Complete guide to CPP contributions, EI premiums, and income tax withholding for Canadian employees and employers. Includes a free payroll calculator to estimate your take-home pay.
| Deduction | Employee Rate | Max Contribution | Employer Rate | Exemption |
|---|---|---|---|---|
| CPP (base) | 5.95% | $3,867.50 | 5.95% | $3,500 |
| CPP2 (enhanced) | 4.00% | $396.00 | 4.00% | — |
| EI | 1.66% | $1,077.48 | 2.326% (1.4×) | — |
| Federal Income Tax | 15%–33% | — | — | $15,705 (BPA) |
Estimates annual CPP, EI, and federal income tax. Provincial tax not included.
The Canada Pension Plan (CPP) is a mandatory deduction for most employed Canadians aged 18–70. In 2025, there are two CPP tiers:
Employment Insurance (EI) protects workers who lose their jobs or need to take maternity/parental/illness leave. 2025 rates:
| Taxable Income | Federal Rate |
|---|---|
| Up to $55,867 | 15% |
| $55,867 – $111,733 | 20.5% |
| $111,733 – $154,906 | 26% |
| $154,906 – $220,000 | 29% |
| Over $220,000 | 33% |
Canadian employers deduct three main items: (1) CPP contributions at 5.95% (plus CPP2 at 4% on earnings above $71,300), (2) EI premiums at 1.66%, and (3) income tax based on your TD1 claim and estimated annual earnings. Employers remit all deductions to CRA along with their own matching CPP and EI contributions.
CPP is the original Canada Pension Plan contribution on earnings between $3,500 and $71,300. CPP2 is the enhanced second-tier contribution introduced in 2024, applying to earnings between $71,300 and $81,900 at 4%. If you earn $81,900+, you pay both maximums: $3,867.50 (CPP) + $396 (CPP2) = $4,263.50 total.
File a TD1 form with your employer claiming all eligible deductions (RRSP contributions, tuition, disability, etc.). You can also file a T1213 "Request to Reduce Tax Deductions at Source" with CRA if you have recurring deductions that reduce your taxable income — for example, regular RRSP contributions or investment carrying charges.
Self-employed individuals do not pay EI automatically and are not covered for regular (job loss) EI. However, you can voluntarily register for EI special benefits — which covers maternity, parental, illness, compassionate care, and critical illness benefits. You must register at least 12 months before making a claim and pay premiums at the employee rate only.
The Basic Personal Amount for 2025 is $15,705 for federal purposes. This is the amount all Canadians can earn tax-free — you receive a 15% non-refundable tax credit on the BPA, equivalent to $2,356 in tax savings. Most provinces also have their own BPA, ranging from about $100 to $21,000.
Payroll remittance frequency depends on your employer's size. Most employers remit monthly (by the 15th of the following month). Large employers (average monthly withholding over $25,000) remit more frequently — bi-weekly or even twice weekly. Employers who miss remittance deadlines face significant penalties and interest.