Statutory (or legislated) deductions

Statutory deductions are also called legislated deductions, as they represent the payroll deductions that are mandatory.

The following is a list of mandatory deductions that you’re aware of when paying your employees:

Canada Pension Plan (CPP)

The Canada Pension Plan (CPP) is a retirement savings plan in which contributions are deducted from the income of employees between the ages of 18 and 69. Anyone over the age of 65 can choose to opt out of the program. Otherwise, employers make the appropriate deductions for all their employees. The amount paid is based on the employee’s annual income.

The following are the CPP rates for 2025 (Note: CPP now includes a second tier of contributions, known as CPP2, on earnings between the Year’s Maximum Pensionable Earnings (YMPE) of $71,300 and the Year’s Additional Maximum Pensionable Earnings (YAMPE) of $81,200):

• 5.95% of yearly income up to $71,300 (after a $3,500 basic exemption), plus 4% on earnings between $71,300 and $81,200
• Maximum employee and employer contributions: $4,034.10 (base CPP) + $396 (CPP2) = $4,430.10 each
• Maximum self-employed contributions: $8,068.20 (base CPP) + $792 (CPP2) = $8,860.20

Quebec has its own system called the Quebec Pension Plan (QPP), which has the following rates (QPP also includes a second tier on earnings between $71,300 and $81,200):

• Base plan: 5.4% of yearly income up to $71,300 (after a $3,500 basic exemption), plus 1% additional on the same earnings band, plus 2% on earnings between $71,300 and $81,200
• Maximum employee and employer contributions: $3,661 (base) + $678 (additional on earnings up to $71,300) + $396 (additional on earnings $71,300–$81,200) = $4,735 each
• Maximum self-employed contributions: $7,322 (base) + $1,356 (additional on earnings up to $71,300) + $792 (additional on earnings $71,300–$81,200) = $9,470

Employment Insurance (EI)

Employment insurance (EI) provides employees with temporary assistance if they find themselves without a job or need a leave of absence from work due to pregnancy, sickness, or caring for a family member. EI comes out of each pay cheque and is calculated according to income.

To properly apply source deductions, consider the key rates for 2025 (maximum insurable earnings: $65,700):

• Employee contribution: $1.64 per $100 earned (outside Quebec); $1.31 per $100 earned (in Quebec)
• Maximum contribution: $1,077.48 (outside Quebec); $860.67 (in Quebec)
• Employer contribution: $2.30 per $100 earned (outside Quebec); $1.83 per $100 earned (in Quebec)
• Maximum employer contribution: $1,508.47 (outside Quebec); $1,204.94 (in Quebec)

Quebec also has a special EI program for parents called the Quebec Parental Insurance Plan (QPIP), which is a program specifically for parents who need to take time off work for childcare. The rates for contributions remain unchanged in 2025 (maximum insurable earnings: $98,000):

• Employee contribution: $0.494 per $100 earned
• Maximum employee contribution: $484.12
• Employer contribution: $0.692 per $100 earned
• Maximum employer contribution: $678.16
• Self-employed contribution: $0.878 per $100 earned
• Maximum self-employed contribution: $860.44

Federal and provincial income taxes

Both federal and provincial income tax are statutory deductions that you submit for each employee.

The federal income tax rates for 2025 are as follows (Note: The lowest rate is reduced to an effective 14.5% for the full year due to a mid-year change from 15% to 14% effective July 1):

• 14.5% on the first $57,375 of taxable income, plus
• 20.5% on the next $57,375 of taxable income (on the portion of taxable income over $57,375 up to $114,750), plus
• 26% on the next $63,132 of taxable income (on the portion of taxable income over $114,750 up to $177,882), plus
• 29% on the next $75,532 of taxable income (on the portion of taxable income over $177,882 up to $253,414), plus
• 33% of taxable income over $253,414

Provincial income tax rates for 2025 are as follows:

Newfoundland and Labrador (Indexed by 2.3%)

• 8.7% on the first $44,192 of taxable income, plus
• 14.5% on the next $44,190 (over $44,192 up to $88,382), plus
• 15.8% on the next $69,410 (over $88,382 up to $157,792), plus
• 17.8% on the next $63,118 (over $157,792 up to $220,910), plus
• 19.8% on the next $61,304 (over $220,910 up to $282,214), plus
• 20.8% on the next $282,215 (over $282,214 up to $564,429), plus
• 21.3% on the next $564,429 (over $564,429 up to $1,128,858), plus
• 21.8% on the amount over $1,128,858

Prince Edward Island (Indexed by ~2.0%)

• 9.5% on the first $33,328 of taxable income, plus
• 13.47% on the next $31,328 (over $33,328 up to $64,656), plus
• 16.6% on the next $40,344 (over $64,656 up to $105,000), plus
• 17.62% on the next $35,000 (over $105,000 up to $140,000), plus
• 19% on the amount over $140,000

Nova Scotia (Indexed by 3.1%)

• 8.79% on the first $30,507 of taxable income, plus
• 14.95% on the next $30,508 (over $30,507 up to $61,015), plus
• 16.67% on the next $34,868 (over $61,015 up to $95,883), plus
• 17.5% on the next $58,767 (over $95,883 up to $154,650), plus
• 21% on the amount over $154,650

New Brunswick (Indexed by 2.7%)

• 9.4% on the first $51,306 of taxable income, plus
• 14% on the next $51,308 (over $51,306 up to $102,614), plus
• 16% on the next $87,446 (over $102,614 up to $190,060), plus
• 19.5% on the amount over $190,060

Quebec

(Administered by Revenu Québec; indexed by 2.85%; use federal withholding tables per CRA):

• 14% on $51,780 or less
• 19% on more than $51,780 but not more than $103,545
• 24% on more than $103,545 but not more than $126,000
• 25.75% on more than $126,000

Ontario (Indexed by 2.8%)

• 5.05% on the first $52,886 of taxable income, plus
• 9.15% on the next $52,889 (over $52,886 up to $105,775), plus
• 11.16% on the next $44,225 (over $105,775 up to $150,000), plus
• 12.16% on the next $70,000 (over $150,000 up to $220,000), plus
• 13.16% on the amount over $220,000

Manitoba (Indexed by 1.2%)

• 10.8% on the first $47,564 of taxable income, plus
• 12.75% on the next $52,636 (over $47,564 up to $100,200), plus
• 17.4% on the amount over $100,200

Saskatchewan (Indexed by 2.7%)

• 10.5% on the first $53,463 of taxable income, plus
• 12.5% on the next $99,287 (over $53,463 up to $152,750), plus
• 14.5% on the amount over $152,750

Alberta

(Indexed by 2.0%; new 8% bracket effective July 1, 2025 – prorated to effective 6% for July–Dec on first $60,000 for withholding):

• 6% (prorated effective) on the first $60,000 of taxable income, plus
• 10% on the next $91,234 (over $60,000 up to $151,234), plus
• 12% on the next $30,247 (over $151,234 up to $181,481), plus
• 13% on the next $60,493 (over $181,481 up to $241,974), plus
• 14% on the next $120,987 (over $241,974 up to $362,961), plus
• 15% on the amount over $362,961

British Columbia (Indexed by 2.8%)

• 5.06% on the first $49,279 of taxable income, plus
• 7.7% on the next $49,281 (over $49,279 up to $98,560), plus
• 10.5% on the next $14,598 (over $98,560 up to $113,158), plus
• 12.29% on the next $24,249 (over $113,158 up to $137,407), plus
• 14.7% on the next $48,899 (over $137,407 up to $186,306), plus
• 16.8% on the next $73,523 (over $186,306 up to $259,829), plus
• 20.5% on the amount over $259,829

Yukon (Indexed by 2.7%)

• 6.4% on the first $57,375 of taxable income, plus
• 9% on the next $57,375 (over $57,375 up to $114,750), plus
• 10.9% on the next $63,132 (over $114,750 up to $177,882), plus
• 12.8% on the next $322,118 (over $177,882 up to $500,000), plus
• 15% on the amount over $500,000

Northwest Territories (Indexed by 2.7%)

• 5.9% on the first $51,964 of taxable income, plus
• 8.6% on the next $51,966 (over $51,964 up to $103,930), plus
• 12.2% on the next $65,037 (over $103,930 up to $168,967), plus
• 14.05% on the amount over $168,967

Nunavut (Indexed by 2.8%)

• 4% on the first $54,707 of taxable income, plus
• 7% on the next $54,706 (over $54,707 up to $109,413), plus
• 9% on the next $68,468 (over $109,413 up to $177,881), plus
• 11.5% on the amount over $177,881