When CPP and EI Stop Coming Off Your Paycheque in 2026
At a salary of $95,000, three deductions on an Ontario paycheque reach their annual ceilings before the year ends: Canada Pension Plan (CPP) contributions, the second additional CPP contribution (CPP2) and Employment Insurance (EI) premiums. When CPP and EI stop coming off your paycheque, take-home pay steps up for the rest of the year. The step is smaller than the contributions that disappeared, though, because the income tax withheld rises on the very same cheque.
The example is a single employee with employment income only, working in Ontario for one employer all year, paid in equal instalments, claiming only the basic personal amounts (claim code 1) and the automatic Canada employment amount, with no other credits or deductions. “Biweekly” means 26 pay periods. Data as of November 12, 2026, using CRA’s January 2026 tables. For the whole cheque and not just the ceilings, see where the rest of an Ontario paycheque goes.
The three ceilings for 2026
The rates and ceilings come from CRA’s T4032ON payroll deductions tables for Ontario, January 2026. The CPP and EI figures on this page apply outside Quebec, which runs its own pension plan and its own EI premium rate. For employees outside Quebec, the federal half of the income tax calculation is the same in every province.
| Deduction | Rate | Ceiling | Maximum for the year |
|---|---|---|---|
| CPP base + first additional | 5.95% | Year’s maximum pensionable earnings (YMPE) of $74,600, less the $3,500 basic exemption | $4,230.45 |
| CPP2 (second additional) | 4.00% | Earnings between the YMPE of $74,600 and the year’s additional maximum pensionable earnings (YAMPE) of $85,000 | $416.00 |
| EI, employee | 1.63% | $68,900 of insurable earnings | $1,123.07 |
If you have a pay stub, read the year-to-date CPP and EI boxes against $4,230.45 and $1,123.07. When a box reaches its figure, that deduction is finished for the year.
Together the three top out at $5,769.52. Of the CPP maximum, $3,519.45 is the base contribution at 4.95% and $711.00 is the first additional contribution at 1.00%. CPP and EI are contributions, not income tax: they buy a pension benefit and an entitlement to EI, and they sit alongside the income tax on your cheque rather than inside it.
Where in the year each ceiling lands
The higher the salary, the earlier the year’s maximums are reached. EI goes first, then CPP and CPP2. On a biweekly schedule:
- $95,000: last EI period is 19, last CPP period is 21, CPP2 runs periods 21 to 24, and periods 25 and 26 are free of all three.
- $140,000: last EI period is 13, last CPP period is 14, CPP2 runs periods 14 to 16, and the first clear cheque is period 17, which leaves ten.
If the first biweekly pay date is Friday, January 2, 2026, the $95,000 earner’s last EI cheque is September 11, the last CPP cheque is October 9, the last CPP2 cheque is November 20 and the first clear cheque is December 4.
Chart 1: Take-home pay rises mid-year, then resets in January. Net pay per biweekly cheque at $95,000 and $140,000, with the step marked and the first cheques of the new year shown. Source: CRA T4127 and T4032ON, January 2026, with our calculations.
Lower salaries never reach a clear cheque. The biweekly threshold, to the nearest hundred dollars, is $88,400. At that salary there is a single clear cheque, the 26th, at $2,750.28 against $2,510.25 in period 1. Also to the nearest hundred, the threshold is $86,700 weekly, $88,700 semi-monthly and $92,800 monthly.
Chart 2: Below $88,400 of salary, no cheque is ever clear. The pay periods in which EI, CPP and CPP2 are still deducted, by salary, biweekly. Source: CRA T4032ON and T4127, January 2026, with our calculations.
The $95,000 walk, cheque by cheque
Gross pay is $3,653.85 per period. Periods 1 to 18 are identical: CPP $209.39, CPP2 nothing, EI $59.56, income tax $714.56 and net pay of $2,670.34. Then the deductions peel away.
- Period 19: EI falls to $50.99, its last. Net $2,678.91.
- Period 20: no EI at all. Net $2,729.90.
- Period 21: CPP falls to $42.65 from $209.39 and CPP2 starts at $85.23, both on the same cheque. Tax is $697.59. Net $2,828.38.
- Periods 22 and 23: CPP is zero, CPP2 is $146.15, tax is $681.66. Net $2,826.04.
- Period 24: CPP2 falls to $38.47, its last. Tax is $713.59. Net $2,901.79.
- Periods 25 and 26: nothing is left to deduct, tax is $724.99 and net pay is $2,928.86.
Tax sits below its period-1 level for four periods before it rises. While CPP2 runs at the full 4% of the cheque, factor F5 (explained below) is larger than it ever was, so the annualized estimate falls below where it started.
From period 1 to period 25 the cheque rises by $258.52. The contributions that stopped come to $268.95 a period. The $10.43 gap is the rise in withheld income tax, from $714.56 to $724.99, which is 3.9% of the contributions that stopped. Over the whole year, take-home is $1,286.06 above 26 times the period-1 cheque.
The two ceilings are crossed on different measures. CPP stops when cumulative contributory earnings pass $71,100, the $74,600 YMPE less the $3,500 exemption. CPP2 starts when cumulative gross pay passes $74,600. At $95,000 both land in period 21. At $92,000 biweekly they do not: period 21 carries CPP of $179.85 and CPP2 of $0.00, because gross year to date is $74,307.66, and CPP2 starts in period 22. CRA says so in Chapter 6 of T4127: “For that same reason, it’s also possible that C2 will not start calculating in the same period that maximum C is reached.”
The walk also assumes one employer all year. T4127 Chapter 6 says each employer deducts CPP “based on the employee’s pensionable income, without regard to any other earnings the employee may have had with another employer in the same year.” The ceilings restart at a new employer, so someone who changed jobs mid-year will usually see no clear cheque at all.
Why withheld income tax rises in the same period
Payroll does not tax the cheque you see. It annualizes it. Step 1 of CRA’s T4127 payroll deductions formulas computes annual taxable income A as A = [P x (I – F – F2 – F5A – U1)] – HD – F1, where one of the deductions is factor F5. F5 equals C x (0.0100/0.0595) + C2, and CRA’s own note reads: “When C = 0 and C2 = 0, F5 = 0.”
So the formula deducts the enhanced part of CPP (the 1.00% first additional contribution and all of CPP2) from income before annualizing. The 4.95% base is not deducted, it earns a tax credit instead. The split is in the Income Tax Act: section 118.7 gives a credit for the base contribution and for EI premiums, while paragraph 60(e.1) gives a deduction for the additional contributions.
Once CPP stops, F5 is zero and the annualized estimate climbs. At $95,000, F5 is $35.19 in period 1 and $0 in period 25, so A rises from $94,085.16 to $95,000.10, a gain of $914.94, and tax per period goes from $714.56 to $724.99. In the first clear cheque at $110,000, $140,000 and $180,000, the tax rise is $13.88, $22.79 and $30.53, or 4.4%, 5.7% and 5.9% of the contributions that stopped.
It is not a windfall: the year nets out
Add up the tax withheld across the year and compare it with the same formula run once on the year’s actual figures. At $60,000 the two agree within 6 cents at every pay frequency. At $75,000, $85,000, $95,000, $140,000 and $180,000 they agree within 9 cents.
The one case with a dollar-sized gap is $110,000, where $3.17 to $4.37 too much is withheld depending on frequency ($3.93 biweekly). In the two periods where CPP2 is running at the full 4% of the cheque, the annualized estimate dips to $105,600.04, below the Ontario third bracket edge of $107,785, while the year’s actual taxable income of $108,873.00 sits above it. Two periods are estimated in the 9.15% bracket instead of 11.16%, and the return settles the difference.
CRA describes this moment itself. T4032ON says its tables are designed to calculate the CPP additional contributions accurately in most situations, but recommends its Payroll Deductions Online Calculator instead “If at any point during the year, the employee reaches the YMPE of $74,600”, because the tables there “may result in over or under deduction of federal and provincial taxes during the year.” Withholding is an estimate made 26 times, and it lands within a few dollars of the year. What you see on the cheque is the same annual money arriving unevenly.
When the tax line jumps instead of edging up
Factor K2 is the tax credit for the base CPP contribution and EI premium. Read literally, K2 falls to zero once CPP and EI are zero, and withheld tax would leap. CRA recommends otherwise: in the period the employee’s contributions or premiums reach the annual maximum and for the rest of the year, the per-period amounts are replaced by “the employee’s maximum annual base contribution or premium.”
The two methods produce different cheques. At $95,000 in period 25, tax is $724.99 with the recommendation applied and $759.07 without, so the take-home step is $258.52 with it and $224.44 without, and $205.68 is over-withheld across the year.
If the income tax line on your cheque jumps when CPP and EI stop, rather than edging up by ten or twenty dollars, the credit collapsing is a likely cause, though a bonus, a TD1 change or a bracket crossing can look the same. When it is the credit, the return settles the difference.
What to do with the later cheques
At $95,000 the back-of-year cheques add up to $1,286.06 above what 26 period-1 cheques would pay, money you have already budgeted around, and where it goes is the live question: our guide to TFSA vs RRSP vs FHSA lays out the accounts. RRSP room is a function of last year’s earned income, so our RRSP contribution room calculator shows how much room you have to receive it.
The January reset
Nothing about your salary changes on the first pay date of the new year, but the cheque does. At $95,000 biweekly, December’s $2,928.86 becomes $2,670.34 in January, down $258.52. At $140,000 it falls from $3,997.72 to $3,620.36, down $377.36. If you plan around the larger cheque, plan around the smaller one too.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Every figure in this article is 2026 and published by the Canada Revenue Agency, or is our own arithmetic on CRA’s own formula and labelled as ours. The algorithm is CRA T4127 Payroll Deductions Formulas, 122nd Edition effective January 1, 2026: Step 1 factor A and factor F5, with CRA’s note that F5 is zero when both CPP contributions are zero, factor K2 and its note on reaching the annual maximum, and the Chapter 6 and Chapter 7 formulas for the per-period CPP, CPP2 and EI amounts. Parameters are from T4032ON Payroll Deductions Tables for Ontario, January 2026 (page details 2025-12-17), cross-checked against the 123rd Edition of T4127 effective July 1, 2026, which agrees on every federal and Ontario figure used. Before any derived figure was published, our per-period engine was run against 33 control tests: it reproduces BOTH of CRA’s own step-by-step worked examples in T4032ON to the cent, including the $73.35 CPP contribution, $21.19 EI premium, $12.33 additional CPP contribution, $62,798.84 annual taxable income and $177.35 tax deduction of the first, and the $64.00 CPP2, $79,872.00 annual taxable income and $276.24 tax deduction of the second. Walking all 52, 26, 24 or 12 pay periods of the year, it sums to the published annual maximums of $4,230.45, $416.00 and $1,123.07 at every one of those pay frequencies, and it refuses to run if any control fails. Both charts are drawn from that same engine, so the charts and the article cannot disagree. The $88,400, $86,700, $88,700 and $92,800 salary thresholds come from a scan in $100 steps and are stated to the nearest hundred dollars; the scan was verified monotone from $85,000 to $150,000. The $92,000 case, where the CPP ceiling is reached in period 21 and CPP2 does not begin until period 22, is why this article does not claim the two ceilings always fall on one cheque: CRA’s own Chapter 6 warns that they may not. The statutory split is Income Tax Act section 118.7, which credits the base CPP contribution and the EI premium, and paragraph 60(e.1), which deducts the additional contributions, on the Justice Laws consolidation current to October 19, 2026. CPP and EI are contributions that buy a pension benefit and an entitlement rather than tax, and the article says so. The model is a single Ontario employee with one employer for the full year, claim code 1, and no other credits or deductions. Quebec is not modelled, and the article scopes its CPP and EI figures to outside Quebec. No figure is estimated, forecast, indexed forward or taken from an aggregator.
