Canadian payroll deductions calculator

Every payroll deduction has a second half you never see

Your payslip shows income tax, CPP and EI coming out of your pay. It does not show that your employer paid CPP again, and EI at 1.4 times what you paid, on the same earnings.

On $85,000 in Ontario, side by side:

Income tax — $15,011 from you, nothing from the employer. Withholding only; the employer remits it but does not fund it.

CPP — $4,646.45 from you, $4,646.45 from the employer. Matched exactly, dollar for dollar, CPP2 included.

EI — $1,123.07 from you, $1,572.30 from the employer. The 1.4 multiplier is in the legislation, not a rounding: employment insurance is drawn by workers and funded mainly by those who hire them.

So the employer puts $6,219 on top of your $85,000. You cost $91,219 — 7.3% more than your salary — before a desk, a laptop or a benefits plan.

And that surcharge shrinks as the salary grows

CPP and EI both stop at a ceiling, so the employer's share stops with them. As a percentage of pay it falls away sharply:

$45,000 — the employer adds $3,496, or 7.8%.

$85,000 — $6,219, or 7.3%.

$200,000 — $6,219, or 3.1% — the same dollars as at $85,000, because both ceilings were passed long before.

That is worth knowing on both sides of a hiring conversation. Two junior hires at $45,000 cost their employer $774 more in payroll contributions than one senior hire at $200,000, on a smaller wage bill. It is a real cost difference that never appears in a salary band.

The week your take-home goes up

Because the ceilings are annual and the deductions are per pay period, contributions simply stop part-way through the year for anyone paid above the maximums — and net pay jumps for the rest of it, with no raise and no explanation on the payslip.

CPP stops once you have contributed $4,230.45 on earnings up to $74,600. EI stops at $1,123.07 on insurable earnings up to $68,900. CPP2 then runs on the slice between $74,600 and $85,000 and stops too.

The paycheque calculator works out which pay period that happens in for your salary and pay frequency. It is the single most common "is my payroll broken?" question, and the answer is almost always no.

What is deliberately not in the employer figure

Four provinces levy a payroll tax on employers over and above CPP and EI, each with its own name, its own rate and its own exemption threshold: Ontario's Employer Health Tax, British Columbia's employer health tax, Manitoba's Health and Post-Secondary Education Tax Levy, and Newfoundland and Labrador's Health and Post-Secondary Education Tax.

None is applied here, because each is set by its province rather than the CRA and none has been read for this page. For a small employer under the exemption threshold the figure above is the whole payroll cost; for a large one it is not, and the gap is a provincial matter.

Quebec adds employer contributions of its own, including the employer half of QPIP, administered by Revenu Québec. Also not included, for the same reason.

Where these figures come from

Read off the CRA's own documents, with the date each was read:

CRA — T4127 Payroll Deductions Formulas, 122nd edition (the bonus method, and the $5,000 note on annual taxable income) — read 2026-09-08. https://www.canada.ca/en/revenue-agency/services/forms-publications/payroll/t4127-payroll-deductions-formulas/t4127-jan/t4127-jan-payroll-deductions-formulas-computer-programs.html

CRA — T4127 Payroll Deductions Formulas, 123rd edition (the CPP base rate cut announced for 1 January 2027) — read 2026-09-08. https://www.canada.ca/en/revenue-agency/services/forms-publications/payroll/t4127-payroll-deductions-formulas/t4127-jul/t4127-jul-payroll-deductions-formulas.html

CRA — CPP contribution rates, maximums and exemptions (the self-employed rate and maximum) — read 2026-09-08. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/canada-pension-plan-cpp/cpp-contribution-rates-maximums-exemptions.html

CRA — Second additional CPP contribution (CPP2) rates and maximums — read 2026-09-08. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/calculating-deductions/making-deductions/second-additional-cpp-contribution-rates-maximums.html

CRA — EI premium rates and maximums, including the 1.4 employer multiplier — read 2026-09-08. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/employment-insurance-ei/ei-premium-rates-maximums.html

CRA — The Canada Pension Plan enhancement: what it means for the self-employed (the credit and deduction split) — read 2026-09-08. https://www.canada.ca/en/revenue-agency/news/2023/05/the-canada-pension-plan-enhancement--businesses-individuals-and-self-employed-what-it-means-for-you.html

Service Canada — EI special benefits for self-employed people: premiums — read 2026-09-08. https://www.canada.ca/en/services/benefits/ei/ei-self-employed-workers/premiums.html

And what is not covered:

— Business expenses are not deducted. A self-employed figure here is tax on net income after expenses, so enter what is left once your costs are out — not what you invoiced.

— Employer payroll taxes beyond CPP and EI are not included. Ontario's Employer Health Tax, British Columbia's employer health tax, Manitoba's Health and Post-Secondary Education Tax and Newfoundland's payroll tax all fall on the employer above their own thresholds, and each is set by its province.

— Quebec's employer QPIP contribution and its other employer contributions are not included in the employer cost, because Revenu Québec publishes them separately and they have not been read here.

— The bonus figure is the withholding your employer takes, which is the CRA method. It is not necessarily your final tax on that bonus: that is settled on your return, where every credit you are entitled to applies.

— GST/HST on self-employment income is not modelled. Registration is required once revenue passes $30,000 in four consecutive quarters, and the tax is collected from clients rather than paid out of income.

Questions

How much does an employee actually cost an employer in Canada?

Salary plus 7.3% at $85,000 in Ontario — $91,219 in total. The employer matches CPP dollar for dollar and pays EI at 1.4 times the employee rate, which comes to $6,219 on top of the wage. Provincial employer payroll taxes are extra where they apply.

Does my employer pay the same EI as me?

No — more. The employer rate is 1.4 times yours, capped at $1,572.30 for 2026 ($1,253.98 in Quebec). CPP is the one that is matched exactly.

Why did my take-home pay go up mid-year without a raise?

Your CPP or EI contributions reached their annual ceilings. Both are capped for the year, so once you have paid the maximum, the deduction stops and the rest of your pay comes with income tax only. The paycheque calculator says which pay period that falls in.

What are the total payroll deductions on $85,000?

$20,781 from the employee — $15,011 income tax, $4,646.45 CPP and $1,123.07 EI — leaving $64,219. The employer separately pays $6,219.

Do employers pay income tax on wages?

No. Income tax is entirely the employee's; the employer withholds and remits it but does not fund any of it. What employers fund is CPP, EI, and in four provinces a payroll tax of the province's own.