What changed in Canadian payroll for 2026 (and what is known for 2027)
The 2026 CPP, CPP2, EI, QPP and QPIP maximums, the new 14% federal rate, the July 2026 provincial changes, and the CPP rate cut and EI figures already set for 2027.
7 min read · October 24, 2026
The 2026 numbers
| Item | 2026 | 2025 |
|---|---|---|
| CPP maximum pensionable earnings (YMPE) | $74,600 | $71,300 |
| CPP basic exemption | $3,500 | $3,500 |
| CPP rate, employee and employer each | 5.95% | 5.95% |
| CPP employee maximum | $4,230.45 | $4,034.10 |
| CPP2 ceiling (YAMPE) | $85,000 | $81,200 |
| CPP2 rate and employee maximum | 4%; $416.00 | 4%; $396.00 |
| EI maximum insurable earnings | $68,900 | $65,700 |
| EI employee rate and maximum | 1.63%; $1,123.07 | 1.64%; $1,077.48 |
| EI employer maximum (1.4 times) | $1,572.30 | $1,508.47 |
| EI in Quebec, employee | 1.30%; $895.70 | 1.31%; $860.67 |
Self-employed people pay both halves of CPP, up to $8,460.90 for 2026. CPP2 applies to earnings between the YMPE and the YAMPE, so an employee earning $85,000 or more pays the full $416, matched by the employer.
Income tax: the 14% rate and indexation
- Lowest federal rate: 14%. It was cut from 15% part way through 2025 (payroll used a prorated rate from July 2025). For 2026 and later years it is a flat 14% in the CRA's payroll formulas.
- Brackets indexed by 2.0%. For 2026 the federal rates are 14% up to $58,523, 20.5% to $117,045, 26% to $181,440, 29% to $258,482, and 33% above.
- Basic personal amount: $16,452 for net income up to $181,440, reducing to $14,829 at $258,482 and above.
- Canada employment amount: $1,501.
Employees only need a new TD1 if their situation changed; payroll software applies the new indexed amounts on its own. Remember that the claim codes on old TD1 forms refer to amounts, so a new indexed basic amount flows through without new paperwork.
The July 2026 provincial changes
The CRA issued a mid-year edition of its payroll formulas (T4127, 123rd edition) for pays from July 1, 2026. It changed three provinces:
- British Columbia: the lowest provincial rate went to 5.60% for 2026. Because January to June was withheld at the old rate, payroll uses a prorated 6.14% from the first July pay. The BC tax reduction also changed, and BC has paused indexation of its brackets and credits at 2026 levels for 2027 to 2030.
- Newfoundland and Labrador: a higher basic personal amount for 2026, with a prorated $15,000 used from July. Employees who already gave you a TD1NL do not need a new one.
- Prince Edward Island: a new 20% bracket on income over $200,000, withheld at a prorated 21% for the rest of 2026.
If you ran payroll for these provinces from July without updated tables, the year-end T4 will still show the right tax only if your deductions were right. Check before December.
Quebec: QPP and QPIP
Employees working in Quebec contribute to the Quebec Pension Plan instead of CPP, and pay QPIP parental insurance with a lower EI rate. Revenu Québec's 2026 figures:
| Item | 2026 |
|---|---|
| QPP maximum pensionable earnings | $74,600; exemption $3,500 |
| QPP rate, employee and employer each | 6.30% (5.30% base plus 1% additional); maximum $4,479.30 |
| Second additional QPP | 4% on earnings from $74,600 to $85,000; maximum $416 |
| QPIP maximum insurable earnings | $103,000 |
| QPIP rate | 0.430% employee (maximum $442.90), 0.602% employer; down from 0.494% employee in 2025 |
Quebec income tax is withheld under Revenu Québec's own formulas, and Quebec employees get an RL-1 slip as well as a T4.
What is already known for 2027
- CPP rate cut. Bill C-30, which received Royal Assent on June 19, 2026, lowers the base CPP rate from 9.9% to 9.5% combined starting in 2027: 4.75% each for employee and employer instead of 4.95%. The 1% first additional contribution and CPP2 do not change, so the employee rate on earnings up to the YMPE becomes 5.75%. Finance Canada estimates about $133 a year saved for an employee earning $70,000, with the same saving for the employer.
- EI for 2027 is published: maximum insurable earnings $70,800, employee rate 1.64% (maximum $1,161.12), employer maximum $1,625.57. In Quebec, 1.29% (maximum $913.32).
- Not published yet: the 2027 YMPE and YAMPE (the CRA usually announces them around the start of November), the 2027 federal brackets and basic personal amount, and the January 2027 payroll formulas. We will update this article when they are out.
Source: CRA pages for CPP, CPP2 and EI rates and maximums; CRA "Adjustment of personal income tax and benefit amounts"; CRA T4127, 122nd and 123rd editions; Finance Canada, June 2026; Revenu Québec 2026 QPP and QPIP pages. Check the CRA site for changes before you rely on a figure.
In AcboBooks
AcboBooks runs Canadian payroll with the CRA's 2026 formulas, including the July 2026 edition, tracks each employee against the CPP, CPP2 and EI maximums, and calculates QPP and QPIP for Quebec employees. It prepares the PD7A remittance figures, T4 slips and the T4 Summary, but not the RL-1, which you prepare separately for Quebec employees. Updates for 2027 tables come with the yearly update plan; see Canadian payroll.
Try the Canadian payroll calculator
Our free calculator runs the CRA's 2026 formulas for CPP, CPP2, EI and federal and provincial tax, the same code AcboBooks runs payroll with.
This article is general information, not tax, legal or accounting advice. Rules and dates change; check the official source or ask your accountant before acting.
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