2025 Seniors Tax Comparison: Canadian Dividends vs Other Investment Income

Tax Comparison Calculation Information

Comparison 1: $30,000 of Eligible Dividends or Other Income

Comparison 2: $50,000 of Eligible Dividends or Other Income

Check Your Own Income Situation

Canadian Dividends Not Best For All Situations

Other Tax Comparisons

Tax Comparison Calculation Information

The tables on this page compare taxes payable by province in 2025 for two different types of income:

	Canadian eligible dividends, and
	other income, such as interest and foreign dividends.

To the above income we add:

	$8,776 of OAS - this is the approximate maximum for 2025, based on Jan - Sep 2025 rates, with no increase for Oct - Dec
	$10,134 of CPP retirement income - average for new beneficiaries Apr 2025
	$24,000 of pension income that is eligible for the pension income tax credit

The calculations assume that the income is received by a single senior. The tax rates used are as known on July 24, 2025.

Notes:

	The OAS Clawback reduces taxable income, and is included in taxes payable.
	The age amount clawback reduces the tax credit and thus increases taxes payable.
	Ontario - includes Ontario Health Premium.
	QC includes health contribution, contribution to the health services fund, and prescription drug insurance plan premiums.

Income Type	Annual Amount
OAS	$8,776
CPP	10,134
Eligible Pension Income	24,000
Total before investment income	$42,910

Comparison 1: $30,000 of Eligible Dividends or Other Income

The first comparison uses $30,000 of eligible dividends compared to $30,000 of other income.

Income Type	Annual Income
Income Type	Case A Dividends	Case B Interest
OAS/CPP and Pension Income	$42,910	$42,910
Eligible Dividends	30,000	nil
Other Income	nil	30,000
Total Income	72,910	72,910
Gross-up	11,400	nil
OAS Clawback	nil	nil
Taxable Income	$84,310	$72,910

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable age credit clawback. In these two cases there was no OAS clawback.

Province/ Territory	2025 Taxes Payable		Case B Increase in Taxes for Interest	Increase as % of A
Province/ Territory	Case A Dividends	Case B Interest	Case B Increase in Taxes for Interest	Increase as % of A
AB	$6,433	$12,151	$5,718	89%
BC	4,529	11,702	7,174	158%
MB	9,206	14,698	5,492	60%
NB	6,810	14,483	7,673	113%
NL	10,513	14,953	4,440	42%
NS	10,855	16,252	5,397	50%
NT	3,587	10,703	7,116	198%
NU	3,898	8,988	5,090	131%
ON	5,926	12,569	6,644	112%
PE	9,344	15,330	5,987	64%
QC	10,609	16,097	5,488	52%
SK	7,080	13,705	6,625	94%
YT	4,529	11,757	7,228	160%

You can see above that in BC, NB, NT, NU, ON and YT, more than double the income tax is payable with interest or other income instead of eligible dividends.

Comparison 2: $50,000 of Eligible Dividends or Other Income

The next comparison uses $50,000 of eligible dividends compared to $50,000 of other income.

Income Type	Annual Income
Income Type	Case C Dividends	Case D Interest
OAS/CPP and Pension Income	$42,910	$42,910
Eligible Dividends	50,000	nil
Other Income	nil	50,000
Total Income	92,910	92,910
Gross-up	19,000	nil
OAS Clawback	-2,768	0
Taxable Income	$109,142	$92,910

The following table compares the taxes payable on the above incomes - the taxes payable include any applicable OAS and age amount clawbacks.

Province/ Territory	Taxes Payable		Case D Increase in Taxes for Interest	Increase as % of C
Province/ Territory	Case C Dividends	Case D Interest	Case D Increase in Taxes for Interest	Increase as % of C
AB	$10,896	$18,865	$7,969	73%
BC	8,708	17,845	9,138	105%
MB	14,712	21,783	7,071	48%
NB	10,745	21,991	11,246	105%
NL	16,843	22,615	5,772	34%
NS	16,841	24,121	7,280	43%
NT	7,766	17,135	9,369	121%
NU	8,443	15,001	6,558	78%
ON	9,953	19,047	9,094	91%
PE	14,789	23,286	8,498	57%
QC	16,376	24,108	7,732	47%
SK	11,327	20,877	9,550	84%
YT	8,708	18,284	9,576	110%

Although the higher taxable income with Canadian eligible dividends often causes a clawback of the OAS and a higher clawback of the age credit, the taxes payable are still significantly lower.

Check Your Own Income Situation

To see the tax results for your own income situation, and how it would change if the type of investment income changes, use our Detailed Income Tax and RRSP Savings Calculators, and our very simple Investment Income Tax Calculator.

Dividend Gross-up Can Reduce Other Benefits

Sometimes the dividend gross-up can increase net income enough to cause a loss or reduction of other government benefits, such as GIS, GST/HST credit, Pharmacare or other benefits.

Other Tax Comparisons

See also Tax Comparisons by Province and Territory, which compare different levels of employment income for people who are not seniors.

Tax Tip: Although Canadian dividends increase the OAS clawback, the net tax payable is still much less than with interest or foreign dividends.

Revised: July 27, 2025