Question 1

How do I calculate CPP and EI deductions for a Canadian employee?

Accepted Answer

To calculate CPP, multiply pensionable earnings (gross pay minus the $3,500 basic exemption, annualized) by 5.95% up to the 2025 YMPE of $71,300. For EI, multiply insurable earnings by 1.66% up to the annual maximum of $65,700. Both have annual maximums — CPP max is $4,034.10 and EI max is $1,090.62 for 2025. Our payroll deductions calculator handles all of this automatically by province.

Question 2

What is CPP2 and who pays it?

Accepted Answer

CPP2 is the second additional Canada Pension Plan contribution introduced in 2024. Employees pay 4% on earnings between the Year's Maximum Pensionable Earnings ($71,300) and the Year's Additional Maximum Pensionable Earnings ($81,200) for 2025. Employers match the CPP2 contribution. Quebec residents pay QPP instead of CPP and are not subject to CPP2.

Question 3

Is this payroll calculator accurate for Quebec employees?

Accepted Answer

Yes. The calculator uses Quebec-specific rates: QPP (Quebec Pension Plan) at 6.4% instead of CPP, QPIP (Quebec Parental Insurance Plan) at 0.494%, and Quebec provincial income tax brackets. For authoritative payroll calculations, verify results with the CRA Payroll Deductions Online Calculator (PDOC) or Revenu Québec WebRAS.

Canadian Payroll Deductions Calculator

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