Prevention: Best Practices to Avoid Issues: Accurate CPP/EI Calculations
Getting the math right is your first line of defence:
| Item | 2025 Amount | 2026 Amount |
| YMPE (CPP first ceiling) | $71,300 | $74,600 |
| YAMPE (CPP second ceiling) | $81,200 | $85,000 |
| CPP contribution rate (employee) | 5.95% | 5.95% |
| Max CPP contribution (employee) | $4,034.10 | $4,230.45 |
| CPP2 contribution rate | 4.00% | 4.00% |
| Max CPP2 contribution (employee) | $396.00 | $416.00 |
| CPP basic annual exemption | $3,500 | $3,500 |
| EI max insurable earnings (non-Quebec) | $65,700 | $68,900 |
| EI premium rate — employee (non-Quebec) | 1.64% | 1.63% |
| Max EI premium — employee (non-Quebec) | $1,077.48 | $1,123.07 |
| EI premium rate — employer (non-Quebec) | 2.296% | 2.282% |
| Max EI premium — employer (non-Quebec) | $1,508.47 | $1,572.30 |
Table: CPP and EI contribution rates and maximums for 2025 and 2026. Quebec employers use different EI and QPP rates. The CPP basic exemption of $3,500 must be prorated by pay period failing to do so, or applying it multiple times during bonus runs, is one of the most common sources of PIER discrepancies. Employers must also remember that CPP2 applies to earnings between the YMPE and YAMPE, a second-tier contribution that payroll systems sometimes miss.
Proper T4 Filing and Software Practices
T4 accuracy is essential. Reconcile total remittances against T4 totals before filing. Verify CPP deductions appear in box 16, EI premiums in box 18, and pensionable or insurable earnings in boxes 26 and 24 where they differ from box 14. Be cautious with box 28 incorrect exemption markings trigger automated mismatches. File by February 28 to avoid late-filing penalties. Update payroll software annually with the latest rate tables and double-check that the province of employment is accurate for each employee. Run a PIER report through your system before the final pay run of the year. Document any manual adjustments to CPP or EI with a clear written reason.
5.3 Quarterly Self-Checks
Build a quarterly review into your calendar. Compare remitted amounts against what your payroll register says you should have remitted. Spot-check year-to-date CPP and EI totals for a sample of employees. Verify that employees who turned 18 or 70 have had their CPP status updated, and that any CPT30 elections were processed. If you spot discrepancies, correct them in your next remittance rather than waiting for year-end.
