Payroll Deductions Calculator (2026)
An employer doesn't work out your tax for the year. It works out what to hold back from this one cheque, using CRA's payroll formulas and the TD1 forms you signed. Enter one period's gross pay and this calculator applies the same formulas CRA publishes for pay dates from July 1, 2026, cheque by cheque.
Net pay for the period
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Employer's share for the period
One cheque, treated as a year
The formulas in CRA's guide T4127 take the pay for a single period, subtract the enhanced part of CPP (which is deductible), and multiply by the number of pay periods to estimate a year's taxable income. They work out the year's federal and provincial tax on that estimate, credit the basic personal amount from your TD1 and the CPP and EI you'll pay, then divide back down to one period. CPP comes off at 5.95% of pay above the period's share of the basic exemption, and EI at 1.63%.
A biweekly cheque of $2,500 in Ontario, on the basic TD1 claims, is treated as $64,385.10 of taxable income a year. It loses $242.58 to federal tax, $131.46 to Ontario tax, $140.74 in CPP contributions and $40.75 in EI premiums, leaving $1,944.47. The employer adds its own $140.74 of CPP, an equal match, and $57.05 of EI, which is 1.4 times the employee's premium.
Why three provinces use different rates from July
Payroll tables are issued twice a year, in January and July. Three provinces changed their 2026 tax after January's tables had gone out, so for the second half of the year CRA prorates each change: the July figure is set so that half a year at the old figure and half at the new one averages out to the real 2026 amount.
| Figure | January tables | July tables | 2026 return |
|---|---|---|---|
| B.C. lowest rate | 5.06% | 6.14% | 5.60% |
| B.C. tax reduction | $575 | $805 | $690 |
| N.L. basic personal amount | $11,188 | $15,000 | $13,094 |
| P.E.I. rate over $200,000 | 19% | 21% | 20% |
The July column is a payroll device, not the 2026 rate. Your return applies the right-hand column to the whole year, and the calculator above uses the July column because it is what employers withhold from cheques paid on or after July 1. The figures come from T4127's 123rd edition, effective July 1, 2026, which CRA's own online calculator also uses.
Withholding isn't the same as your tax
Payroll formulas estimate, and the estimate runs high or low for predictable reasons. The prorated tables are one. Take the same $2,500 biweekly cheque: if every cheque of the year were withheld at July's rates, British Columbia would take $3,108 against $2,930 on the return, and Newfoundland and Labrador $5,083 against $5,248. In Ontario, which changed nothing mid-year, the two land within a dollar: $3,418 and $3,419.
The rest of the gap comes from credits payroll can't see. Ontario's low-income workers' credit, the low-income reductions in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island, and Manitoba's family tax benefit are claimed only on the return. So are RRSP deductions not taken at source, other income, and credits not entered on a TD1. A refund or a balance owing in April is usually one of these, not a payroll error. For the year's tax as the return sees it, use the take-home pay calculator; this page stops at what each cheque withholds.
CPP2, and why cheques grow late in the year
CPP stops once the employee has paid the year's maximum of $4,230.45, and EI at $1,123.07, the premium on $68,900 of insurable earnings. Above the first ceiling of $74,600, a second tier, CPP2, takes 4% of pay up to $85,000, at most $416 a year. Whether a cheque carries CPP2, or no CPP or EI at all, depends on what has already been deducted this year, so the calculator asks for those amounts. Leave them out and it treats the cheque as the first of the year.
Coming in January 2027
The federal government announced on April 28, 2026 that the base CPP rate will fall from 9.90% to 9.50% on January 1, 2027, so the employee's and the employer's base shares each drop from 4.95% to 4.75%. The first and second additional contributions don't change. Nothing here applies it yet; the 2026 rates stay in force until the January tables.
What this calculator doesn't do
- Quebec. Quebec income tax is withheld under Revenu Québec's own formulas, with QPP and QPIP in place of CPP. Use the Quebec income tax calculator for the year's tax there.
- Bonuses and other one-off payments. They're taxed by a separate method that compares the year with and without the payment. The bonus tax calculator covers it.
- TD1 defaults. Left blank, the claims are the basic personal amounts, reduced at high incomes as T4127 directs when no TD1 is filed. Enter your TD1 totals for anything else, such as dependants or a disability amount.
- Pay dates before July 1, 2026, and the estimate itself. The results are an estimate for pay dates from July 1 to December 31, 2026, with no taxable benefits, RRSP or union dues deducted at source.
- The last cent. In rare cases where a figure lands on a half-cent, withholding can differ from CRA's PDOC by one cent.
Common questions
How much is deducted from a $2,500 biweekly paycheque in Ontario?
On the basic TD1 claims, $242.58 of federal tax, $131.46 of Ontario tax, $140.74 of CPP and $40.75 of EI, for net pay of $1,944.47, using CRA's formulas for pay dates from July 1, 2026.
Why did B.C. payroll tax go up in July 2026?
British Columbia raised its lowest rate to 5.60% for 2026 after the January payroll tables were issued. To collect the full year's change in the second half, the July tables withhold at a prorated 6.14% on that band. Your 2026 return uses 5.60%.
What does an employer pay on top of payroll deductions?
The employer matches the employee's CPP and CPP2 contributions dollar for dollar, and pays EI premiums of 1.4 times the employee's. All of it is remitted to CRA with the tax withheld.