The gap between your salary and what actually lands in your bank account catches everyone off guard. Four deductions explain most of it. Here's what each one is in 2026.
1. Federal income tax
Everyone pays federal tax on a progressive scale — the 2026 brackets start at 14% and rise to 33% on income above $258,482. The first ~$16,452 is effectively tax-free thanks to the basic personal amount.
2. Provincial / territorial income tax
Each province adds its own tax on top, with its own brackets and its own basic personal amount. This is why the same salary nets different amounts in Ontario, Alberta or Quebec. Quebec is a special case: it collects its own provincial tax and your federal tax is reduced by the 16.5% Quebec abatement.
3. CPP (or QPP in Quebec)
The Canada Pension Plan takes 5.95% of earnings between the $3,500 exemption and the $74,600 ceiling (YMPE) in 2026, plus a second layer (CPP2) of 4% on earnings up to $85,000. Quebec's QPP works the same way at a slightly higher rate. Unlike tax, CPP stops once you hit the annual maximum.
4. EI premiums
Employment Insurance takes 1.63% of insurable earnings up to $68,900 in 2026 — a maximum of about $1,123. Quebec pays a lower EI rate (1.30%) plus a separate QPIP premium, because Quebec runs its own parental insurance plan.
See your own numbers
Plug your salary and province into the take-home pay calculator to see the exact split — or the income tax calculator for tax owed alone.
Marginal vs. average rate — the part people get wrong
A raise is never "taxed at 40%" across your whole income. Only the dollars in the top bracket are taxed at your marginal rate; your average rate — total tax ÷ income — is always lower. So a raise always leaves you with more money, even if it nudges you into a higher bracket.
The bottom line
Expect roughly 25–35% of a middle income to disappear to tax, CPP and EI combined, varying by province and salary. Knowing the pieces makes budgeting — and reading your pay stub — a lot less mysterious.
General information only, not tax advice. Figures are 2026 estimates; verify with the CRA / Revenu Québec.