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Employer payroll deductions in Canada come to three items: income tax, CPP and EI taken from each employee’s pay. On top of that, you pay your own share of CPP, which matches the employee’s, and EI at 1.4 times theirs. For a $60,000 employee in Ontario, that extra cost to you is $4,730.95 a year, or about $394 a month.
What do you take off an employee’s pay?
Three things, every pay period. Income tax is withheld based on the employee’s pay and claim amounts. CPP is 5.95% of pay above a $3,500 yearly exemption, up to $74,600. A second CPP tier adds 4% on pay between $74,600 and $85,000. EI is 1.63% of pay up to $68,900. The CRA lists these on its pages for second additional CPP rates and maximums and for EI premiums.
| Item | Employee pays | Employer pays |
|---|---|---|
| CPP, first tier | 5.95%, maximum $4,230.45 | Same amount |
| CPP, second tier | 4%, maximum $416 | Same amount |
| EI | 1.63%, maximum $1,123.07 | 1.4 times, maximum $1,572.30 |
| Income tax | Withheld from pay | Nothing extra |
Quebec differs. It has its own pension plan and parental insurance, and this page doesn’t cover them.
What does one employee really cost?
Take a $60,000 salary in Ontario. The employee has $3,361.75 of CPP and $978.00 of EI taken off, plus $8,320.50 of federal and Ontario income tax, so they receive $47,339.75. You send all of that to the CRA, and you add your own share: $3,361.75 of CPP and $1,369.20 of EI.
So the payroll cost of that job is $64,730.95, not $60,000. The gap grows with pay, but only up to the ceilings.
| Salary | Employer CPP | Employer EI | Extra cost |
|---|---|---|---|
| $40,000 | $2,171.75 | $912.80 | $3,084.55 |
| $60,000 | $3,361.75 | $1,369.20 | $4,730.95 |
| $90,000 | $4,646.45 | $1,572.30 | $6,218.75 |
Above about $85,000 the extra cost stops rising. At $150,000 it’s the same $6,218.75 as at $90,000, though income tax on the employee’s side keeps climbing.
How do you check an employee’s net pay?
Use the payroll deductions calculator with the employee’s gross pay per period and province. It lists the tax, CPP and EI you’d take from one cheque. For a whole year the take-home pay calculator gives the same split. Someone negotiating a fixed net figure? The net to gross calculator shows what you’d have to pay before deductions.
If the employee is paid by the hour, the hourly to salary calculator converts the wage into a yearly figure first.
What should a small employer budget for?
Think of it as a markup on wages. For a $40,000 employee the extra is about 7.7%. For a $60,000 employee it’s 7.9%. At $90,000 it falls to 6.9%, since the ceilings cap it. Those percentages come from the table above and aren’t a rule, because they leave out any provincial levy, workers’ compensation and benefits you offer. Is the hire worth it at that price? The answer usually turns on the whole package, not the payroll line alone, so price the salary first and layer the rest on top.
When do you send the money to the CRA?
Most new employers start as regular remitters. The CRA’s employers’ guide says it has to receive the deductions on or before the 15th day of the month after the month you paid your employees, and that the regular remitter group is for an average monthly withholding amount of less than $25,000. So Sam, who runs a small shop in Regina and paid his one employee on 28 March, sends March’s deductions by 15 April. Bigger payrolls and some small ones follow other schedules, and the guide lists them, so read the CRA’s employers’ guide to payroll deductions and remittances for your own account.
Where do employers go wrong?
Forgetting the ceilings is the common one. CPP and EI stop once an employee reaches the yearly maximum, so a December cheque may have none. Payroll software handles that, and a spreadsheet often doesn’t.
Another is treating pay stubs as exact. Any estimate here can differ by a few dollars from real payroll tables, because employers deduct tax in steps through the year. The calculators also leave out taxable benefits, union dues, pension contributions and provincial employer levies. We haven’t priced those, so check your provincial rules before you budget.
The last one is lateness. The CRA sets the due date by the day you paid staff, not the day the work was done, so a cheque that goes out on the last day of the month still lands in that month’s remittance. Put the 15th in your calendar and treat it like rent day.
Where we got these figures
CPP rates, the $3,500 exemption and the maximums are the 2026 figures from the Canada Revenue Agency, as are the EI rate and maximum. Income tax withholding follows the CRA’s payroll deductions tables. The employer multiple for EI, 1.4, is also a CRA figure. This site is not linked to the CRA or any government, and the results are estimates for planning, not payroll advice.
Frequently asked questions
What payroll deductions does an employer take in Canada?
Income tax, CPP and EI come off each employee's pay. Quebec has its own pension plan and parental insurance.
How much CPP does an employer pay?
The same amount as the employee. In 2026 that's up to $4,230.45 on the first tier and $416 on the second.
How much EI does an employer pay?
1.4 times the employee's premium, up to $1,572.30 in 2026.
Does the employer pay the employee's income tax?
No. You withhold it from pay and send it to the CRA, and it costs you nothing extra.
When do CPP and EI stop?
EI stops at $68,900 of pay. CPP's first tier stops at $74,600 and the second at $85,000.
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