CPP and EI Deductions Explained 2026
Canada Pension Plan (CPP)
CPP protects against loss of income at retirement, disability and death. The 2026 employee rate is 5.95% on earnings between the basic exemption ($3,500) and the Year's Maximum Pensionable Earnings (YMPE) of $74,600. The maximum annual employee contribution is $4,230.45.
The CPP rate comprises a base portion (4.95%) and an enhanced portion (1.00%). This distinction matters for your tax return: the base share earns a non-refundable tax credit at 14%, while the enhanced share is an income deduction.
CPP2: the second tier
Since 2024 there is a second CPP tier (CPP2) at 4% on earnings between the YMPE ($74,600) and the Year's Additional Maximum Pensionable Earnings (YAMPE) of $85,000. The maximum CPP2 contribution is $416.00. CPP2 contributions are entirely a deduction from income, not a credit, providing a slightly larger tax saving than the base CPP credit.
Employment Insurance (EI)
EI protects employees against job loss and provides parental, sickness and other benefits. The 2026 employee rate is 1.63% on insurable earnings up to $68,900 (Maximum Insurable Earnings). The maximum annual employee premium is $1,123.07. Quebec residents pay a lower rate (1.30%) because the province administers its own parental insurance plan (QPIP).
The employer EI contribution is 1.4 times the employee premium. On maximum insurable earnings that means $1,572.30 per employee per year in employer EI cost.
CPP and EI deductions at three salary levels (Ontario)
| Gross salary | CPP | CPP2 | EI | Combined |
|---|---|---|---|---|
| $50,000 | $2,766.75 | $0.00 | $815.00 | $3,581.75 |
| $75,000 | $4,230.45 | $16.00 | $1,123.07 | $5,369.52 |
| $90,000 | $4,230.45 | $416.00 | $1,123.07 | $5,769.52 |
At $75,000 CPP has nearly reached its maximum and CPP2 begins. At $90,000 both CPP and CPP2 are maxed, and EI is also at its ceiling, so no additional premiums are deducted for earnings above that level.
Employer obligations
Employers must match every dollar of CPP (and CPP2) the employee contributes and remit the combined amount to the CRA. For EI, the employer remits 1.4 times the employee premium. These employer costs appear on T4 slips but are not visible on the employee's payslip as deductions.
See the full picture in the Canada salary calculator, which shows CPP, CPP2 and EI alongside federal and provincial tax for any province.
Frequently asked questions
What is CPP2 and who pays it?
CPP2 is the second tier of the Canada Pension Plan, introduced in 2024 as part of a multi-year CPP expansion. It applies to earnings between the Year's Maximum Pensionable Earnings (YMPE) and the Year's Additional Maximum Pensionable Earnings (YAMPE). In 2026 the employee rate is 4% on earnings between $74,600 and $85,000, for a maximum employee contribution of $416. Quebec uses QPP2 instead of CPP2. CPP2 contributions are deducted from income (not a non-refundable credit), which affects how they interact with taxable income.
Can self-employed people opt into CPP?
Self-employed individuals in Canada are required to pay both the employee and employer share of CPP, which at full contribution rates amounts to 11.90% on net self-employment income between the exemption and the YMPE. They can choose to contribute to CPP2 voluntarily. CPP contributions by the self-employed generate a 50% non-refundable credit (employee share) and a 50% deduction from income (employer share).
Do EI premiums ever stop during the year?
Yes. Once your insurable earnings reach the Maximum Insurable Earnings (MIE) of $68,900 in 2026, EI deductions stop for the rest of the year. At that point your employer also stops its 1.4x EI employer match on your behalf. The deduction automatically resumes at the start of the next calendar year.
Sources: CRA T4127 (122nd and 123rd editions, 2026), ESDC EI Premium Rates 2026. Last updated 2026-11-04.