Pension Income Amount (Line 31400)

How the credit works

The pension income amount is one of the non-refundable credits on your return (see tax credit vs. tax deduction for how credits differ from deductions). You claim the lesser of $2,000 and your eligible pension income for the year on line 31400, and the credit equals that amount multiplied by the lowest federal rate, 14% for 2026 (as of October 2026). The most it can be worth federally is therefore $2,000 multiplied by 14%, or $280.

The $2,000 ceiling is not indexed to inflation: it has stayed at $2,000 since 2006, so its real value shrinks a little every year. Provinces and territories add their own pension credits on the provincial return, with amounts and rates that vary.

Because the credit is non-refundable, it can reduce your tax to zero but not below it. An unused amount cannot be carried forward to a later year; it may be transferable to a spouse or common-law partner on Schedule 2.

Who qualifies: the type of income and the age-65 test

What counts as eligible pension income depends on the type of income and on your age on December 31 of the year. Turning 65 at any point during the year is enough for the whole year.

A life annuity from a registered pension plan, such as a workplace defined benefit pension, qualifies at any age. RRIF and LIF payments, and annuity payments from an RRSP or a deferred profit sharing plan (DPSP), qualify from the year you turn 65. Under 65, RRIF and LIF payments qualify only if you receive them because of the death of your spouse or common-law partner.

Some common retirement income never qualifies, at any age: OAS, CPP and QPP benefits, and lump-sum RRSP withdrawals.

Pension income splitting and the receiving spouse

When a couple elects pension income splitting, the income allocated to the receiving spouse can count toward that spouse's own pension income amount. That is how splitting can give a couple two $2,000 credits instead of one.

There is an age catch. Split RRIF, LIF or RRSP annuity income counts toward the receiving spouse's credit only if the receiving spouse is 65 or older on December 31. Split life annuity income from a registered pension plan counts at any age. The transferring spouse keeps a full credit only if at least $2,000 of eligible pension income remains on their own return after the split.

Using the credit with a small RRIF from 65

If you have no workplace pension, you have no eligible pension income until RRIF or annuity payments start, and the credit goes unused every year until then. A common approach is to move a slice of an RRSP into a RRIF at 65 and take about $2,000 a year from it, so the credit is used every year.

The RRIF minimum withdrawal before 71 is 1 divided by (90 minus your age). At 66 that is 1 divided by 24, so a RRIF of about $48,000 has a minimum of exactly $2,000. A smaller RRIF of about $25,000 to $35,000 works too: you simply withdraw $2,000 a year, a little more than the minimum, and only the part above the minimum has tax withheld. The account then runs down sooner.

Timing matters: a RRIF has no required minimum in the year it is opened, but any payment you take in a year you are 65 or older by December 31 still counts for the credit. This is general information, not advice: the right size depends on your other income, your tax bracket and when you plan to draw on your savings.