Canada Payroll CPP & EI Deductions Guide 2026

1. Gross Pay, Net Pay and Statutory Payroll Deductions

A Canadian employee's gross pay is the employment remuneration earned before payroll deductions. Net pay is the amount remaining after statutory and other applicable deductions are withheld. The exact deductions on a paycheque depend on the employee's province or territory of employment, income, pay frequency, benefits and other circumstances. For most employees outside Quebec, the principal federal statutory payroll deductions are Canada Pension Plan (CPP), Employment Insurance (EI) and federal income tax, together with applicable provincial or territorial income tax. Quebec employment generally uses the Quebec Pension Plan (QPP) instead of CPP and has Quebec-specific income-tax and parental-insurance rules. Non-statutory deductions can include employer benefit premiums, registered pension-plan contributions, union dues, charitable payroll deductions, wage assignments and other authorized amounts. A deduction should not automatically be treated as statutory merely because it appears on every pay stub.

2. 2026 CPP, CPP2 and EI Rates & Maximums

The original page used outdated 2024 EI and CPP ceilings. The correct 2026 figures are higher. For 2026, CPP uses a $3,500 Year's Basic Exemption, a $74,600 Year's Maximum Pensionable Earnings (YMPE), and an $85,000 Year's Additional Maximum Pensionable Earnings (YAMPE). The employee/employer CPP rate through the YMPE is 5.95%, and CPP2 applies at 4.00% to the $74,600-to-$85,000 band. For 2026, the maximum employee CPP contribution for the base plus first additional CPP is $4,230.45 and the maximum employee CPP2 contribution is $416.00. The maximum employee total across those two tiers is therefore $4,646.45 when the employee reaches at least the $85,000 YAMPE and all normal CPP rules apply. For EI outside Quebec, the 2026 maximum insurable earnings are $68,900. The employee premium rate is 1.63%, producing a maximum employee premium of $1,123.07. In Quebec, the federal EI employee rate is 1.30% and the maximum federal EI premium is $895.70. Quebec's separate Quebec Parental Insurance Plan (QPIP) has its own premium rules and is not the same thing as federal EI. EI and CPP ceilings are different. Therefore, a payroll employee earning above $68,900 but below $74,600 can continue paying CPP after EI premiums have reached their annual employee maximum.

3. Understanding T4 Boxes 14, 16, 16A, 18, 22, 24 and 26

Employers generally issue a T4 Statement of Remuneration Paid for the preceding calendar year by the last day of February following the tax year. For example, a 2026 T4 must generally be provided to the employee and filed with CRA by the last day of February 2027. T4 box 14 reports employment income. Box 16 reports employee CPP contributions for the base and first additional components, while box 16A reports employee second additional CPP contributions (CPP2). Box 18 reports employee EI premiums. Box 22 reports income tax deducted. Box 24 reports EI insurable earnings and box 26 reports CPP/QPP pensionable earnings. Box 26 is especially important after the CPP enhancement because it can contain pensionable earnings used to calculate CPP/CPP2 even where the amount does not exactly equal the amount on which a particular contribution was actually withheld in a special situation. Starting with 2024 slips, box 26 reflects pensionable earnings used for CPP/QPP and CPP2/QPP2 reporting. A T4 is a tax-reporting document, not a simple copy of the final paycheque. If the information appears incorrect, the employee should first contact the employer for correction and, where necessary, follow CRA's T4 correction process.

4. TD1 Forms and Income-Tax Withholding

The federal TD1 and the applicable provincial or territorial TD1 are personal tax credits return forms. An employee uses these forms to tell the employer about personal tax credits and deductions that affect payroll income-tax withholding. TD1 forms do not determine CPP or EI rates; CRA's payroll formulas determine those statutory deductions separately. The employer uses the employee's claim amount from the relevant TD1 form, together with the CRA payroll deduction tables or formulas, to calculate the amount of income tax to withhold. A TD1 should be completed when starting a new job and whenever the employee's personal tax-credit situation changes in a way that requires an updated form. If an employee has more than one employer at the same time, the employee generally cannot claim the same personal credits with every employer. CRA's TD1 instructions include the multiple-employer situation and the employee can indicate that the personal tax credits have already been claimed elsewhere. Tax withheld at source is an installment toward the eventual income-tax liability. A refund or balance owing can occur after the annual tax return calculates the actual tax payable using all income, deductions, credits and tax already withheld.

5. When CPP and EI Deductions Stop During the Year

CPP and EI do not stop at the same earnings level because they have different annual ceilings. In 2026, EI outside Quebec stops once the employee reaches the $1,123.07 maximum employee premium. CPP base plus first additional contributions stop at the employee's $4,230.45 maximum, and CPP2 may apply afterward until the employee reaches the $416 CPP2 maximum. Payroll systems also account for the $3,500 CPP basic exemption and pay-period calculations. This means an employee should not calculate a deduction on a given cheque simply as 5.95% of gross pay or 1.63% of gross pay without considering pensionable/insurable earnings and the year-to-date position. If the employee works for several employers, each employer generally calculates deductions based on its own payroll. An employee can therefore have total CPP deductions above the personal annual maximum and can be entitled to an overpayment refund through the tax return. An employee can similarly have an EI overpayment in certain circumstances. The employer's share is different from the employee's share. The employer must remit its own statutory contribution even though it is not deducted from the employee's net pay.

6. Pay Stub Audit: How to Check Your 2026 Paycheque

A practical pay-stub audit should compare the employee's gross earnings, taxable benefits, statutory deductions and year-to-date totals against the employment agreement and CRA payroll rules. Overtime is not automatically 1.5 times the hourly wage in every Canadian workplace: the applicable provincial or federal employment-standards law, contract and overtime exemptions determine the legal overtime rate. The employee should separately verify regular earnings, overtime, vacation pay, taxable benefits, CPP/QPP, CPP2/QPP2, EI, income tax, pension/benefit deductions and the year-to-date totals. A mismatch is not always an error; taxable benefits, bonuses, irregular pay periods and annual ceilings can create legitimate changes in payroll deductions. For the annual T4, compare box 14 with the year's employment income and compare boxes 16, 16A, 18, 22, 24 and 26 with the relevant payroll records. If an amount is wrong, ask the employer for a corrected T4 before filing where practical. If the employer does not correct an erroneous slip, CRA has procedures for handling incorrect information and PIER/deficiency assessments.

7. Step-by-Step Payroll and T4 Verification Checklist

New employees should verify that the employer has the correct name, address, SIN and province of employment. The employee should complete the federal and applicable provincial or territorial TD1 forms and provide them to the employer. The employer uses those forms with the CRA payroll formulas to calculate income-tax deductions. During the year, track gross pay and year-to-date CPP, CPP2, EI and income-tax deductions. Remember that EI and CPP have different ceilings, and Quebec has separate QPP/QPIP rules. At year-end, use the T4 slip to prepare the tax return and investigate any discrepancies before submitting the return if possible. Electronic T4 slips can be available through CRA My Account or the employer's payroll system depending on the employer's filing and delivery method. However, a missing T4 does not mean the employee is prohibited from filing a return. CRA instructs taxpayers to use available information and contact the employer or CRA if a slip is missing or incorrect.

Official Government & Tribunal References

• CRA — Payroll Deductions Tables for 2026
• CRA — 2026 EI Premium Rates and Maximums
• CRA — 2026 CPP Contribution Rates, Maximums and Exemptions
• CRA — 2026 Payroll Deductions Formulas
• CRA — T4 Slip: Statement of Remuneration Paid
• CRA — Employers' Guide to Filing the T4 Slip and Summary
• CRA — T4 Slip Information for Employers
• CRA — TD1 Personal Tax Credits Return
• CRA — Completing the TD1
• Service Canada — Employment Insurance Premium Rates and Maximums

Frequently Asked Questions (6 Verified Answers)

Payroll Key Metrics

• EI Rate Outside Quebec (2026)1.63% Employee
• EI Maximum (2026)$1,123.07 on $68,900
• CPP Employee Rate (2026)5.95% to $74,600 YMPE
• CPP2 (2026)

  4.00% from $74,600 to $85,000