Payroll Deductions Calculator

Canadian Payroll Deductions — 2025 Guide

Every Canadian employee has several mandatory deductions taken off each paycheque: federal and provincial income tax, CPP (or QPP in Quebec), and EI premiums. Understanding what's being deducted and why helps you plan your finances and verify your pay stub is correct.

How Income Tax Withholding Works

Your employer uses your TD1 form (federal) and TD1 provincial form to estimate how much tax to withhold each pay period. The withholding is designed so that your total deductions for the year approximately equal your actual tax owing. If too much is withheld, you get a refund; too little means you owe at tax time.

CPP Contributions in 2025

Employees contribute 5.95% of earnings between $3,500 and $71,300 — up to $4,034. Employers match this amount. CPP2 applies to earnings between $71,300 and $81,900 at 4%, adding up to $424. Quebec employees contribute to QPP (6.40%) instead of CPP, with their employer also matching.

EI Premiums in 2025

EI premiums are 1.049% of insurable earnings up to $65,700 — maximum $689/year. Employers pay 1.4× the employee rate. Quebec residents have a lower EI rate (0.882%) because the Quebec Parental Insurance Plan (QPIP) covers parental benefits separately.

RRSP Contributions Reduce Your Tax

If your employer offers a group RRSP or pension plan (RPP), contributions are deducted before tax is calculated — immediately reducing your taxable income. This is one of the most tax-efficient ways to save, as you effectively receive an instant tax refund through reduced withholding.

Calculations use 2025 federal and provincial tax brackets, CPP/QPP and EI rates. Ontario surtax not included. Quebec abatement included via lower federal rate adjustment. Actual withholding may vary based on other credits and circumstances. Not tax advice.