Two deductions confuse Canadians more than any others, mostly because they behave unlike tax: CPP and EI are charged from your first paycheque, then — for many people — they simply stop partway through the year. Here is exactly how each works in 2026, why your autumn paycheques are bigger than your spring ones, and what changed with CPP2.

CPP: a pension you fund with every cheque

The Canada Pension Plan is a mandatory, earnings-based pension. In 2026 employees contribute 5.95% of pensionable earnings — earnings between the $3,500 basic exemption and the $74,600 Year’s Maximum Pensionable Earnings (YMPE). The maximum employee contribution is $4,230.45, and your employer matches every dollar. That 5.95% has two parts: a 4.95% “base” rate that has existed for decades (it earns you a non-refundable tax credit) and a 1.00% “first additional” rate from the CPP enhancement (it is a tax deduction instead). Self-employed Canadians pay both halves: 11.90%.

CPP2: the second tier most people have not heard of

Since 2024 there is a second ceiling, the YAMPE — $85,000 in 2026. Earnings between $74,600 and $85,000 are charged an extra 4% (maximum $416), matched by the employer. CPP2 exists to fund the enhanced benefit for higher earners under the CPP expansion; if you earn under $74,600 you never pay it, which is why the worked example on our CPP & EI calculator page shows CPP2 of $0 at a $70,000 salary but $416 at $90,000.

Why deductions stop mid-year

Employers deduct per pay period but must stop when your year-to-date contributions reach the maximum. At a $100,000 salary you hit the $4,646.45 combined CPP/CPP2 maximum around October — from then until January, that money is in your cheque instead. EI behaves the same way: at higher salaries the $1,123.07 maximum is reached even earlier. New job mid-year? Each employer starts fresh, so you will likely overpay — the excess CPP is refunded on your tax return and EI overpayments are refunded through the return as well.

EI: insurance, with a hard cap

Employment Insurance funds regular benefits (job loss) and special benefits (parental, sickness, caregiving). The 2026 employee premium is 1.63% of insurable earnings up to the $68,900 Maximum Insurable Earnings — a maximum premium of $1,123.07. Your employer pays 1.4 times your premium. Unlike CPP there is no exemption: EI is charged from the first dollar. EI premiums are a non-refundable credit at the lowest federal and provincial rates. What surprises many people: EI is not a savings account. Years of premiums with no claim buy you insurance coverage for that year, not a balance.

Quebec: QPP, lower EI, and QPIP

Quebec runs its own pension plan, the QPP, at 6.30% on the same $3,500–$74,600 band (maximum $4,479.30), plus QPP2 at the same 4%/$416 tier. Because Quebec also runs its own parental plan, federal EI is cheaper there: 1.30%, maximum $895.70. The difference is made up by QPIP — the Quebec Parental Insurance Plan — at 0.430% of earnings up to $103,000 (maximum $442.90), which funds Quebec’s more generous parental benefits. Total payroll deductions in Quebec are therefore a little higher than in the rest of Canada at the same salary, and Quebec workers also file a separate provincial return and receive a 16.5% abatement of federal tax.

What you get for it

CPP contributions build a real, inflation-indexed pension payable from age 60 (reduced) or 70 (increased), plus disability and survivor benefits — the enhancement means post-2019 contributions buy a noticeably larger benefit (the plan is moving from replacing 25% of earnings toward 33.33%). EI premiums buy up to roughly 45 weeks of regular benefits at 55% of insurable earnings if you lose your job through no fault of your own, and access to special benefits everyone hopes not to need. They are deductions, yes — but they are also the two most universal pieces of social insurance in the country.