Employer Payroll Deductions: CPP, EI, Tax Tables 2026
Every 2026 rate, maximum and threshold an Ontario employer needs, taken from the CRA's own T4032 tables: CPP at $74,600, CPP2 to $85,000, EI at $68,900, the new 14% bottom federal bracket, remitter types, remittance deadlines and the penalty grid that starts at 3% on day one.
2026 Payroll Deductions at a Glance
Three amounts come off every employee's pay and go to the CRA: Canada Pension Plan contributions, Employment Insurance premiums, and federal and provincial income tax. You match the CPP dollar for dollar, you pay 1.4 times the EI, and you remit the whole package against your payroll account on the schedule the CRA assigns you.
Here is every 2026 number in one place. These figures are drawn from the CRA's T4032 Payroll Deductions Tables effective January 1, 2026.
| Item | 2026 | 2025 | Change |
|---|---|---|---|
| CPP maximum pensionable earnings (YMPE) | $74,600 | $71,300 | Up $3,300 |
| CPP basic exemption | $3,500 | $3,500 | Unchanged |
| CPP maximum contributory earnings | $71,100 | $67,800 | Up $3,300 |
| CPP rate, employee and employer each | 5.95% | 5.95% | Unchanged |
| CPP maximum contribution, each | $4,230.45 | $4,034.10 | Up $196.35 |
| CPP self-employed rate and maximum | 11.90% / $8,460.90 | 11.90% / $8,068.20 | Up $392.70 |
| CPP2 second ceiling (YAMPE) | $85,000 | $81,200 | Up $3,800 |
| CPP2 rate, employee and employer each | 4.00% | 4.00% | Unchanged |
| CPP2 maximum contribution, each | $416.00 | $396.00 | Up $20.00 |
| EI maximum insurable earnings | $68,900 | $65,700 | Up $3,200 |
| EI employee rate | $1.63 per $100 | $1.64 per $100 | Down 1 cent |
| EI employer rate (1.4 times) | $2.282 per $100 | $2.296 per $100 | Down |
| EI maximum employee premium | $1,123.07 | $1,077.48 | Up $45.59 |
| EI maximum employer premium | $1,572.30 | $1,508.47 | Up $63.83 |
| Federal basic personal amount (maximum) | $16,452 | $16,129 | Up $323 |
| Ontario basic personal tax credit | $12,989 | Indexed | Indexed 1.9% |
The Trap in These Numbers: The EI rate went down for 2026, so employers assume EI got cheaper. It did not. Maximum insurable earnings rose $3,200, so for every employee earning at or above $68,900 you pay $63.83 more in EI than in 2025, not less. Add the $196.35 CPP increase and each maxed-out employee costs you $260.18 more in 2026 before you account for EHT or WSIB.
The Three Deductions, and Who Pays What
CPP and CPP2
5.95% on earnings between $3,500 and $74,600, to a maximum of $4,230.45 each. Then CPP2 at 4% on earnings from $74,600 to $85,000, to a maximum of $416 each.
You match the employee dollar for dollar. Maximum combined employer CPP cost per employee: $4,646.45.
Employment Insurance
$1.63 per $100 of insurable earnings up to $68,900, to an employee maximum of $1,123.07. No basic exemption, so EI comes off the first dollar.
You pay 1.4 times the employee rate, to a maximum of $1,572.30 per employee.
Income Tax
Federal and provincial tax withheld based on the employee's TD1 claim codes and the CRA tax tables for their province of employment.
No employer share. You withhold and remit it, but it costs you nothing beyond the administration.
The Employer Share Is the Hidden Number: An employee earning $85,000 in Ontario sees $5,769.52 come off their pay in CPP, CPP2 and EI. What they do not see is that you paid $6,218.75 on top of their salary for the same three items. The true cost of an $85,000 salary is $91,218.75 before you add the Employer Health Tax or WSIB.
CPP and CPP2 for 2026: The Two-Ceiling System
CPP now has two ceilings. The first, the Year's Maximum Pensionable Earnings, is $74,600 for 2026. The second, the Year's Additional Maximum Pensionable Earnings, is $85,000. Earnings between the two are subject to CPP2 at a different rate. This has been in place since 2024 and it is still where payroll setups go wrong.
| Component | Earnings Range | Rate (each) | Maximum (each) |
|---|---|---|---|
| CPP base contribution | $3,500 to $74,600 | 4.95% | $3,519.45 |
| First additional CPP contribution | $3,500 to $74,600 | 1.00% | $711.00 |
| CPP total (what you withhold) | $3,500 to $74,600 | 5.95% | $4,230.45 |
| CPP2 second additional | $74,600 to $85,000 | 4.00% | $416.00 |
| Combined maximum per employee | Earnings of $85,000 or more | Blended | $4,646.45 |
| Self-employed CPP | $3,500 to $74,600 | 11.90% | $8,460.90 |
| Self-employed CPP2 | $74,600 to $85,000 | 8.00% | $832.00 |
The CRA's Own Warning on the Tables: The CRA specifically recommends using the Payroll Deductions Online Calculator rather than the printed T4032 tables once an employee reaches, or is annualising above, the YMPE of $74,600. Using the tables in that range can over or under deduct federal and provincial tax. If your payroll runs on software, this is handled. If someone is looking up tables manually for a higher earner, it is not.
EI Premiums for 2026
EI is simpler than CPP in one respect and harsher in another. Simpler, because there is one ceiling and no basic exemption. Harsher, because the employer pays 1.4 times whatever the employee pays.
| Item | Outside Quebec | Quebec |
|---|---|---|
| Maximum insurable earnings | $68,900 | $68,900 |
| Employee rate per $100 | $1.63 | $1.30 |
| Employer rate per $100 | $2.282 | $1.82 |
| Maximum employee premium | $1,123.07 | $895.70 |
| Maximum employer premium | $1,572.30 | $1,253.98 |
| Basic exemption | None | None |
| Maximum weekly benefit rate | $729 | $729 |
Why Quebec Is Different: Quebec administers its own parental insurance plan (QPIP), so Quebec residents receive parental benefits through QPIP rather than EI and pay a reduced EI rate as a result. QPIP premiums are paid separately to Revenu Quebec. For a deeper breakdown of the 2026 EI rates, the three-year trend and the Premium Reduction Program, please see our EI Premium Rates 2026 guide.
2026 Income Tax Rates and Thresholds
2026 is the first full year of the reduced 14% bottom federal bracket. The rate was cut from 15% effective July 2025, so 2025 ran at an effective 14.5% blended rate. For 2026 it applies for the whole year.
Federal tax rates and thresholds for 2026
| Annual taxable income from | To | Federal rate | Constant (K) |
|---|---|---|---|
| $0.00 | $58,523.00 | 14.0% | $0 |
| $58,523.01 | $117,045.00 | 20.5% | $3,804 |
| $117,045.01 | $181,440.00 | 26.0% | $10,241 |
| $181,440.01 | $258,482.00 | 29.0% | $15,685 |
| $258,482.01 | and over | 33.0% | $26,024 |
Ontario tax rates and thresholds for 2026
| Annual taxable income from | To | Ontario rate | Constant (KP) |
|---|---|---|---|
| $0.00 | $53,891.00 | 5.05% | $0 |
| $53,891.01 | $107,785.00 | 9.15% | $2,210 |
| $107,785.01 | $150,000.00 | 11.16% | $4,376 |
| $150,000.01 | $220,000.00 | 12.16% | $5,876 |
| $220,000.01 | and over | 13.16% | $8,076 |
Personal amounts and Ontario add-ons for 2026
| Item | 2026 Amount | Notes |
|---|---|---|
| Federal basic personal amount, maximum | $16,452 | Reduced to $14,829 minimum for high earners |
| Federal indexing factor | 2.0% | Applied to thresholds and personal amounts |
| Canada employment amount | $1,501 | Maximum credit value $210.14. Built into the tables. |
| Ontario basic personal tax credit | $12,989 | Ontario indexing factor 1.9% |
| Ontario surtax, first threshold | $5,818 | 20% of basic Ontario tax above this amount |
| Ontario surtax, second threshold | $7,446 | Additional 36% of basic Ontario tax above this amount |
| Ontario health premium, maximum | $900 | Where taxable income exceeds $200,000. Nil at $20,000 or less. |
| Ontario tax reduction, basic | $300 | $575 per dependant under 18 |
Use PDOC, Not Mental Arithmetic: The constants (K and KP) in these tables exist because the CRA's formula applies the top applicable rate to all income and then subtracts the constant, rather than calculating each bracket separately. It gets to the same answer faster. You do not need to do this by hand: the CRA's free Payroll Deductions Online Calculator at canada.ca/pdoc uses exact figures and handles the surtax, health premium and tax reduction automatically.
Remitter Types and Deadlines
The CRA assigns your remitter type based on your average monthly withholding amount (AMWA) from two calendar years ago. You do not choose it. The CRA notifies you in writing when it changes, and the deadline that applies to you follows from that assignment.
| Remitter Type | AMWA (two years ago) | Frequency | Due Date |
|---|---|---|---|
| Quarterly (new small employer) | Under $1,000 monthly withholding, perfect compliance | 4 times a year | April 15, July 15, October 15, January 15 |
| Quarterly (existing employer) | Under $3,000, account open 12+ months, perfect compliance | 4 times a year | April 15, July 15, October 15, January 15 |
| Regular | Under $25,000 | Monthly | 15th of the month following the month you paid |
| Accelerated threshold 1 | $25,000 to $99,999.99 | Twice monthly | 25th of the same month (paydays 1st to 15th); 10th of the next month (paydays 16th to month end) |
| Accelerated threshold 2 | $100,000 or more | Up to 4 times monthly | Within 3 working days after each period ends (1-7, 8-14, 15-21, 22 to month end) |
Perfect Compliance Is a Real Condition: Quarterly remitter status requires a perfect compliance record across your payroll and GST/HST accounts over the previous 12 months. One late remittance and you lose it. The CRA's own example: a quarterly remitter that pays late in April may still remit for the second quarter by July 15, but must remit monthly from July onward. The privilege is withdrawn, not merely warned about.
Weekend and Holiday Rule: When a remittance due date falls on a Saturday, Sunday or CRA-recognised public holiday, your payment is on time if the CRA receives it, or a Canadian financial institution processes it, on the next business day. What counts is the date the financial institution credits the CRA, not the date you initiated the payment.
Late Remittance Penalties: No Grace Period
Payroll remittance penalties are not proportional to the delay. They start at 3% on the first day late and reach 10% within a week. There is no grace period and no warning.
| How Late | Penalty | On Top |
|---|---|---|
| 1 to 3 days | 3% of the amount due | Compound daily interest |
| 4 to 5 days | 5% of the amount due | Compound daily interest |
| 6 to 7 days | 7% of the amount due | Compound daily interest |
| More than 7 days, or not remitted | 10% of the amount due | Compound daily interest |
| Second failure in the same calendar year | 20% where the CRA determines it was knowing or grossly negligent | Compound daily interest |
Source Deductions Are Trust Funds: Amounts withheld from employees are held in trust for the Crown. They are not working capital and they should not sit in your operating account. Directors can be assessed personally for unremitted source deductions, and that liability survives the corporation. This is one of the few CRA debts that follows you personally, which is why a cash flow problem should never be solved with the remittance account.
Ontario Employer Costs Beyond the CRA Remittance
Your CRA remittance covers CPP, CPP2, EI and income tax. In Ontario there are two further employer obligations that go to different bodies on different schedules, and new employers routinely miss both.
| Obligation | Paid To | Threshold | Deadline |
|---|---|---|---|
| CPP, CPP2, EI, income tax | Canada Revenue Agency | All employers | Per your assigned remitter type |
| Employer Health Tax (EHT) | Ontario Ministry of Finance | $1,000,000 exemption for eligible employers with Ontario payroll under $5 million | Annual return by March 15 |
| WSIB premiums | WSIB | Depends on your industry classification | Per your WSIB reporting schedule |
EHT in Practice: Eligible Ontario employers claim a $1,000,000 exemption, so most small employers owe nothing but must still file the annual return by March 15 to claim it. The rate is based on total Ontario payroll before the exemption is deducted, rising to 1.95%. EHT remuneration is based on T4 Box 14, which means your taxable benefits are in the EHT base too. Employers with payroll of $5 million or more get no exemption at all.
What This Costs You: Worked Examples
Example 1: Employee Earning $60,000 in Ontario
CPP: ($60,000 minus the $3,500 exemption) at 5.95% equals $3,361.75 withheld from the employee, and $3,361.75 matched by you. No CPP2, because earnings are below $74,600.
EI: $60,000 at 1.63% equals $978.00 withheld from the employee. Your share at 2.282% is $1,369.20.
Income tax is withheld per the employee's TD1 claim codes and remitted, but costs you nothing beyond administration.
Your CPP and EI cost: $4,730.95. True cost of the salary: $64,730.95 before EHT and WSIB.Example 2: Employee Earning $85,000 in Ontario (Both Ceilings Hit)
CPP: maximum reached at $4,230.45 from the employee, matched by you. CPP2 then applies on the $10,400 between $74,600 and $85,000 at 4%, adding $416.00 from the employee and $416.00 from you.
EI: maximum reached at $1,123.07 from the employee. Your share maxes at $1,572.30.
The employee sees $5,769.52 in deductions. You pay $6,218.75 on top of the salary for the same items.
True cost of an $85,000 salary: $91,218.75 before EHT and WSIB.Example 3: What 2026 Added to a 10-Employee Payroll
A business with 10 employees all earning at or above $85,000. CPP maximum rose $196.35 per employee. EI employer maximum rose $63.83 per employee. CPP2 maximum rose $20.00 per employee.
Per employee, the employer cost increase for 2026 is $280.18. Across 10 employees that is $2,801.80 in additional payroll cost, before any raise, and before EHT.
2026 increase on a 10-person payroll: $2,801.80, entirely from indexed ceilingsThe Ten Most Common Payroll Deduction Errors
| # | Error | Consequence |
|---|---|---|
| 1 | Rates not updated at the first January payroll | Under-deduction all year, PIER assessment at T4 time |
| 2 | CPP basic exemption applied to the wrong number of pay periods | CPP shortfall, PIER assessment on both shares |
| 3 | CPP2 not set up at all | No deduction on earnings from $74,600 to $85,000 |
| 4 | Deductions stopped before the annual maximum was reached | Shortfall assessed to the employer |
| 5 | Taxable benefits added at year-end instead of run through payroll | No CPP or EI withheld on them, PIER assessment follows |
| 6 | EI withheld from an owner-manager who controls over 40% of voting shares | EI deducted where the employment was not insurable |
| 7 | Wrong province of employment for a remote employee | Wrong provincial tax withheld all year |
| 8 | Source deductions used as operating cash | Penalties from 3% to 10%, plus personal director liability |
| 9 | Remitting on the wrong schedule after a remitter type change | Late penalties despite paying in full |
| 10 | EHT annual return not filed because no tax was owing | The March 15 return is required even to claim the exemption |
How We Prevent These: For every payroll client we update rates before the first January run, verify the exemption proration against the pay frequency, run taxable benefits through payroll as they arise, confirm insurability for owner-managers, remit on the assigned schedule, and reconcile the PD7A as it arrives rather than at year-end. When a PIER notice does land, we respond to it. Payroll Services →
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