First paycheque deductions in Canada: CPP, EI and tax explained (2026)
The offer said $55,000. The first deposit was nowhere near $2,115. That gap is not a mistake; it is a set of payroll deductions your employer must take and send to the Canada Revenue Agency. Once you can read them, the pay stub stops being a mystery and starts being a budgeting tool. Here is each line, the 2026 numbers, and a calculator for your own salary.
On this page
Paycheque deductions calculator (2026, outside Quebec)
CPP and EI on your pay
| For the year | Your total | 2026 maximum |
|---|
Uses the 2026 CRA rates: CPP 5.95% on pensionable earnings above the basic exemption ($3,500 a year, prorated per pay period), up to $4,230.45; CPP2 4% on earnings between $74,600 and $85,000, up to $416; EI 1.63% of insurable earnings up to $68,900, so at most $1,123.07. Assumes a steady salary, age 18 to 69 for the whole year, and no other employer. Quebec uses the QPP and a lower EI rate, so this calculator does not apply there. Income tax is not estimated because it depends on your province and TD1 claims.
CPP and CPP2: your pension contributions
The Canada Pension Plan deduction is a contribution toward your own future CPP pension, and your employer pays the same amount again on top. The 2026 CRA figures:
| 2026 CPP | Amount |
|---|---|
| Rate (employee) | 5.95% |
| Basic exemption | $3,500 a year (for example $134.61 every two weeks) |
| First ceiling (YMPE) | $74,600 |
| Maximum contribution | $4,230.45 |
| CPP2 rate | 4% on earnings from $74,600 to $85,000 |
| CPP2 maximum | $416.00 |
- When it starts. The CRA tells employers to start deducting CPP on the first pay dated in the month after you turn 18.
- When it stops. Deductions stop after the month you turn 70. From 65 to 69, if you already receive a CPP or QPP pension, you can elect to stop with Form CPT30.
- CPP2 only applies above $74,600 of earnings in the year, so most people never see it, and higher earners see it only late in the year.
Employment Insurance
EI premiums fund benefits such as regular EI if you lose your job, and maternity, parental and sickness benefits. For 2026 the rate is $1.63 per $100 of insurable earnings, up to $68,900 of earnings, so the most you pay is $1,123.07. Your employer pays 1.4 times your premium on top. In Quebec, where parental benefits come from the Quebec Parental Insurance Plan, the employee rate is $1.30 per $100. Unlike CPP, EI has no yearly exemption, so it starts with your first dollar of insurable pay.
Income tax and your TD1
Federal and provincial income tax is the biggest deduction for most people, and the one that varies most. Your employer works it out from the payroll tables and the TD1 forms you filled in when you started: the federal TD1 and, for most provinces, a provincial one. Those forms tell payroll which tax credits to apply, such as the basic personal amount.
- Two jobs at once? If both employers apply the basic personal amount, too little tax may be withheld and you can owe at tax time. The TD1 lets you say you have more than one employer.
- Withholding is an estimate. Your real tax is settled when you file your return. A refund means more was withheld than needed; a balance owing means less.
- Even with low income, file. Filing gets you benefits and credits; see our guide on filing taxes on a low income.
Worked example: Sam's first pay
Sam starts a job in Ontario at $55,000 a year, paid every two weeks, so 26 pays.
- Gross pay: $55,000 ÷ 26 = $2,115.38
- CPP exemption per pay: $3,500 ÷ 26 = $134.61
- CPP: ($2,115.38 − $134.61) × 5.95% = $117.86
- EI: $2,115.38 × 1.63% = $34.48
- Left before income tax: $2,115.38 − $117.86 − $34.48 = $1,963.04
Over a full year, Sam pays about $3,064 in CPP, which is ($55,000 − $3,500) × 5.95% = $3,064.25, and $896.50 in EI, which is $55,000 × 1.63%. Neither reaches the 2026 maximum, so the deductions stay the same every pay. Income tax then comes off what is left, based on Sam's TD1. When Sam builds a monthly budget, the number to plan around is the net deposit, not $2,115.
Why your pay goes up later in the year
CPP and EI have yearly maximums. Once you hit them, your employer stops deducting until January. For someone earning $90,000:
- EI reaches its $1,123.07 maximum once insurable earnings pass $68,900.
- CPP reaches its $4,230.45 maximum once earnings pass $74,600.
- CPP2 then takes 4% on the next $10,400 of earnings, $416 in total.
So the last few pays of the year are bigger, and the first pay in January drops again. It is not a raise and it is not a cut. If you change jobs mid-year, the CRA tells employers not to count deductions made by a previous employer, so you may overpay. The CRA calculates any overpayment when you file your return and refunds it.
Other lines on the stub
| Line | What it usually is |
|---|---|
| Group benefits | Your share of health, dental or life insurance premiums |
| Pension plan | Contributions to a workplace pension, if your employer has one |
| Union dues | If you are in a union |
| Taxable benefits | Things like some employer-paid benefits, added to income for tax |
| Vacation pay | Paid each pay or held and paid later, depending on your employer and province |
Ask payroll about anything you do not recognise. It is your money, and a wrong line can repeat every pay.
What people do with the first pay
| Option | Why people pick it | Watch for |
|---|---|---|
| Set up an automatic transfer | Saving happens before spending | Pick an amount you can keep |
| Start an emergency fund | A buffer for surprises | Keep it easy to reach; see our emergency fund guide |
| Check bank account fees | A new deposit can change which plan fits | Monthly fees that eat the difference |
| Open a TFSA or RRSP | Tax-sheltered saving | Know your room first |
These are options to understand, not recommendations. More calculators are on the tools page.
How to check your first paycheque in Canada
- Divide your annual salary by your number of pays to get gross pay per period.
- Work out CPP: subtract the per-period exemption ($3,500 divided by your pays), then multiply by 5.95%.
- Work out EI: multiply gross pay by 1.63%, or 1.30% in Quebec.
- Compare both with your stub, then look at income tax and any other deductions.
- Check that your TD1 forms are right, especially if you have more than one job.
- Expect CPP and EI to stop once you reach the yearly maximums, and to restart in January.
Questions people ask
What comes off a paycheque in Canada?
Usually CPP (or QPP in Quebec), EI and income tax, plus anything you agreed to such as benefits, a workplace pension or union dues.
How much CPP comes off my pay in 2026?
5.95% of your pay above the basic exemption, which is $3,500 a year prorated across your pay periods. The most an employee pays in 2026 is $4,230.45, plus up to $416 of CPP2 on earnings between $74,600 and $85,000.
How much EI comes off my pay in 2026?
Outside Quebec, $1.63 per $100 of insurable earnings, up to $68,900 of earnings, so at most $1,123.07 for the year. In Quebec it is $1.30 per $100.
Why is my first paycheque so much smaller than my salary divided by pays?
CPP, EI and income tax are taken off first, plus any benefits or pension contributions. On a $55,000 salary paid biweekly, CPP and EI alone are $152.34 a pay before tax.
Why did my paycheque go up in November?
You probably hit the yearly maximum for EI or CPP, so your employer stopped deducting them. They restart in January.
I had two jobs this year. Did I overpay CPP or EI?
Possibly. Each employer deducts without counting the other, so you can go over the yearly maximum. The CRA works out any overpayment when you file your return.
When does CPP start coming off my pay?
From the first pay dated in the month after you turn 18. It stops after the month you turn 70.
Looni reads your deposits and bills, shows what is left after fixed costs, and flags fees that quietly eat into each paycheque. Read-only, no advice.
Sources
Canada Revenue Agency, CPP contribution rates, maximums and exemptions (2026 YMPE $74,600, $3,500 exemption, 5.95%, $4,230.45 maximum), Second additional CPP contribution rates and maximums ($85,000 YAMPE, 4%, $416), EI premium rates and maximums, About the deduction of CPP contributions (start after 18, stop after 70) and Stopping CPP contributions (Form CPT30); Employment and Social Development Canada, 2026 EI premium rate ($1.63, $1.30 in Quebec, $68,900 maximum insurable earnings, employer 1.4 times). The example salary is illustrative; the arithmetic is ours.
The EI premiums on your pay stub buy coverage; our EI benefits guide shows what it pays if you are laid off.