CPP: a pension premium with a ceiling — then a second tier
The Canada Pension Plan contribution is 5.95% of pensionable earnings — gross minus a $3,500 basic exemption — up to the YMPE (year's maximum pensionable earnings), $74,600 in 2026. The 5.95% actually splits in two: 4.95% of base CPP, which generates a non-refundable tax credit, and 1.00% of enhancement, which is deducted from taxable income instead. Maximum for 2026: $4,230.45.
Since 2024 a second tier applies: CPP2, 4.00% on earnings between the YMPE and the YAMPE ($85,000). On a $90,000 salary the engine computes $4,230.45 of regular CPP plus $416.00 of CPP2 — the second line only appears once you cross the YMPE.
EI: small percentage, hard cap
Employment Insurance premiums are 1.63% of insurable earnings, capped at $68,900 a year — a maximum premium of $1,123.07 in 2026 (Quebec residents pay a reduced 1.31% because QPIP replaces part of the benefit — see the Quebec guide). On $65,000 the engine computes $1,059.50; on $90,000 the line stops at the cap ($1,123.07).
| Contribution (2026, ON) | 65,000 $ | 90,000 $ |
|---|---|---|
| CPP (5.95% ≤ YMPE) | $3,659.25 | $4,230.45 |
| CPP2 (4.00% YMPE→YAMPE) | $0.00 | $416.00 |
| EI (1.63% ≤ MIE) | $1,059.50 | $1,123.07 |
What the premiums buy
CPP contributions fund the defined-benefit pension you collect from 60 or 65 — the enhancement years (2019 onward) are gradually raising the replacement rate from about a quarter to a third of career average earnings. EI premiums fund temporary income if you lose your job (regular benefits, typically 55% of insurable earnings up to a weekly cap) plus maternity and parental benefits outside Quebec. Neither is a savings account: both are pay-as-you-go social insurance, which is why the ceilings matter — they cap both what you pay and what the plan can ever owe you.
Where the lines land on your T4
These contributions resurface on the T4 slip: Box 16 for the employee CPP share, Box 18 for EI premiums (and Box 55 for QPIP in Quebec). The payroll totals are what your tax software uses for the credits — a T4 with a wrong Box 16 quietly shrinks your refund, so it is worth a glance in February. CPP2 contributions get their own line starting with the 2024 slips.
The employer half — and the self-employed double
Employers match CPP dollar-for-dollar and pay 1.4 times your EI premium — payroll cost invisible on your stub. Self-employed Canadians pay both CPP shares themselves (11.9% between the exemption and the YMPE), while EI is optional for them. On a $65,000 salary the employer side adds roughly $3,659 of CPP — a reminder that the stub only shows half the contribution.
When the lines stop mid-year
Both premiums reset every January and cap during the year — which is why a high earner's October cheque is larger than their January one. On $90,000, CPP stops after the YMPE and YAMPE are exhausted and EI after $68,900 of insurable earnings; the engine computes the annual totals ($4,646.45 and $1,123.07) but real payroll shows the progression pay period by pay period.
Why these premiums also reduce your tax
The base CPP share and the EI premium earn a non-refundable tax credit at the lowest federal rate, and the enhancement + CPP2 parts are deducted from taxable income directly. So the premiums you see leaving your cheque partly come back at calculation time — another reason the effective payroll cost is lower than the raw rates suggest. Employer matches: CPP is matched dollar-for-dollar, EI is paid at 1.4× by the employer. Rates verified on canada.ca for 2026 (methodology). Try the calculator. Indicative estimate computed with the official parameters in force — not a pay slip, and not tax or legal advice.