Key Retirement Tax Strategies
- Pension Income Splitting: Split up to 50% of eligible pension income with your spouse - saves $2,000-$8,000/year
- Age Amount Credit: Get ~$1,300 federal + $500-$1,000 provincial tax reduction at age 65+
- CPP Sharing: Share CPP benefits between spouses to equalize income and reduce taxes
- Province of Residence: Your December 31st address determines which province taxes your entire year's income
Top 5 Provinces for Retirees (2026 Rankings)
We ranked provinces based on total tax burden on typical retirement income, considering income tax rates, sales taxes, property taxes, and retiree-specific benefits.
| Rank | Province | Tax on $60K Retirement Income | Sales Tax | Climate | Overall Score |
|---|---|---|---|---|---|
| #1 | Alberta | $8,200 | 5% GST only | Cold winters | |
| #2 | British Columbia | $8,900 | 12% | Mild (coast) | |
| #3 | Ontario | $9,100 | 13% HST | Four seasons | |
| #4 | Saskatchewan | $9,400 | 11% | Cold winters | |
| #5 | New Brunswick | $9,800 | 15% HST | Four seasons |
*Tax calculations based on $60,000 retirement income (mix of CPP, OAS, and pension/RRIF), single retiree age 65+, after Age Amount credit.
Detailed Province Analysis for Retirees
Alberta
Why it's #1: Lowest overall tax burden. No PST means every purchase costs 7-10% less. Low income tax rates (10% on first $148,269) keep more retirement income in your pocket.
Tax on $60K retirement income: ~$8,200/year
Provincial Age Amount: ~$6,300
Sales tax: 5% GST only (no PST)
Best for: Retirees prioritizing lowest taxes, those with significant RRIF withdrawals, snowbirds who spend winters elsewhere
Consider: Cold winters (-15°C average January), healthcare wait times, distance from family if they're in Eastern Canada
British Columbia
Why it ranks high: The BC Tax Reduction can eliminate provincial tax for very low incomes. Mild climate (especially coast and Okanagan) means lower heating costs. Strong healthcare system.
Tax on $60K retirement income: ~$8,900/year
Provincial Age Amount: ~$5,800
Sales tax: 12% (5% GST + 7% PST)
Best for: Retirees who value mild climate, outdoor lifestyle, strong healthcare, or have family in BC
Consider: Very high housing costs in Vancouver/Victoria, 7% PST adds up on purchases
Ontario
Why it ranks high: Large healthcare network, many specialized services. Ontario Trillium Benefit helps lower-income retirees. Pension income tax credit available.
Tax on $60K retirement income: ~$9,100/year
Provincial Age Amount: ~$5,700
Sales tax: 13% HST
Best for: Retirees needing access to specialized healthcare, those with family in GTA, urban lifestyle seekers
Consider: Very high housing/property taxes in GTA, 13% HST on purchases, cold winters
Saskatchewan
Why it ranks well: Low cost of living, affordable housing, and reasonable tax rates. Strong community support for seniors in smaller cities.
Tax on $60K retirement income: ~$9,400/year
Provincial Age Amount: ~$5,400
Sales tax: 11% (5% GST + 6% PST)
Best for: Retirees seeking affordable living, small-town lifestyle, strong community ties
Consider: Very cold winters, limited urban amenities, fewer healthcare specialists
New Brunswick
Why it makes the list: Very affordable housing ($300K-$400K for nice homes), beautiful coastline, bilingual services. Lower cost of living offsets higher tax rates.
Tax on $60K retirement income: ~$9,800/year
Provincial Age Amount: ~$5,600
Sales tax: 15% HST
Best for: Retirees wanting affordable coastal living, bilingual Canadians, those fleeing Ontario housing costs
Consider: 15% HST is highest in Canada, fewer healthcare resources, colder than expected winters
How Retirement Income is Taxed in Canada
CPP (Canada Pension Plan)
Taxed as regular income. Maximum CPP in 2026 is ~$16,375/year. You can share CPP with your spouse to reduce overall household taxes.
OAS (Old Age Security)
Taxed as regular income. Maximum ~$8,500/year. Subject to clawback if income exceeds ~$90,000. GIS (Supplement) is tax-free.
Employer Pensions
Taxed as regular income. Eligible for pension income splitting with spouse (up to 50%). Qualifies for the Pension Income Tax Credit.
RRSP/RRIF Withdrawals
Taxed as regular income. After age 65, RRIF withdrawals qualify for pension income splitting and the Pension Income Tax Credit.
TFSA Withdrawals
Tax-free! TFSA withdrawals don't count as income and don't affect OAS clawback. Ideal for tax-efficient retirement income.
Investment Income
Dividends get preferential tax treatment. Capital gains are 50% taxable. Interest is fully taxed. Plan withdrawals strategically.
Retirement Tax Comparison: $60,000 Income
Here's what a 65+ retiree with $60,000 annual income (CPP + OAS + pension/RRIF) would pay in each province:
| Province | Federal Tax | Provincial Tax | Total Tax | Take-Home |
|---|---|---|---|---|
| Alberta | $5,200 | $3,000 | $8,200 | $51,800 |
| British Columbia | $5,200 | $3,700 | $8,900 | $51,100 |
| Ontario | $5,200 | $3,900 | $9,100 | $50,900 |
| Saskatchewan | $5,200 | $4,200 | $9,400 | $50,600 |
| Manitoba | $5,200 | $4,800 | $10,000 | $50,000 |
| Nova Scotia | $5,200 | $5,100 | $10,300 | $49,700 |
| Quebec | $5,200 | $5,800 | $11,000 | $49,000 |
The Alberta Advantage: A retiree with $60,000 income saves $2,800/year in Alberta vs Quebec - that's $28,000 over a 10-year retirement, plus additional savings from no PST on every purchase.
The Pension Income Splitting Advantage
One of the most powerful tax strategies for retired couples is pension income splitting. Here's how it works:
Pension Splitting Example
Without splitting:
- Spouse A: $80,000 pension income → pays ~$18,000 tax
- Spouse B: $20,000 CPP/OAS → pays ~$2,000 tax
- Total household tax: $20,000
With splitting (transfer $30,000 to Spouse B):
- Spouse A: $50,000 → pays ~$9,000 tax
- Spouse B: $50,000 → pays ~$9,000 tax
- Total household tax: $18,000
Savings: $2,000/year just from better tax bracket allocation!
Age Amount Tax Credit by Province
Canadians 65+ qualify for the Age Amount - a non-refundable tax credit that reduces your tax bill:
| Province | Provincial Age Amount | Tax Savings (approx.) | Income Threshold for Clawback |
|---|---|---|---|
| Federal | $8,790 | ~$1,319 | $44,325 |
| Alberta | $6,300 | ~$630 | $44,660 |
| British Columbia | $5,800 | ~$293 | $41,000 |
| Ontario | $5,700 | ~$288 | $42,450 |
| Quebec | $3,600 | ~$504 | $38,945 |
| Nova Scotia | $5,600 | ~$492 | $34,250 |
Beyond Taxes: Other Factors for Retirees
Healthcare Access
Best: Ontario, BC (most specialists)
Challenging: NB, NS, rural areas (doctor shortages)
Climate
Mildest: BC coast, Southern Ontario
Coldest: Prairies, Northern Ontario
Housing Costs
Most affordable: NB, NS, SK, MB
Most expensive: BC (Vancouver), ON (GTA)
Property Taxes
Lowest: BC, Quebec (as % of value)
Highest: Ontario, Manitoba, NB
Important Considerations
- Healthcare needs: If you have chronic conditions, proximity to specialists may matter more than tax savings
- Family proximity: Being near grandchildren/family support can be invaluable
- Moving costs: Factor in the one-time cost of relocating vs annual tax savings
- Selling your home: Capital gains on principal residence are tax-free - timing matters
- Provincial health coverage: Moving provinces may have a 3-month waiting period for health coverage
Frequently Asked Questions
Can I move provinces just before retirement to save taxes?
Yes, but plan carefully. You must be a legitimate resident on December 31st for that province to tax your income. CRA looks at factors like driver's license, health card, banking, and where you sleep most nights. You can't just change your mailing address - you need to genuinely relocate.
Is TFSA income counted for OAS clawback?
No! TFSA withdrawals are completely tax-free and don't count toward the OAS clawback threshold (~$90,000). This makes TFSAs extremely valuable for retirees - consider prioritizing TFSA withdrawals before RRIF withdrawals if you're near the clawback zone.
Should I convert my RRSP to a RRIF early?
You must convert by December 31st of the year you turn 71. Converting earlier (at 65) allows you to claim the Pension Income Tax Credit on RRIF withdrawals and enables pension income splitting. This can be advantageous even before mandatory conversion age.
Calculate Your Retirement Taxes
Alberta
Lowest Tax Province
British Columbia
Best Climate
Ontario
Healthcare Hub
Nova Scotia
Affordable Coast
Sources & Methodology
Tax rate data: Canada Revenue Agency (CRA) - 2026 Canadian Income Tax Rates
Age Amount: CRA Schedule 1 and provincial tax forms
Pension income splitting: CRA Form T1032
Disclaimer: This guide provides general information for educational purposes. Retirement planning involves many personal factors. Tax situations vary significantly based on income sources, marital status, and province. Consult a qualified tax professional or financial planner for advice specific to your retirement situation.