example: $100,000 pension vs $60,000 pension, Ontario

Spouse A (68) has a $100,000 employer pension, $16,000 of CPP and $9,024 of OAS. Spouse B (66) has a $60,000 pension, $12,000 of CPP and the same OAS.

No splitBest split (17%, $17,000)50% split
Spouse A income tax$28,428$23,022$12,962
Spouse A OAS recovery tax$4,455$1,905$0
Spouse B income tax$14,867$20,168$30,642
Spouse B OAS recovery tax$0$405$5,355
Combined$47,751$45,500$48,960

Splitting 17% saves $2,250; anything from 15% to 29% is within $25 of that. A full 50% split would cost $3,459 more than the best, because it pushes Spouse B’s net income to $131,024, well over the $95,323 OAS threshold.

Assumptions

  • Both spouses are residents of Canada and living together on December 31; both are taxed as individuals with only the credits listed above (no disability, medical, donation or spousal amounts).
  • Provincial and territorial age amounts are not modelled, and the pension income amount is modelled only for Ontario outside the federal credit, because no other 2026 provincial figure was verified against a primary source. The federal credits apply everywhere.
  • The age amount is reduced using taxable income as the net-income measure; for a spouse in OAS recovery territory the age amount is already nil or nearly so.
  • GIS, the spouse or common-law partner amount, and provincial seniors’ benefits that depend on one spouse’s net income are not scored.
  • Quebec: the provincial split is applied only when the transferor is 65 or older; Quebec’s own credits are not modelled.

Questions people ask

What income can be split with my spouse?
Eligible pension income: life-annuity payments from a registered pension plan at any age, and from the year you turn 65, RRIF and LIF withdrawals and RRSP annuity payments. CPP, OAS, RRSP lump-sum withdrawals and foreign pensions exempt by treaty never qualify. You can move up to 50% of the eligible amount.
Is splitting 50% always best?
No. Moving income helps only while the receiving spouse's tax rate on the extra dollar is lower than the transferring spouse's rate on the last dollar. Once the receiver reaches the same bracket, or crosses the $95,323 OAS recovery threshold, further splitting costs money. In the worked example below a 50% split costs about $3,500 more than the best one. The guide <a href="/guides/pension-income-splitting">Pension income splitting and CPP pension sharing</a> walks through the rules and two worked couples.
How does splitting affect the OAS clawback?
The OAS recovery tax is 15% of net income above $95,323 for 2026 income. Splitting lowers the transferor's net income and can end their clawback, but raises the receiver's and can start one. The optimiser scores both, and because the repayment is deductible its true cost is a little under 15%.
Can the receiving spouse claim the pension income amount?
Yes, on up to $2,000 of the transferred income, if it qualifies for them: any transfer of employer-pension annuity income qualifies, but transferred RRIF income counts only if the receiver is 65 or older. The transferring spouse claims the pension amount on what is left after the transfer.
Does my spouse have to be 65?
No. The age test applies to the transferring spouse's income type, not to the receiver. A 62-year-old can receive split pension income; they simply cannot claim the pension income amount on transferred RRIF income until they are 65.
How do we actually do it on the return?
Both spouses complete and sign Form T1032, Joint Election to Split Pension Income, and file it with both returns. The transferor deducts the amount on line 21000; the receiver reports it on line 11600. Tax withheld on the pension is allocated in the same proportion on line 43700. The election is made every year and can use a different percentage each year.
What about Quebec?
Quebec allows the provincial split only when the transferring spouse is 65 or older at the end of the year (line 123 and Schedule Q of the Quebec return). Below 65 only the federal return benefits, and the calculator computes the Quebec tax without the split in that case. Quebec's own age and retirement-income credits are not modelled; verify with Revenu Québec.
Can we change our minds later?
Yes. The CRA accepts a late, amended or revoked election up to three calendar years after the filing due date for that year, with a new jointly signed T1032 (or a signed letter to revoke). Both spouses must agree.

How to split pension income on your returns

One joint form, signed by both of you, filed with both returns, every year you use it. Twenty minutes at tax time.

  1. Before filingCRA: Pension income splitting ↗
  2. Before filing
  3. With both returnsForm T1032 ↗
  4. With both returnsLine 31400, pension income amount ↗
  5. With the Quebec returnRevenu Québec: line 123 ↗
  6. After the notice of assessment

Sources

Every figure on this page comes from one of these primary sources. Data last verified .

  1. CRA – Indexation adjustment for personal income tax and benefit amounts (2026 column; modified 2026-03-12)
  2. CRA – Line 30100, Age amount (modified 2026-07-29)
  3. CRA – Line 31400, Pension income amount (modified 2026-01-20)
  4. Income Tax Act s. 118(2) age credit and s. 118(3) pension credit (Justice Laws)
  5. Ontario Ministry of Finance, Personal income tax rates and credits, 2026 file (Amounts relating to non-refundable tax credits for 2026)
  6. CRA – Lines 33099 and 33199, Eligible medical expenses you can claim on your tax return
  7. CRA – Disability tax credit
  8. CRA – Canada caregiver credit
  9. CRA T4127 Payroll Deductions Formulas, 122nd Edition, effective January 1, 2026 (Rev. 26/05)
  10. CRA – CPP contribution rates, maximums and exemptions
  11. CRA – Second additional CPP (CPP2) contribution rates and maximums
  12. ESDC – EI maternity and parental benefits: how much you could receive
  13. CRA – EI premium rates and maximums
  14. CRA, Canadian income tax rates for individuals, current and previous years
  15. Government of Alberta, Personal income tax
  16. Government of British Columbia, Personal income tax rates (2026)
  17. Government of British Columbia, B.C. tax reduction credit
  18. CRA, T4127 Payroll Deductions Formulas, 123rd edition (July 1, 2026)
  19. Manitoba Finance, Personal income taxes
  20. CRA, T4032 Payroll Deductions Tables, New Brunswick (January 2026)
  21. Government of New Brunswick, Personal income tax
  22. Newfoundland and Labrador Department of Finance, Personal income tax
  23. Newfoundland and Labrador, Bill 16 (2026), An Act to Amend the Income Tax Act, 2000
  24. Nova Scotia Finance and Treasury Board, Personal income tax indexation update for 2026
  25. Nova Scotia Income Tax Act (consolidated), s. 35 low income tax reduction
  26. CRA, T4032 Payroll Deductions Tables, Northwest Territories (January 2026)
  27. Government of Nunavut, January 2026 Tax Rate Sheet
  28. CRA, T4032 Payroll Deductions Tables, Nunavut (January 2026)
  29. Prince Edward Island Income Tax Act (consolidated 2026)
  30. Revenu Québec, TP-1015.F-V (2026-01) Formulas to Calculate Source Deductions and Contributions
  31. Retraite Québec, Québec Pension Plan Figures 2026
  32. Gouvernement du Québec (Québec.ca), Taux de cotisations au Régime québécois d'assurance parentale (RQAP) — page updated 19 March 2026
  33. Ministère des Finances du Québec, Parameters of the Personal Income Tax System for 2026 (November 2025)
  34. Government of Saskatchewan, Personal income tax
  35. CRA, T4032 Payroll Deductions Tables, Yukon (January 2026)
  36. CRA, Pension income splitting
  37. CRA, Form T1032, Joint Election to Split Pension Income
  38. Service Canada, Old Age Security pension recovery tax
  39. Income Tax Act s. 60.03, split-pension amount (Justice Laws)
  40. Revenu Québec, line 123, Retirement income transferred by your spouse

Try it with your own numbers →