CPP and EI Deduction Rates for 2026: What You Need to Know

Every year, CRA sets the contribution rates for the Canada Pension Plan (CPP) and Employment Insurance (EI). Here are the 2026 numbers you need if you're processing payroll for yourself or your employees.

2026 CPP rates

The employee CPP contribution rate for 2026 is 5.95%.

The employer CPP contribution rate is also 5.95% — your corporation pays this on top of the employee deduction. So the total CPP cost per dollar of salary (above the basic exemption) is 11.9% — split equally between you as employee and your corporation as employer.

Key 2026 CPP numbers: - Basic annual exemption: $3,500 - Maximum annual pensionable earnings: $71,300 - Maximum annual employee contribution: $4,034.10 - Maximum annual employer contribution: $4,034.10

The basic exemption is why low-income earners pay proportionally less CPP. The first $3,500 of annual earnings is exempt — which works out to about $291.67/month or $134.62/biweekly pay period.

2026 EI rates

The employee EI premium rate is 1.64%.

The employer EI rate is 1.4 times the employee rate: 2.296%. Your corporation pays this employer premium in addition to withholding the employee premium.

Key 2026 EI numbers: - Maximum insurable annual earnings: $65,700 - Maximum annual employee premium: $1,077.48 - Maximum annual employer premium: $1,508.47

Note: self-employed people who opt into EI pay both the employee and employer portions themselves. Incorporated business owners paying themselves a salary are treated as regular employees for EI purposes.

How deductions are calculated per pay period

CRA payroll deductions are always calculated on a per-period basis, then annualized to check against maximums.

For CPP, the calculation is: 1. Subtract the period's basic exemption (annual exemption ÷ pay periods per year) 2. Multiply the remaining amount by 5.95% 3. Cap at the per-period maximum

For a monthly employee earning $6,000 gross: - Period exemption: $3,500 ÷ 12 = $291.67 - Pensionable earnings: $6,000 − $291.67 = $5,708.33 - CPP: $5,708.33 × 5.95% = $339.65 - Monthly max: $4,034.10 ÷ 12 = $336.18 - Final CPP: $336.18 (capped at max)

For EI, there is no basic exemption — the rate applies to all insurable earnings up to the annual maximum: - Monthly insurable max: $65,700 ÷ 12 = $5,475 - EI on $5,475: $5,475 × 1.64% = $89.79

Federal income tax

Federal tax is calculated by annualizing the per-period gross pay, applying the federal tax brackets to the excess above the Basic Personal Amount ($16,129 in 2026), then applying non-refundable credits for CPP and EI contributions (15% of each).

The 2026 federal brackets: - 15% on the first $57,375 - 20.5% on $57,375 to $114,750 - 26% on $114,750 to $158,519 - 29% on $158,519 to $220,000 - 33% on income above $220,000

Tools that handle this automatically

If you're running payroll for your own corporation, manually calculating these deductions each pay period is tedious and error-prone. PaystubHero does all of this automatically — enter your gross pay and pay frequency, and it calculates CPP, EI, and federal tax using the current CRA rates. The result is a print-ready paystub.

CRA's Payroll Deductions Online Calculator (PDOC) is the official tool if you need to verify numbers or handle provincial tax.