Guaranteed Income Supplement 2026: What It Costs Your RRSP

Normand is 55 and works as a school custodian in Saguenay. He earns $34,000 a year, has $60,000 in his RRSP and $20,000 in his TFSA, and plans to retire at 65 with a QPP pension of about $7,000. His plan for the RRSP is to leave it alone until the law forces him to touch it.

That plan has a cost no tax table will ever show him. On that income, Normand will qualify for the GIS, the Guaranteed Income Supplement, and the GIS goes down when income goes up. Every dollar that leaves his RRSP after 65 will take between 50 and 75 cents off his supplement the following year.

Think of a scale. Every July, Service Canada weighs the income Normand had the year before. The supplement makes up what is missing: the more his income weighs, the less it has to make up. What comes out of his RRSP goes on that scale. What comes out of his TFSA does not. And before 65 there is no scale yet: Normand has ten years to decide what it will weigh.

What the GIS is and what it pays in 2026

The GIS is a monthly federal benefit for people who already receive OAS and have a low income. The Government of Canada pays it, as it does OAS, and it is not taxable: you report it, then deduct it. It does not depend on what you contributed: it depends on the income you have.

The amount depends on your family situation and your income. These are the maximums and cut-offs the government publishes for October to December 2026. For a couple, the cut-off is the two incomes combined:

The maximum is what you receive with no other income. From the first dollar of income that counts, the supplement starts to go down. As with OAS, the figures are adjusted for inflation every quarter, in January, April, July and October. In October 2026 they rose 1.4%. The cut-offs do not include OAS, which never counts in calculating the supplement.

One condition comes first: the GIS is only paid to people who receive OAS. If you defer OAS, you defer the supplement too, and the government says so in its own guide: there is no advantage in waiting if you are eligible for the GIS. We follow it through Lucrèce's case in Old Age Security and what it means for your plan.

How it is calculated: 50 or 75 cents per dollar

The calculation starts from the income you report on your tax return, minus OAS. Every July, Service Canada recalculates your supplement using your net income for the previous calendar year, and that amount applies until the following June.

For a single person, each dollar of income takes this much off the GIS, under the Old Age Security Act:

• 50 cents on the first $2,000;
• 75 cents between $2,000 and about $10,500;
• 50 cents from there on, until the supplement reaches zero at $23,112.

Normand will have $7,000 of QPP at 65. His first $2,000 take $1,000 off his supplement, and the next $5,000 take $3,750. Of a maximum of roughly $13,670 a year ($1,138.90 a month), he keeps about $8,900, or $743 a month. Since his income stays below $10,500, every dollar he takes out of his RRIF costs him 75 cents: a $1,000 withdrawal means $750 less in supplement.

For a couple, the rule is shared. If both receive OAS, each loses 25 cents for every dollar of combined income, so the household loses the same 50. The 75-cent range runs from $4,000 to $8,800 of combined income.

What goes on the scale, and what does not? Not all income counts the same:

• Counts: the QPP pension, an employer pension, interest from a non-registered account, and everything that comes out of the RRSP or the RRIF.
• Does not count: OAS, and neither do your TFSA withdrawals or what the account earns inside, as the Canada Revenue Agency's TFSA guide confirms.
• Counts in part: wages. Since July 2020, the law leaves out the first $5,000 of employment income and half of the next $10,000.

The year you retire has a trap of its own. If you stop working at 65, the previous year's income still includes your salary, and it would leave you with no supplement in your first year. Service Canada plans for this: if your income drops because you retired, it can calculate your GIS using an estimate of the current year. It is not automatic: you have to ask Service Canada for it when you retire. In our simulations, without asking for it, Normand would receive nothing that first year; if he asks, he receives about $8,300, in 2026 dollars.

The GIS clawback: the rate no tax table shows

What does a RRIF dollar really cost? You have to add two things: the tax, and what the GIS takes from you. Lucrèce, from our Old Age Security article, retires next year, single, with $7,200 from the QPP and full OAS. We worked it out for her at 66, living alone in Quebec, with the 2026 federal rates, the federal credits, Quebec's parameters and the October to December GIS. Our RRIF calculator reaches the same result:

Read the table from the bottom up. With an $18,000 withdrawal, the GIS has already run out and Lucrèce pays only the 2026 tax, federal and Quebec: 25.7%. At $14,000 she pays that same tax and also loses half a dollar of supplement: it costs her 75.7 cents of every dollar. With small withdrawals, tax credits bring her tax to zero, but the GIS charges her 50 or 75 cents. That is why withdrawing more does not always cost more per dollar.

A dollar from your TFSA and a dollar from your RRSP are worth the same. Only one goes on the scale.

The supplement exists to make up an income that falls short, and when your own income rises, it makes up less. The rule is reasonable. The mistake is planning without seeing it, because it decides how far every dollar you saved will go.

Normand at 55: two paths for the same RRSP

Back to Normand. We simulated his entire retirement with AuraPlan's calculation engine, using the 2026 GIS and tax rules, and compared two plans. In both he spends the same, $24,000 a year in today's dollars, and lives to 90.

In the first, he leaves the RRSP untouched until the law converts it into a RRIF. From 66 to 72 he receives a GIS of between $8,650 and $9,100 a year, in today's dollars. At 72 the RRIF minimum withdrawal begins, and the following year his supplement falls to about $5,150. It never goes above $5,600 again for the rest of his life, because every minimum withdrawal goes on the scale.

In the second, Normand takes $7,690 a year out of his RRSP between 55 and 64 and moves it into his TFSA. That money is taxed at the rate on his salary, 25.7% in 2026, about $2,000 a year. At 65 his RRSP is almost empty, and his GIS never drops below $8,350 a year to the end.

Added up in 2026 dollars, the two paths come to this:

Normand pays just over $15,000 more in tax and receives some $51,000 more in supplement. At 90 he has about $31,000 more. He pays the tax earlier, while he is working, and he collects the GIS for 25 years.

Does it depend on the assumptions? Yes, which is why we changed them one at a time. We tried returns from 2% to 6%, an RRSP from $20,000 to $250,000 and a QPP pension from $5,000 to $13,000. In every variant we tried, the second path came out ahead. The size of the advantage depends mostly on how long Normand lives:

• If he lives to 80, the advantage falls to about $11,000. The balance left in the RRIF at death is taxed on that year's return, and never goes on the GIS scale.
• If he reaches 95, it rises to about $46,000, because he collects five more years of a supplement the RRIF does not cut into.

Two other conditions matter, and both are in Normand's hands:

• He needs TFSA room. Normand has $89,000 unused, because room accumulates every year from age 18. Without that room, the money ends up in a non-registered account whose interest does go on the scale, and his advantage falls to about $19,500.
• He does not need to start at 55. If Normand starts at 60, he withdraws about $18,000 a year and the advantage is almost the same: about $30,000. Leaving it to the end does cost him: taking out more than $100,000 in a single year, at 64, pushes up his tax, and the advantage falls to about $20,000.

Normand's plan only makes sense if you are going to receive the GIS. If your retirement income is going to exceed $23,112 a year not counting OAS, there will be no scale for you, and taking the RRSP out early only brings your tax forward.

For a couple, the scale weighs both incomes. We also simulated Sylvie and Robert, both 55, with salaries of $30,000 and $32,000, RRSPs of $45,000 and $35,000 and a QPP pension of about $6,000 each. They spend $36,000 a year between them. If each moves their RRSP into their TFSA between 55 and 64, together they receive about $50,000 more in supplement and pay about $24,000 more in tax. If both live to 90, they end up with about $17,000 more, in 2026 dollars; if both live only to 80, the two paths come out practically even. When one outlives the other, the advantage grows: with Robert to 83 and Sylvie to 92, it is about $26,000.

The key to Normand's plan was not the tax bracket but the years in which he takes the money out. Our research on withdrawal order found the same thing: what separated a good plan from a rigid one was which years were used for withdrawals. For a household that will receive the GIS, those are the years before 65. Normand paid 25.7% on what he took out then; afterwards, every dollar would have cost him 50 or 75 cents.

The order in which you empty your accounts matters with a $60,000 RRSP too, not only with a million-dollar one. We explain it in the withdrawal order in Quebec, in how to empty your RRSP early and in the year-by-year plan. The difference between the TFSA and the RRSP is the piece that lets you change paths. And if you already have a RRIF, the same calculator adds the lost GIS to the cost of each withdrawal, year by year. In AuraPlan, your year-by-year plan accounts for the GIS under these same rules: the amount you are entitled to each year based on the previous year's income, and the estimate for the year you retire.

Lucrèce no longer has ten years ahead of her, but she knows what that scale weighs. Normand still has them. If you are 55 with an RRSP like Normand's, you are where he is: with time to decide what goes on that scale, and to let the supplement keep the promise in its name.