Understanding CPP and EI Deductions for Ontario Employees in 2026

Every Ontario employee sees two mandatory deductions on every paycheque — CPP and EI. For many workers, especially newcomers to Canada or those entering the workforce for the first time, these deductions are confusing. Where does this money go? How much will be deducted? And most importantly — what do you get in return?

This guide answers all those questions clearly, with real 2026 numbers for Ontario employees.

Canada Pension Plan (CPP) — 2026 Numbers

The Canada Pension Plan is a mandatory retirement savings program administered by the federal government. All employed Canadians between the ages of 18 and 70 must contribute (with very few exceptions).

CPP Contribution Rates for 2026

For most Ontario employees earning between $45,000 and $71,300, your CPP deduction is 5.95% of your earnings above $3,500. So on a $60,000 salary: ($60,000 - $3,500) × 5.95% = $3,362 per year, or approximately $280 per month.

What Does CPP Give You?

Your CPP contributions build your retirement pension, which you can start collecting as early as age 60 (at a reduced amount) or as late as age 70 (at an enhanced amount). The maximum CPP retirement pension in 2026 for someone who contributed the maximum for 39+ years is approximately $1,433 per month. The average CPP payment is lower — around $758 per month — because most Canadians did not contribute the maximum every year.

CPP also provides disability benefits if you become severely disabled before retirement, and survivor benefits for your spouse and children if you pass away. These protections make CPP contributions extremely valuable — especially for employees without workplace pension plans.

Employment Insurance (EI) — 2026 Numbers

Employment Insurance is a federal program that provides temporary income replacement for Canadians who lose their jobs through no fault of their own, take parental or maternity leave, or are seriously ill.

EI Premium Rates for 2026

On a $60,000 salary, your EI deduction is $60,000 × 1.66% = $996 per year, or approximately $83 per month. Once your income exceeds $63,200, EI deductions stop for the rest of that calendar year.

What Does EI Give You?

If you lose your job through layoff or shortage of work (not if you quit or are fired for misconduct), you may be eligible for regular EI benefits worth 55% of your average insurable weekly earnings, up to a maximum of $695 per week in 2026. To qualify, you generally need 420 to 700 hours of insurable employment in the past 52 weeks depending on the unemployment rate in your region.

EI also covers: Maternity benefits (15 weeks at 55%), Parental benefits (up to 40 weeks standard or 69 weeks extended), Sickness benefits (up to 26 weeks), Compassionate care benefits, and Family caregiver benefits. For Kitchener-Waterloo families, EI parental benefits are particularly valuable — a parent earning $75,000 can receive up to $695 per week while on parental leave.

CPP and EI for Self-Employed Ontarians

If you are self-employed in Ontario — including freelancers, contractors, and small business owners — CPP and EI work differently. Self-employed individuals must pay both the employee AND employer portion of CPP, which means 11.90% on net self-employment earnings (plus the CPP2 enhancement). This is a significant cost that many new self-employed Ontarians underestimate when setting their rates.

EI for self-employed Canadians is optional but available. You can opt in voluntarily to access special benefits (maternity, parental, sickness, compassionate care) but you cannot access regular employment benefits if your business slows down.

Frequently Asked Questions