What deductions come off my paycheque in Canada?

Mandatory deductions include federal income tax, provincial income tax, CPP contributions (5.95% of pensionable earnings up to $73,200 in 2026), CPP2 (4% on earnings $73,200–$81,200), and EI premiums (1.64% up to $65,700 insurable earnings). Optional deductions may include pension plan contributions, group benefits, union dues, RRSP contributions, and parking.

How much CPP and EI will be deducted from my pay in 2026?

For 2026: CPP1 maximum employee contribution is approximately $4,034 (5.95% on earnings $3,500–$73,200). CPP2 maximum is approximately $320 (4% on earnings $73,200–$81,200). EI maximum employee premium is approximately $1,077 (1.64% on earnings up to $65,700). Combined maximum: ~$5,431/year for CPP+EI.

Why is my net pay so much less than my gross pay?

Statutory deductions (income tax, CPP, EI) typically take 25–35% of gross pay for middle-income earners. At $60,000 salary, expect ~$12,000–$15,000 in income tax and ~$4,500 in CPP/EI, leaving roughly $40,000–$43,000 net. Additional voluntary deductions (pension, benefits, parking) reduce it further.

How to Read Your Pay Stub in Canada in 2026

Anatomy of a Canadian Pay Stub

Section	What It Shows	Where to Find It
Gross pay	Total earnings before deductions	Top of stub
Earnings breakdown	Regular hours, overtime, vacation, bonuses	Earnings section
Statutory deductions	Income tax, CPP, EI	Deductions section
Voluntary deductions	Pension, benefits, RRSP, union dues	Deductions section
Net pay	Amount deposited to your bank	Bottom of stub
Year-to-date (YTD)	Cumulative totals for the year	Right column

Common Pay Stub Codes

Code	Meaning	Type
REG / REG HRS	Regular hours/pay	Earnings
OT / OT 1.5	Overtime at 1.5x rate	Earnings
STAT / STAT HOL	Statutory holiday pay	Earnings
VAC / VAC PAY	Vacation pay	Earnings
SICK	Sick leave pay	Earnings
BON / BONUS	Bonus payment	Earnings
RETRO	Retroactive pay adjustment	Earnings
FIT / FED TAX	Federal income tax	Deduction
PIT / PROV TAX	Provincial income tax	Deduction
CPP / QPP	Canada/Quebec Pension Plan	Deduction
CPP2	Second additional CPP contribution	Deduction
EI / QPIP	Employment Insurance / Quebec Parental Insurance	Deduction
PEN / RPP	Registered Pension Plan contribution	Deduction
RRSP	RRSP contribution (payroll deduction)	Deduction
GRP INS / BEN	Group insurance / benefits	Deduction
UNION	Union dues	Deduction
LTD / STD	Long-term / short-term disability premium	Deduction
PARK	Parking deduction	Deduction
GARN	Garnishment (court-ordered)	Deduction

Statutory Deductions Explained (2026)

Deduction	Rate	Applied On	Annual Max	Notes
Federal income tax	15–33%	Taxable income	No cap	Progressive brackets
Provincial income tax	4–25.75%	Taxable income	No cap	Varies by province
CPP (base)	5.95% (employee)	Earnings $3,500–$73,200	~$4,034	Employer matches
CPP2	4% (employee)	Earnings $73,200–$81,200	~$320	Employer matches
EI	1.64% (employee)	Earnings up to $65,700	~$1,077	Employer pays 1.4×
QPP (Quebec)	6.40% (employee)	Similar to CPP	~$4,640	Higher rate than CPP
QPIP (Quebec)	0.494%	Insurable earnings	~$450	Quebec parental insurance

Sample Pay Stub: $70,000 Salary (Biweekly, Ontario)

Line	Amount
Earnings
Regular pay (80 hours)	$2,692.31
Deductions
Federal income tax	−$297.45
Ontario income tax	−$148.20
CPP (base)	−$155.19
CPP2	−$0.00*
EI	−$44.15
Group benefits (dental, health)	−$45.00
Pension plan (5% match)	−$134.62
Total deductions	−$824.61
Net pay (deposited)	$1,867.70

CPP2 applies only after CPP base max reached (later in the year).

Annual Summary at $70,000

Item	Annual Amount	% of Gross
Gross pay	$70,000	100%
Federal tax	~$7,735	11.0%
Provincial tax (ON)	~$3,853	5.5%
CPP	~$3,955	5.7%
EI	~$1,020	1.5%
Benefits	~$1,170	1.7%
Net pay	~$52,267	74.7%

Net Pay by Salary Level (Ontario, 2026)

Gross Salary	Federal Tax	Provincial Tax	CPP + EI	Net Pay	Effective Tax Rate
$40,000	$3,340	$1,487	$3,275	$31,898	20.3%
$50,000	$4,840	$2,237	$3,830	$39,093	21.8%
$60,000	$6,340	$3,037	$4,440	$46,183	23.0%
$70,000	$7,735	$3,853	$4,975	$53,437	23.7%
$80,000	$9,335	$4,703	$5,035	$60,927	23.8%
$100,000	$13,035	$6,603	$5,131	$75,231	24.8%
$120,000	$17,235	$8,683	$5,131	$88,951	25.9%
$150,000	$23,685	$11,953	$5,131	$109,231	27.2%

How to Verify Your Deductions

Check	How	If Wrong
Compare to CRA payroll calculator	Use CRA’s online payroll deductions calculator	Ask payroll department
Verify income tax (TD1 form)	Ensure correct TD1 filed (claim amounts)	File new TD1 with employer
Check CPP hitting max	Should stop mid-year for high earners	Will be refunded on tax return if overpaid
Check EI hitting max	Should stop after ~$65,700 insurable earnings	Will be refunded on tax return
Match T4 to pay stubs	YTD totals should match T4 boxes	Contact employer before filing