CPP and EI Deductions Explained
2026 CPP, CPP2 and EI rates and maximums, the employer share, who pays and who does not, and how overpayments come back.
The short version
- CPP 2026: 5.95% of earnings between $3,500 and $74,600, up to $4,230.45. Your employer pays the same again.
- CPP2 2026: 4% of earnings between $74,600 and $85,000, up to $416.00. Employer matches it too.
- EI 2026: 1.63% of insurable earnings up to $68,900, up to $1,123.07. Your employer pays 1.4 times that.
- Self-employed people pay both halves of CPP and CPP2 (11.9% and 8%) and no EI unless they opt in.
- Two jobs in a year? Each employer deducts in full; any overpayment comes back on your return.
CPP and EI Deductions Explained
CPP and EI are the two deductions people grumble about least and understand least. They aren't income tax; they're insurance premiums. CPP buys you a pension and disability coverage, EI buys you income if you're laid off or on parental leave. The rates are fixed, the maximums are low enough that high earners hit them by summer, and every dollar you overpay comes back. Here's how they work.
2026 Rates and Maximums
| Rate (employee) | Earnings range | Employee maximum | Employer pays | |
|---|---|---|---|---|
| CPP (base + first enhancement) | 5.95% | $3,500 to $74,600 | $4,230.45 | Same |
| CPP2 (second enhancement) | 4% | $74,600 to $85,000 | $416.00 | Same |
| EI | 1.63% | Up to $68,900 | $1,123.07 | 1.4 times (about $1,572) |
Outside Quebec. Quebec has QPP and a lower EI rate plus QPIP, which we don't cover. See your own per-pay amounts in the salary tax calculator, and how it all fits on a pay stub on paycheque deductions.
Think you overpaid CPP or EI?
Give the assistant each T4's boxes 14, 16, 16A, 18, 24 and 26. It checks whether you overpaid, and how much should come back on your return.
How They Reduce Your Income Tax
- Base CPP (4.95% of the 5.95%) and EI give a non-refundable credit at the lowest federal rate.
- The enhanced parts (the other 1% and all of CPP2) are a deduction from income, which is worth more at higher incomes.
- Self-employed: the employer half is also deducted; see how self-employment tax works and the self-employed tax calculator.
Who Pays, and Who Doesn't
| Situation | CPP | EI |
|---|---|---|
| Under 18 | No | Yes |
| 18 to 64 | Yes (even if already receiving CPP) | Yes |
| 65 to 69, receiving CPP | Yes, unless you elect to stop (form CPT30) | Yes |
| 70 and over | No | Yes |
| Self-employed | Both halves | Only if you opt in for special benefits |
| Severance or retiring allowance | No | No |
| Owner of more than 40% of the voting shares of the employer | Yes | Generally no |
Retiring allowances are covered on severance pay tax. Working while collecting CPP builds a post-retirement benefit; see is CPP taxable?
Overpayments Come Back
- Two or more jobs: each employer deducts up to the maximum. Tax software compares the totals with the maximum and refunds the excess CPP and EI on your return.
- Low insurable earnings: if your insurable earnings were $2,000 or less, EI premiums are refunded.
- Your employer can't refund it mid-year once deducted; it comes through your return.
Business owners paying family: see paying your spouse and paying your children.
CPP and EI Questions
What are the CPP rates for 2026?
5.95% for employees on earnings between $3,500 and $74,600, a maximum of $4,230.45, plus CPP2 of 4% on earnings between $74,600 and $85,000, a maximum of $416. Employers pay the same amounts. Self-employed people pay both halves.
What is the EI rate for 2026?
1.63% of insurable earnings up to $68,900, for a maximum employee premium of $1,123.07 outside Quebec. Employers pay 1.4 times the employee premium.
Do I get CPP or EI back if I had two jobs?
Yes. If the total deducted by your employers is more than the yearly maximum, the excess is refunded when you file your return.
Do I pay CPP after 65?
Yes, if you work and are under 70, unless you are 65 to 69, receiving CPP, and elect to stop contributing with form CPT30. Contributions stop at 70.
Is CPP or EI deducted from severance pay?
No. A retiring allowance, which includes most severance, is not pensionable or insurable, so only income tax is withheld.
What is CPP2?
A second tier of CPP contributions on earnings between the yearly maximum pensionable earnings ($74,600 for 2026) and a second ceiling ($85,000). Employees pay 4% on that slice, matched by the employer; self-employed people pay 8%. It raises the CPP pension you’ll get.
Sources: CRA, CPP contribution rates and maximums; T4127 Payroll Deductions Formulas, January 2026. Checked October 2026. The 40% shareholder EI rule depends on the facts; CRA can rule on insurability. The $2,000 EI refund threshold is as we understand CRA's rule.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.