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How to Calculate Take-Home Pay in Canada
Your take-home pay is your gross salary minus five deductions, taken in a fixed order: federal income tax, provincial income tax, Canada Pension Plan (CPP), the CPP enhancement (CPP2), and Employment Insurance (EI). This guide walks through each one, with a worked example at $75,000 in BC. All figures are 2026, in Canadian dollars.
The five deductions, in order
| Deduction | What it is | 2026 maximum |
|---|---|---|
| Federal income tax | Progressive brackets, 14% to 33% | No maximum |
| Provincial income tax | Progressive brackets, set by your province | No maximum |
| CPP | 5.95% of pensionable earnings | $4,230.45 |
| CPP2 | 4% of earnings from $74,600 to $85,000 | $416.00 |
| EI | 1.63% of insurable earnings | $1,123.07 |
Income tax has no maximum — the more you earn, the more you pay. CPP, CPP2, and EI all stop once you hit their annual maximums, which is why late-year paycheques are often bigger than early-year ones.
Income tax: federal and provincial
Canadian income tax is progressive: each bracket's rate applies only to the income inside that bracket, never to your whole salary. You pay federal tax and provincial tax separately, each on your full salary. Both subtract a basic personal amount credit — the basic personal amount times the lowest rate — so the first chunk of your income is effectively tax-free.
2026 federal brackets
| Taxable income | Rate |
|---|---|
| $0 – $58,523 | 14% |
| $58,523 – $117,045 | 20.5% |
| $117,045 – $181,440 | 26% |
| $181,440 – $258,482 | 29% |
| Over $258,482 | 33% |
The federal basic personal amount is $16,452 for 2026, worth a $2,303.28 credit at the 14% rate. Above $181,440 of income it shrinks gradually to $14,829 at $258,482.
2026 BC brackets
| Taxable income | Rate |
|---|---|
| $0 – $50,363 | 5.60% |
| $50,363 – $100,728 | 7.70% |
| $100,728 – $115,648 | 10.50% |
| $115,648 – $140,430 | 12.29% |
| $140,430 – $190,405 | 14.70% |
| $190,405 – $265,545 | 16.80% |
| Over $265,545 | 20.50% |
The BC basic personal amount is $13,216, worth a $740.10 credit at the 5.60% rate. Note that BC raised its lowest rate from 5.06% to 5.60% in Budget 2026, for the full year — older references showing 5.06% are out of date.
CPP and CPP2
CPP is charged at 5.95% on pensionable earnings between the $3,500 basic exemption and the $74,600 maximum pensionable earnings (YMPE). The most you can pay in a year is $4,230.45. CPP2 is a second contribution of 4% on earnings between the $74,600 YMPE and the $85,000 additional maximum (YAMPE), up to $416.00 a year. If you earn under $74,600, CPP2 is zero.
EI
Employment Insurance is charged at 1.63% of insurable earnings up to the $68,900 maximum insurable earnings (MIE), with no exemption. The most you can pay in a year is $1,123.07. Unlike CPP, there is no second tier — once you pass $68,900, EI stops.
Worked example — $75,000 in BC (in CAD)
A $75,000 salary in BC, paid biweekly:
Federal: 14% × $58,523 = $8,193.22, plus 20.5% × $16,477 = $3,377.79, less the $2,303.28 basic personal amount credit = $9,267.73
BC: 5.60% × $50,363 = $2,820.33, plus 7.70% × $24,637 = $1,897.05, less the $740.10 basic personal amount credit = $3,977.28
CPP: 5.95% × ($74,600 − $3,500) = $4,230.45 (the maximum)
CPP2: 4% × ($75,000 − $74,600) = $16.00
EI: 1.63% × $68,900 = $1,123.07 (the maximum)
Total deductions: $18,614.53. Net pay: $56,385.47 a year, $2,168.67 every two weeks. Effective rate 24.8%, marginal rate 28.2%.
Why take-home pay differs by province
Federal tax, CPP, CPP2, and EI are the same in every province. Provincial tax is not — rates and basic personal amounts vary widely, and the gap is large. On $75,000 of employment income in 2026, income tax (federal plus provincial, basic personal amounts only, no CPP or EI) is $17,745.86 in Nova Scotia and $12,057.34 in Nunavut. Nova Scotia's lowest rate is 8.79% with a $11,932 basic personal amount; Nunavut's is 4% with a $19,659 basic personal amount.
Add the same $5,369.52 of CPP, CPP2, and EI that every Canadian worker pays at this income, and the take-home figures are $51,884.62 in Nova Scotia and $57,573.14 in Nunavut — a $5,688.52 difference for the same salary. Your province for tax purposes is set by where you live on December 31, so a mid-year move doesn't split the year.
To see your own province's figure, use the Canada Income Tax Calculator — it covers all 13 provinces and territories at the 2026 brackets.
Effective rate vs marginal rate
Two rates describe your tax, and they answer different questions. The effective rate is total deductions divided by gross salary — the average across all your income. At $75,000 in BC it is 24.8%. The marginal rate is the rate on the next dollar you earn: your federal bracket rate plus your provincial bracket rate. At $75,000 in BC it is 28.2% (20.5% federal + 7.70% BC).
A raise that pushes you into a higher bracket only taxes the part above the threshold at the higher rate — it never makes you worse off. Your effective rate is always lower than your marginal rate.
What this leaves out
- RRSP contributions, pension contributions, and union dues reduce taxable income and are left out here — your actual tax will be lower if you have them.
- Other credits — medical expenses, donations, tuition, and the Canada employment amount (up to $1,501 for 2026) — are not included, and neither are the tax credits on the base portion of your CPP contributions and your EI premiums.
- BC's tax reduction credit (up to $690 for 2026) cuts BC tax for lower earners and is not included, so if you earn under about $45,000 your BC tax will be lower than shown.
- Per-period timing. CPP and EI are spread evenly across the year in the per-period figure, but in reality they stop once you hit their maximums — so late-year paycheques are bigger than the per-period number suggests.
Frequently asked questions
Why is my take-home pay less than my salary minus income tax?
Because income tax is only part of the story. CPP, CPP2, and EI come off on top of federal and provincial tax — on a $75,000 salary in BC, those three add $5,369.52 to the $13,245.01 of income tax, for $18,614.53 in total deductions.
Why does my province matter so much?
Provincial tax rates and basic personal amounts differ a lot. On $75,000 of employment income in 2026, income tax is $17,745.86 in Nova Scotia and $12,057.34 in Nunavut — a $5,688.52 gap. CPP and EI are the same in every province, so the whole difference is provincial tax. Your province is set by where you live on December 31.
Is overtime pay taxed more?
No. Overtime is taxed at your normal marginal rate, the same as any other pay. It can feel heavier because payroll software withholds as if the higher pay continues all year, so a big overtime cheque has more withheld — the difference comes back when you file your return.
Why do my late-year paycheques get bigger?
CPP and EI stop once you hit their annual maximums — $4,230.45 in CPP (plus $416.00 in CPP2) and $1,123.07 in EI for 2026. After that, those deductions disappear from your pay for the rest of the year, so your net pay jumps until January.