Guide
What this calculator leaves out of the cost of a hire
Updated
The figure above is the federal statutory contribution, not the cost of employing somebody. Knowing the gap is the difference between a budget that holds and one that does not.
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.
Vacation and statutory holiday pay
Employment standards in every province require vacation pay, and for many employees it is expressed as a percentage of wages rather than as time already inside the salary.
Where that is how it works, it is a real addition to the cost. It is set by provincial employment standards rather than federally, so check it for the province of employment.
Workers compensation
Premiums are set by the provincial board, by industry classification and by the employer's own claims experience. In a low-risk office classification they are modest; in construction or transport they are not.
Nothing about them is federal or predictable from a salary, which is why no figure for them appears anywhere on this site.
Provincial health and payroll levies
Several provinces levy an employer payroll tax, usually with a threshold below which small employers pay nothing and a rate that applies above it.
Whether one applies depends on the province and your total payroll, not on any individual salary. So it is a question to answer once for the business rather than per hire.
Benefits, pension and everything discretionary
Health and dental coverage, a group retirement plan, life and disability insurance, and any employer pension match. All optional in law, all real in a budget, and all set by you rather than by a rate table.
Add them to the figure above rather than assuming any of them is inside it.
The honest way to use the number
Treat the calculator's output as the federal statutory floor: the amount you cannot avoid and can compute exactly.
Then add the provincial and discretionary layers on top, from your own province's rules and your own benefits decisions. That order produces a defensible budget; starting from a rule of thumb percentage does not.