Canadian Payroll Deductions Calculator
Calculate the CPP, EI, and income tax withheld from each pay period. Enter your year-to-date gross to see accurate remaining room and employer cost breakdown for the 2026 or earlier tax years.
2026 Payroll Rates at a Glance
CPP Rate
5.95%
CPP2 Rate
4.00%
EI Rate
1.63%
EI Rate (QC)
1.30%
Payroll Details
Per-Period Deductions
Effective Deduction Rate
22.0%
Annualized Gross
$60,000
Annualized Summary
Employer Cost
Employers match CPP contributions 1:1 and pay EI at 1.4× the employee rate. This is the true cost of employment beyond the employee's gross pay.
How it works: Tax is calculated by annualizing your per-period gross (less any RRSP contributions), computing federal and provincial income tax using CRA payroll tables, then dividing by the number of pay periods. CPP and EI are also annualized to avoid under-deduction when gross per period falls below the basic exemption threshold. When a YTD gross is provided, CPP and EI are computed incrementally — only the marginal contribution for this pay period is shown, and progress bars reflect how much room remains before each annual maximum. Employer costs reflect the mandatory CPP match and the 1.4× EI multiplier.
How Canadian Payroll Deductions Work
- Income tax — Your employer withholds federal and provincial income tax each pay period by annualising your gross pay, applying the relevant tax brackets and credits (including the Basic Personal Amount), then dividing by the number of pay periods. Withholding is an estimate; your actual tax is determined when you file your T1 return.
- Canada Pension Plan (CPP) — CPP1 is deducted at 5.95% on pensionable earnings above the $3,500 annual basic exemption, up to the YMPE of $74,600 for 2026. Once the YMPE is reached, CPP2 applies at 4% on earnings up to $85,000. Employers match both CPP1 and CPP2 contributions dollar-for-dollar.
- Employment Insurance (EI) — EI is deducted at 1.63% (1.30% in Quebec) on insurable earnings up to the maximum insurable earnings of $68,900 for 2026. Employers pay 1.4 times the employee premium. Quebec residents pay less EI because they also contribute to the Quebec Parental Insurance Plan (QPIP) separately.
Why Use Year-to-Date Gross?
CPP and EI are subject to annual ceilings — once your cumulative earnings cross the YMPE ($74,600 for CPP1) or maximum insurable earnings ($68,900 for EI), deductions stop for the rest of the year. Entering your year-to-date gross lets this calculator determine exactly how much room remains in the current pay period, so the result reflects your actual take-home rather than a start-of-year estimate. This is particularly useful for employees who receive mid-year raises, bonuses, or who switch employers.
What Employers Pay
Employers are required to remit their own share of CPP and EI on top of employee wages. For CPP, employers match the employee contribution at a 1:1 ratio — if an employee contributes $3,868 in CPP1 over the year, the employer contributes another $3,868. For EI, employers pay 1.4× the employee premium, meaning a $1,000 employee EI contribution triggers a $1,400 employer contribution. This employer share is a direct payroll cost not visible in your pay stub but factored into the total cost of employment. The calculator shows the full employer cost breakdown so you can understand your true employment cost to your employer.
Provincial income tax overlay — how 13 provinces differ
Federal income tax is the same across Canada (15% on the first $57,375 of 2026 income, rising to 33% above $253,414). Provincial overlay varies materially — total marginal rates at $100,000 range from 33% (Yukon) to 47% (Quebec). The calculator above applies the correct provincial table based on your selection.
Highest combined marginal at $100k
- Quebec: ~47.5% (28% federal × abatement + 25.75% provincial)
- Nova Scotia: ~43.5%
- PEI: ~43.6%
- Newfoundland: ~43.3%
Lowest combined marginal at $100k
- Yukon: ~33%
- Nunavut: ~35%
- Northwest Territories: ~35.7%
- British Columbia: ~38.3% (under $112k bracket)
Mid-range provinces
- Ontario: ~37.9% (Ontario surtaxes apply above $96K)
- Alberta: ~36% (flat 10% provincial below $148K)
- Manitoba: ~43.4%
- Saskatchewan: ~38.5%
Quebec uses dual administration — CRA handles federal income tax, Revenu Québec handles provincial. The 16.5% Quebec Abatement (an automatic reduction to federal tax for Quebec residents) accounts for Quebec running its own income tax system. The net Quebec federal rate is ~12.5% on the first bracket vs 15% elsewhere, but combined federal + Quebec provincial sits at the highest tier in the country.
Three worked examples — Ontario / BC / Quebec
Same gross salary, three provinces — showing how the provincial overlay and Quebec's QPP/QPIP/abatement combination shifts net pay.
Ontario — $75,000 annual
- Per pay (biweekly × 26): $2,884.62
- Federal tax: ~$337
- Ontario tax: ~$148
- CPP1 (5.95%): ~$167
- EI (1.63%): ~$47
- Net per pay: ~$2,186
- Annual take-home: ~$56,830
BC — $75,000 annual
- Per pay (biweekly × 26): $2,884.62
- Federal tax: ~$337
- BC tax: ~$110 (lower thresholds than ON)
- CPP1: ~$167
- EI: ~$47
- Net per pay: ~$2,223
- Annual take-home: ~$57,800
Quebec — $75,000 annual
- Per pay (biweekly × 26): $2,884.62
- Federal tax (post-abatement): ~$281
- Quebec provincial tax: ~$310
- QPP (5.95%): ~$167
- EI (1.30%): ~$37
- QPIP (0.494%): ~$14
- Net per pay: ~$2,075
- Annual take-home: ~$53,950
Quebec's higher provincial tax and the additional QPIP deduction make Quebec residents' take-home about 5% lower than Ontario at this income level. The trade-off is access to Quebec-specific benefits (QPIP parental leave, subsidised childcare, lower in-province university tuition).
Common payroll deduction errors to watch for
- Two TD1s with full personal credits — if you have two jobs and both employers apply the Basic Personal Amount credit, you're under-withholding all year. Ask your second employer to use TD1 with "$0 personal credit". The CRA T1 reconciliation catches this at year-end, but you'll owe a large balance.
- Bonus tax shock — bonuses are withheld using the annualised method, often producing more withholding than the actual marginal rate. You typically get the over-withholding back at year-end as a refund.
- Mid-year employer change — both employers re-apply CPP and EI from $0 YTD, so you can over-contribute. The over-contribution is refunded at year-end via T1.
- Stock options / RSU vesting — equity income is reported through payroll but the withholding is typically inadequate for the marginal rate. Set aside additional tax voluntarily or budget for a year-end balance owing.
- Commission income under T4 Box 14 — commissions are taxed as ordinary employment income but employers sometimes under-withhold relative to the higher annual income. Adjust by submitting a TD1 with "Additional Tax to be deducted" each pay.
- Severance lump sum — severance can be paid as a lump-sum or via salary continuance. Lump-sum withholding rates (CRA tables: 10/20/30% by amount) often differ from your marginal rate; year-end T1 reconciles.
Frequently asked questions
How are payroll deductions calculated in Canada?
Canadian payroll deductions consist of three components: income tax, Canada Pension Plan (CPP), and Employment Insurance (EI). Income tax is withheld based on your annualised pay period income applied to federal and provincial brackets. CPP is deducted at 5.95% on pensionable earnings above the $3,500 basic exemption, up to the Year's Maximum Pensionable Earnings (YMPE) of $74,600 for 2026. EI is deducted at 1.63% (1.30% in Quebec) on insurable earnings up to $68,900 for 2026.
When do CPP and EI deductions stop during the year?
CPP1 deductions stop once your year-to-date earnings reach the YMPE of $74,600 for 2026. CPP2 applies at 4% on earnings between $74,600 and $85,000, then stops. EI deductions stop once your year-to-date insurable earnings reach the maximum insurable earnings of $68,900 for 2026. After these ceilings are reached mid-year, your take-home pay increases for the remaining pay periods — typically late September to mid-October for a $90k salary paid bi-weekly.
How much does my employer pay for CPP and EI?
Employers match CPP contributions dollar-for-dollar at the same 5.95% rate (plus CPP2 at 4%). For EI, employers pay 1.4 times the employee premium — so if you pay $100 in EI, your employer pays $140. These employer contributions are in addition to your salary and represent a significant payroll cost. For a $75,000 salary, employer CPP and EI contributions add roughly $4,000–$5,000 per year to the total employment cost. The calculator above shows both employee deductions and the full employer cost breakdown.
Are payroll deductions different in Quebec?
Yes. Quebec residents pay a lower federal EI rate of 1.30% instead of 1.63% because they contribute to the Quebec Parental Insurance Plan (QPIP) separately at 0.494%. Federal income tax for Quebec residents is also reduced by a 16.5% Quebec Abatement since Quebec administers its own provincial income tax through Revenu Québec. Quebec provincial tax rates range from 14% to 25.75%, and Quebec residents have separate QPP contributions instead of CPP (with similar rates and ceilings).
What is CPP2 and who pays it?
CPP2 is the enhanced second tier of Canada Pension Plan contributions introduced in 2024. It applies at 4% on earnings between the YMPE ($74,600) and the YAMPE ($85,000) for 2026. Only employees with annual earnings above $74,600 pay CPP2. Maximum annual CPP2 employee contribution = ($85,000 − $74,600) × 4% = $416 for 2026. Employers match CPP2 at the same 4% rate. CPP2 was added to expand the income-replacement value of CPP — eventual retirement benefits are higher for those who contribute CPP2 over a working career.
How does year-to-date gross affect my deductions?
Year-to-date gross determines how much CPP and EI room remains. If your YTD earnings are near or above the CPP ceiling ($74,600) or EI ceiling ($68,900), your deductions for upcoming pay periods will be lower. Without YTD input, the calculator assumes you are at the start of the year. Entering your actual YTD gives a precise per-period deduction that reflects mid-year ceiling crossings from bonuses, raises, or multiple employers.
Which T4 box does each deduction appear in?
Box 14 — Employment income (gross before deductions). Box 16 — CPP contributions (CPP1). Box 16A — CPP2 contributions (added 2024). Box 17 — QPP contributions (Quebec employers). Box 18 — EI premiums. Box 20 — RPP contributions (registered pension plan). Box 22 — Income tax deducted (federal + provincial combined except Quebec). Box 24 — EI insurable earnings (caps at $68,900 for 2026). Box 26 — CPP / QPP pensionable earnings (caps at YMPE / YAMPE).
Why does my take-home pay change mid-year?
Three common mid-year deduction shifts: (1) CPP ceiling reached — at the pay period where YTD pensionable earnings cross $74,600 (or $85,000 for CPP2), CPP/CPP2 stops, lifting net pay by 5.95% (and 4% if you were paying CPP2). (2) EI ceiling reached — at the pay period where YTD insurable earnings cross $68,900, EI stops, lifting net pay by 1.63% (1.30% in Quebec). (3) Bonus tax bump — a one-time bonus is taxed at your bonus tax rate (annualised method) for the period it's paid, which usually withholds more tax than the marginal rate suggests; the over-withholding refunds at year-end.
I changed employers mid-year — how do CPP and EI ceilings work?
Each employer applies the CPP and EI deductions independently from your start with them — they don't know about your prior employer's deductions. This can cause over-contribution to CPP and over-contribution to EI in the year you change jobs. The over-contribution is refunded automatically when you file your T1: any CPP / CPP2 / EI paid above the annual maximum appears as a refundable credit. To minimise the cashflow drag during the year, ask your new payroll for a TD1 update including any TD1 prior-employer credit (rare), and enter accurate YTD gross in this calculator to plan around the duplicate deductions.
How is income tax withholding actually calculated by my employer?
Employers use CRA's payroll deduction tables (T4032 series, one per province / territory) or the Payroll Deductions Online Calculator (PDOC). The mechanic: take gross pay × pay periods in year = annualised income → apply federal + provincial brackets → subtract Basic Personal Amount tax credit (and any TD1 personal credits you claimed) → divide by pay periods to get per-period withholding. The result is an estimate; your actual T1 return reconciles the total. Employers don't account for: spouse / dependent credits, charitable donations, RRSP deduction, professional dues, second job income — all of which are claimed when you file.
Sources
June 15 self-employed tools: quarterly instalments, GST/HST registration, self-employed tax buffer, June 15 filing guide, T2125 mistakes
Related Calculators
Last updated April 2026. Reflects 2026 tax year rates.