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Payroll taxes in Canada are the amounts an employer takes off each wage, plus the amounts it adds on top. Take off: income tax, CPP and EI. Add on: a matching CPP payment and EI at 1.4 times what the employee pays. For a $60,000 salary in Ontario, the employer’s own extra bill is about $4,730.95 a year, so the job really costs $64,730.95.
Who pays which payroll taxes?
People use “payroll taxes” for two different piles of money, and mixing them up is how wages and costs get confused. The first pile comes out of the employee’s pay. The second is on top of it and never shows on the stub.
If you run payroll, here’s the rule. Whenever an employer withholds an amount, the CRA says the employer must remit it, together with the employer share of CPP and EI. Every amount held back is treated as held in trust for the government until it is paid. That last point matters. Holding on to withheld money is not like owing a supplier. The CRA’s payroll section covers the whole cycle, from opening a payroll account to remitting and filing slips.
What does an employer pay on top of wages?
Two items in most provinces. The employer matches the employee’s CPP contribution dollar for dollar, including the second band between $74,600 and $85,000. And it pays EI at $2.28 per $100 of insurable earnings, which is the employee rate of $1.63 times 1.4, with a yearly maximum of $1,572.30 per employee. Quebec uses its own parental plan, so the employer rate on EI there is $1.82 per $100 and QPIP comes on top.
| Yearly wage (Ontario) | Employer CPP | Employer EI | Extra cost | Total cost |
|---|---|---|---|---|
| $30,000 | $1,576.75 | $684.60 | $2,261.35 | $32,261.35 |
| $60,000 | $3,361.75 | $1,369.20 | $4,730.95 | $64,730.95 |
| $80,000 | $4,446.45 | $1,572.30 | $6,018.75 | $86,018.75 |
| $100,000 | $4,646.45 | $1,572.30 | $6,218.75 | $106,218.75 |
Ontario employers may also owe the Employer Health Tax. Its rates weren’t confirmed for this page, so check the Ontario government page for the current bands. Workers’ compensation premiums vary by province and industry, and they’re left out as well.
Spread over a year, the $60,000 job adds about $394 a month on top of the wage. That’s the number to keep in mind when you’re working out what a new hire costs.
How much does an employee lose from the same wage?
On $60,000 the employee pays $3,361.75 in CPP, $978.00 in EI and $8,320.50 in income tax (federal and Ontario together). That’s $12,660.25 gone, leaving $47,339.75. So from a $64,730.95 cost, the worker sees $47,339.75 in take-home pay. Your own numbers will differ with province, pension plan and benefits, and the payroll deductions calculator runs them for any pay period.
If an employee asks for a fixed take-home amount, the net to gross calculator works backwards. A $50,000 net pay needs about $64,136 gross in Ontario, according to the engine.
When do payroll taxes stop for the year?
Each has a cap. EI stops at $68,900 of insurable earnings, the main CPP rate at $74,600 and the second CPP band at $85,000. So a high earner’s cost is flat past those lines, apart from income tax. The last column of the table above doesn’t grow much between $80,000 and $100,000, only $200 of CPP.
Hiring late in the year? A $100,000 salary paid from January passes the EI cap in autumn, and one that starts in July won’t reach it at all.
What does a first-time employer need to do?
Before the first paycheque, you need a payroll account with the CRA, and a way to work out each deduction. Then comes the routine: withhold on each pay date, add your share, remit on schedule and file slips after the year ends. Missing even one step gets expensive, because the CRA charges penalties and interest on late remittances. A small shop with one or two employees often hands the job to a payroll service or bookkeeper. Plenty of owners do it themselves with software once they’ve seen how it works.
Common mistakes with payroll taxes
The worst one is treating withheld tax as spare cash. You can’t. It belongs to the CRA from the moment it’s taken. Another is forgetting that bonuses, vacation pay and taxable benefits count as pay too. Our bonus tax calculator shows what a bonus does to the employee’s side.
The CRA decides how often an employer remits by remitter type, based on the average monthly withholding amount. There isn’t one rule to quote, so read the CRA page on when to remit before you set your payroll calendar. Slips also matter. The CRA pages say a T4 goes out for each employee, and the filing date is the last day of February after the year ends.
This page isn’t payroll software. Sole proprietors, contractors and incorporated owners have different rules, and the page on Canada payroll deductions looks at the pay side for ordinary employees.
Our sources
CPP and EI rates and maximums for 2026 are from the Canada Revenue Agency‘s payroll pages and the Employment and Social Development Canada notice on the 2026 EI premium rate. The employer totals come from our own engine, which applies the same rates. Provincial income tax comes from our data file, which we recheck against the CRA payroll tables. Items that couldn’t be confirmed are left out rather than guessed.
Frequently asked questions
What are payroll taxes in Canada?
Income tax, CPP and EI taken from wages, plus the employer's matching CPP and its own EI premium.
How much EI does an employer pay?
For 2026 the rate is $2.28 per $100 of insurable earnings outside Quebec, up to $1,572.30 per employee. In Quebec it is $1.82 per $100.
Does the employer pay the employee's income tax?
No. The employer withholds it from the wage and sends it to the CRA.
What does a $60,000 employee cost in Ontario?
About $64,730.95 a year in our engine, before any Ontario Employer Health Tax, workers' compensation or benefits.
When are payroll remittances due?
It depends on the remitter type the CRA assigns, so check the CRA page on when to remit.
All payroll and salary calculators
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