Payroll deductions calculator for Canadian employers (2026)
Enter a gross pay and a pay frequency. Get CPP, CPP2, EI, federal and Ontario income tax for that pay, the employee’s net pay, and what the pay run actually costs you. CRA’s 2026 rates, no sign-up.
Employee deductions, this pay
- CPP (5.95%)
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- CPP2 (4% over $74,600)
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- EI (1.63%)
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- Federal income tax
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- Ontario income tax, surtax and health premium
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- Total deductions
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- Net pay
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Employer cost, this pay
- Employer CPP + CPP2 match
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- Employer EI (1.4×)
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- Gross pay + employer share
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Annualized
- Gross salary
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- Take-home for the year
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Estimate for a regular pay run with the basic personal amounts only (TD1 and TD1ON claim code 1), no taxable benefits, no RRSP or union deductions, and the employee under 70 and not CPP-exempt. Assumes the same pay every period, so CPP and EI stop at the annual maximums in proportion. CRA’s Payroll Deductions Online Calculator will differ by a few dollars in the rounding; your payroll run is what CRA expects you to remit.
What comes off a paycheque in 2026
| Deduction | Employee | Employer | 2026 ceiling |
|---|---|---|---|
| CPP | 5.95% of earnings above $3,500 | Matches 5.95% | $74,600 pensionable (max $4,230.45 each) |
| CPP2 | 4% of earnings between $74,600 and $85,000 | Matches 4% | $85,000 (max $416 each) |
| EI | 1.63% of insurable earnings | 1.4 × the employee premium (2.28%) | $68,900 insurable (max $1,123.07 employee, $1,572.30 employer) |
| Federal tax | 14% to 33% in five brackets, less credits | — | Basic personal amount $16,452 |
| Ontario tax | 5.05% to 13.16% in five brackets, plus surtax and the Ontario Health Premium | — | Basic personal amount $12,989 |
Three things in that table surprise first-time employers. The employer share is real money — about 7.4 cents on every dollar of salary until the employee crosses the CPP and EI ceilings. CPP2 is new enough that many people have never seen it on a stub; it only bites above $74,600. And the Ontario Health Premium is collected through payroll even though it is a provincial tax, which is why the Ontario line is a little higher than the bracket rates alone suggest.
How the calculation works
The calculator follows the structure CRA sets out in its payroll formulas guide (T4127). Gross pay is annualized by the number of pay periods. CPP and EI are taken on the annualized amount up to their ceilings. The enhanced portion of CPP — the 1% “first additional” slice and all of CPP2 — is deducted from income before tax, because it is a deduction rather than a credit. Federal tax is the bracket calculation less 14% of the basic personal amount, the base CPP, EI and the Canada Employment Amount ($1,501). Ontario tax is its own bracket calculation less 5.05% of the Ontario basic personal amount, base CPP and EI, then the surtax (20% of basic Ontario tax over $5,818, another 16% over $7,446) and the health premium are added. Everything is divided back by the number of pay periods.
The 2026 federal and Ontario brackets
| Federal taxable income | Rate | Ontario taxable income | Rate |
|---|---|---|---|
| Up to $58,523 | 14% | Up to $53,891 | 5.05% |
| $58,523 to $117,045 | 20.5% | $53,891 to $107,785 | 9.15% |
| $117,045 to $181,440 | 26% | $107,785 to $150,000 | 11.16% |
| $181,440 to $258,482 | 29% | $150,000 to $220,000 | 12.16% |
| Over $258,482 | 33% | Over $220,000 | 13.16% |
Then you have to send it to CRA
Every dollar in the “total deductions” line, plus the employer share, is trust money. For most small employers it is due to CRA by the 15th of the month after the pay date; larger payrolls remit more often. The penalty for being late starts at 3% and reaches 10% after a week, and directors are personally liable for what is not remitted. The late payroll remittance guide has the full schedule and a penalty calculator; how payroll remittances work covers the mechanics of paying.
If you are incorporated: let the payroll run do the math
This page answers “how much comes off?” for one paycheque. Running payroll means answering it every period for every employee, filing the remittance on time, producing T4s in February and a Record of Employment when someone leaves — and getting every one of those numbers into the books.
taxifi payroll is $49 a month plus $10 per employee: pay runs on your schedule, CPP, EI and income tax calculated, remittances sent to CRA on time, T4 and T4A slips at year-end, ROEs filed, and every run posted straight into books a Canadian accountant reviews. Not registered yet? Start with opening a CRA payroll account and hiring your first employee. Ottawa-based, serving all of Ontario — see our small business accountant in Ottawa page or published prices.
This is general information, not tax advice for your situation. Get started and a Canadian accountant will give you the answer for your business.
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Common questions
How much CPP and EI comes off a paycheque in 2026?
CPP is 5.95% of pensionable earnings between the $3,500 basic exemption and the $74,600 maximum (YMPE), so at most $4,230.45 a year. Earnings between $74,600 and $85,000 attract CPP2 at 4%, at most $416. EI is 1.63% of insurable earnings up to $68,900, at most $1,123.07. The employer matches CPP and CPP2 dollar for dollar and pays 1.4 times the employee’s EI.
What does an employee actually cost the employer?
Gross pay plus the employer’s CPP and CPP2 match plus 1.4 times the employee’s EI premium: roughly 7.4% on top of salary up to the CPP and EI maximums, less above them. Ontario employers with more than $1 million of annual payroll also pay Employer Health Tax, and most pay WSIB premiums; neither is a source deduction, so the calculator leaves them out.
Why is my payroll software's number a few dollars different?
CRA’s Payroll Deductions Online Calculator and every payroll system apply the same formulas, but rounding differs by pay period, employees may have claimed extra amounts on their TD1, and mid-year hires or prior employers can change the CPP and EI already contributed. Treat any calculator, including this one, as an estimate; the remittance CRA expects is what your payroll run produces.
Does this work for other provinces?
The CPP, CPP2, EI and federal tax lines apply everywhere in Canada except Quebec, which runs its own pension plan and parental insurance. The provincial tax line here is Ontario only; other provinces have their own brackets and credits.
When do I have to send these deductions to CRA?
Most small employers are regular remitters: everything withheld in a month is due on the 15th of the following month, together with the employer share of CPP and EI. Late remittances carry a 3% to 10% penalty. See the guide to late payroll remittance penalties for the full schedule.
What do I need before I can run payroll at all?
A CRA payroll program account (an RP extension on your business number), a completed TD1 and TD1ON from each employee, their SIN, and a pay schedule. Opening the account takes about fifteen minutes online; the guide to registering a CRA payroll account walks through it.