Guide
How employer CPP and EI are actually calculated
Updated
The employer side of Canadian payroll is not one percentage: it is three separate calculations stopping at three different points, so a hire's cost does not scale with salary.
Talk to a specialist One salary in, and you have the employer's CPP, CPP2 and EI for 2026, with every rate traceable to CRA.
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How this calculator works
- 2026 rates, employment outside Quebec. Quebec employment is a different calculation. It uses the Quebec Pension Plan rather than CPP, adds the Quebec Parental Insurance Plan, and carries a reduced EI rate (1.30% for employees in 2026, against 1.63% elsewhere). This tool does not model QPP or QPIP and should not be used for a Quebec employee (CRA).
- CPP: the 2026 maximum annual pensionable earnings are $74,600, the basic exemption is $3,500, and maximum contributory earnings are $71,100. The employee and employer contribution rate is 5.95% each, giving a maximum annual employee and employer contribution of $4,230.45 (CRA).
- CPP2: the 2026 additional maximum annual pensionable earnings are $85,000, the employee and employer rate is 4%, and the maximum annual employee and employer contribution is $416. CPP2 applies to earnings above the annual maximum pensionable earnings (CRA).
- EI: the 2026 maximum annual insurable earnings are $68,900 and the employee rate is 1.63%, giving a maximum annual employee premium of $1,123.07. CRA states that "the employer's premium will be 1.4 times this amount", giving a maximum annual employer premium of $1,572.30 (CRA).
- The employer EI figure is computed from the employee premium, not from insurable earnings, because that is how CRA defines it: 1.4 times the employee's premium, after rounding. Computing it as 1.4 times the rate applied to earnings gives a figure that differs by cents from the published maximum.
- Every published maximum reproduces exactly from these inputs, which checks that the tool and the source agree. ($74,600 minus $3,500) x 5.95% = $4,230.45. ($85,000 minus $74,600) x 4% = $416. $68,900 x 1.63% = $1,123.07, and x 1.4 = $1,572.30.
- The rates and ceilings are statutory in structure and announced annually in amount. Schedule 1 of the Canada Pension Plan sets the base rate at 4.95% for employees and employers from 2003 onward. Schedule 2 sets the first additional rate at 1.0% each from 2024, making the 5.95% above, and the second additional rate at 4.0% each from 2024.
- Section 20(2) fixes the Year's Basic Exemption at $3,500 for each year after 1997. Section 18.1(1)(b) sets the additional maximum pensionable earnings at 1.14 times the maximum pensionable earnings for 2025 and later, rounded down to the next multiple of $100. That is how $74,600 produces $85,000 (Canada Pension Plan).
- Not included: vacation pay, statutory holiday pay, benefits, pension contributions, workers compensation premiums, provincial health or payroll levies such as the Employer Health Tax, and any territorial payroll tax. Those vary by province and by employer and are not modelled here, so the figure is the federal statutory floor rather than the full cost of employment.
- The CPP exemption setting covers employees under 18, employees over 70, and employees for whom an election not to contribute is in force. An employer contributes only where the employee does. EI is unaffected by that setting and continues.
- These figures change every January. The date at the top of this page is when the rates were read from CRA, and it is the date they belong to.
CPP: match the employee, exactly
Take the salary, cap it at the maximum pensionable earnings of $74,600 for 2026, subtract the basic exemption of $3,500, and apply 5.95%. That is the employee's contribution and it is also yours: the rates are identical.
At or above the ceiling that gives maximum contributory earnings of $71,100 and a contribution of $4,230.45 on each side, which is exactly the maximum CRA publishes. The full set of 2026 ceilings and maximums is on the 2026 maximums page.
CPP2: a second band, not a second rate on everything
Earnings between $74,600 and the additional maximum of $85,000 attract a further 4%, again matched by the employer. That is a band of $10,400 and a maximum of $416 each side.
It is a band rather than a surcharge on the whole salary, which is the most common misunderstanding. Somebody on $80,000 pays CPP2 on $5,400, not on $80,000.
EI: a multiple of the premium, not of the earnings
Cap the salary at the maximum insurable earnings of $68,900 and apply the 2026 employee rate of 1.63%, which gives a maximum employee premium of $1,123.07.
Then apply the multiplier. CRA states that the employer's premium will be 1.4 times this amount, which gives $1,572.30. Note what is being multiplied: the employee's premium, after rounding, not the earnings.
Applying 1.4 times the rate to the earnings gives a figure that differs by cents from the published maximum. Cents matter when a year-end reconciliation is being checked.
Why the uplift falls as salary rises
All three charges stop. EI stops at $68,900, CPP at $74,600 and CPP2 at $85,000, so above $85,000 the employer's statutory contribution is frozen at $6,218.75 however high the salary goes.
The consequence is that the statutory cost of a junior hire is a much larger share of their pay than that of a senior one. Around the EI ceiling the uplift is close to 7.9%; at $200,000 the same dollars are about 3.1%.
Where the structure comes from
The dollar ceilings are announced each year; the rate structure behind them is statutory. Schedule 1 to the Canada Pension Plan sets the base contribution rate at 4.95% for employees and employers from 2003 onward. Schedule 2 sets the first additional rate at 1.0% each from 2024, and the second additional rate at 4.0% each from 2024.
Section 20(2) fixes the Year's Basic Exemption at $3,500 for each year after 1997. Section 18.1 sets the additional ceiling at 1.14 times the main one for 2025 onward, rounded down to the next multiple of $100. That is why a maximum of $74,600 produces an additional maximum of exactly $85,000.