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Ministère des Finances

Ministère des Finances

Work income kept on retirement in 2025

This calculator estimates the share of work income kept by a pensioner who resumes employment.

The calculator facilitates enlightened financial decision‑making. It indicates disposable income before and after the resumption of employment. This overview considers:

  • government withholdings and transfer clawback;
  • employment incentive measures to which an individual may be entitled, depending on their situation.

Use the calculator

Government withholdings and clawback

The calculator estimates:

  • Québec and federal taxes that would be applied to the pensioner’s work income;
  • the required contributions that would be deducted from such income (e.g., contributions to the Québec Pension Plan);
  • the impact of work income on government assistance, which might decrease because of the increase in the pensioner’s total income (e.g., Guaranteed Income Supplement).

Employment incentives

The Québec and Canadian taxation systems contain measures that seek to protect from taxation certain work income, in order to:

  • recognize employment‑related expenses;
  • encourage taxpayers to return to the labour market or to remain there.

Many of these measures (e.g., deduction for workers) apply to all workers. Other measures (e.g., tax credit for career extension) apply only to experienced workers.

The calculator indicates the impact of such measures on the tax payable of retired taxpayers who are employed.

Example

Let us take the example of a 65‑year‑old pensioner. Each year, this individual receives a retirement pension of $10 000 from the Québec Pension Plan (QPP) and withdraws $20 000 from their RRSP. This person wants to estimate the net gain that $15 000 in annual work income would provide.

With this additional work income, the individual would be subject to withholdings totalling $6 369, that is, $5 327 in additional taxes and contributions and $1 042 in reduced government assistance.

However, this individual can save $610 by no longer contributing to the QPP. They also benefit from a $1 050 tax cut through the tax credit for career extension, as well as an additional contribution of $358 through:

  • the deduction for workers;
  • the Canada employment amount.

Accordingly, the employment incentives reduce tax payable by $2 018.

The pensioner’s net gain from work income will therefore be $10 649. This corresponds to a retention rate of work income of 71.0%.

  • Work income: $15 000
  • Net withholdings and government clawback: −$6 369
  • Employment incentives: +$2 018
  • Additional disposable income: $10 649
  • Retention rate of work income: 71.0%

Roles and limits of the calculator

The calculator estimates the additional disposable income of a pensioner when the latter’s potential work income is considered. The calculations are based on assumptions that reflect the most common situations. The calculator merely seeks to provide a realistic estimate of this amount. However, the exact amount of the tax payable and various required contributions payable can differ depending on the households and their specific situations.

Assumptions used

For the calculator of work income retained at retirement

  • The calculator proposes a flexible model adapted to the general situation of some typical households. The results are presented for illustrative purposes.
  • The calculator does not consider all income, deductions and tax credits.
  • The minimum age of household members has been set at 55. Household members can only report work and retirement income, which cannot exceed $250 000 per spouse.

Other assumptions

  • No individual is a dependent of another person.
  • All households contribute to the Québec Prescription Drug Insurance Plan.
  • The eligible expenses under the refundable and non‑refundable medical expense tax credits include only the annual premium of the public plan.