How federal tax, provincial tax, CPP and EI come off Canadian pay in 2026

Guide · Updated 2026-11-10

Follow a 2026 salary from gross to take-home: tax brackets, non-refundable credits, CPP, CPP2 and EI, and what an RRSP deduction is really worth.

Open the Canada tax Free, in your browser, nothing uploaded.

A Canadian payslip has at least four lines taken off before the money reaches you: federal income tax, provincial or territorial income tax, Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums. The Canada tax calculator works all four out for the 2026 tax year, for every province and territory, and shows the take-home pay a year, a month and every two weeks. It suits anyone comparing job offers, thinking about a move between provinces or wondering what an RRSP contribution saves. To decide where the saving should go next, compare accounts with the RRSP or TFSA tool or the FHSA, and then share out the take-home pay with the budget planner.

What it is

Canada taxes income twice, once federally and once by your province or territory, and each level uses brackets: slices of income taxed at rising rates. In 2026 the first federal slice, up to $58,523, is taxed at 14%, the next at 20.5%, and so on up to 33%.

Tax is not charged on your whole income at the top rate. It is built in three steps:

1. Taxable income = employment income + other income − RRSP deduction − the enhanced part of CPP (the extra 1% and CPP2).
2. Bracket tax: each slice of taxable income times its rate, added up.
3. Credits: some amounts are not deducted from income but turned into a credit at the lowest rate. Federally these are the basic personal amount ($16,452 for most people), the Canada employment amount ($1,501), the base part of CPP and your EI premiums. Credit = 14% × their total. The province does the same with its own basic amount and lowest rate.

Payroll contributions are separate:

• CPP = 5.95% × (pay up to $74,600 − $3,500).
• CPP2 = 4% × pay between $74,600 and $85,000.
• EI = 1.63% × pay up to $68,900.

Quebec uses QPP, a lower EI rate, QPIP and its own tax system, and Ontario adds a surtax and the Health Premium. The tool handles each of these.

How to use it

1. Pick the province or territory you lived in on 31 December 2026. Ontario is selected at first.
2. Type your employment income for the year: salary, wages and bonuses before deductions.
3. Type any other income, such as interest, rental profit or a pension. It is taxed, but no CPP or EI is charged on it.
4. Type the RRSP deduction you plan to claim, if any.
5. Read the four boxes at the top: take-home a year, a month, every two weeks, and your marginal and average rates.
6. Look at the bar and its key to see what share of every dollar goes to each item, then use the table for each amount a year and a month. A warning note appears when a figure is an estimate.

A worked example

Daniel lives in Alberta and earns $85,000 in salary. He has no other income.

Payroll first. CPP = 5.95% × ($74,600 − $3,500) = 5.95% × $71,100 = $4,230.45. CPP2 = 4% × ($85,000 − $74,600) = 4% × $10,400 = $416.00. EI = 1.63% × $68,900 = $1,123.07.

Taxable income. The enhanced CPP part is 1% × $71,100 = $711, plus the $416 CPP2. Taxable income = $85,000 − $711 − $416 = $83,873.

Federal tax. Bracket tax = 14% × $58,523 + 20.5% × $25,350 = $8,193.22 + $5,196.75 = $13,389.97. Credits: $16,452 + $1,501 + $3,519.45 (base CPP, 4.95% × $71,100) + $1,123.07 = $22,595.52, times 14% = $3,163.37. Federal tax = $10,226.60.

Alberta tax. Bracket tax = 8% × $61,200 + 10% × $22,673 = $4,896.00 + $2,267.30 = $7,163.30. Credits: ($22,769 + $3,519.45 + $1,123.07) × 8% = $2,192.92. Alberta tax = $4,970.38.

Take-home = $85,000 − $10,226.60 − $4,970.38 − $4,230.45 − $416.00 − $1,123.07 = $64,033.50 a year, about $5,336 a month. His marginal rate is 30.5% (20.5% federal + 10% Alberta).

Now Daniel puts $5,000 into an RRSP and types it in. His income tax falls by $1,525.00 (30.5% of $5,000), and the take-home figure rises to $65,558.50. Keep in mind that the $5,000 itself is now in the RRSP, so the real cost of saving it was $3,475.

Where it is used

• Comparing job offers, especially between provinces: the same salary leaves different take-home pay in Alberta, Ontario and Quebec.
• Planning a move: newcomers and people relocating can see the effect of a new province before they sign a lease.
• Pricing a raise: the marginal rate shows how much of the next $100 you keep.
• RRSP planning: try different deductions and watch the income tax line fall.
• Freelancers with a side salary: put the extra profit into other income to see the added tax (self-employed CPP is not covered).
• Classes on public finance, to show how brackets and credits work together.

Common mistakes

• Thinking a raise can lower your take-home pay. Only the slice above a bracket line pays the higher rate, so more pay always leaves more after income tax.
• Choosing the province you work in instead of the one you live in. The province of residence on 31 December decides your provincial tax.
• Putting self-employment income in the employment box. Employment income triggers employee CPP and EI. The tool does not work out the self-employed share.
• Taking the result as your exact refund. Credits for tuition, medical costs, donations and dependants are left out, so your return can differ. Check the official source.
• Counting RRSP money twice. Take-home pay rises with an RRSP deduction, but the contribution itself still has to come out of your bank account.

Questions people ask

Why does my CPP stop rising late in the year? Contributions stop once your pay for the year passes the ceiling, so December pay can be larger than January pay.

Is CPP2 a tax? No. It is a pension contribution that raises your future CPP. It is also deductible, which is why it lowers taxable income in the example.

Why is my average rate so much lower than my marginal rate? The average spreads all your income tax over every dollar, including the low first slices and the credits. The marginal rate is the rate on the next dollar only.

Is this tax advice? No. It is general education based on the 2026 rates the tool uses. Rates and credits change each year; check the official source (canada.ca or Revenu Québec) or a tax professional.