On January 1, 2027, two lines on your pay stub will move in opposite directions.
Your CPP deduction gets a little smaller. Your EI deduction gets a little bigger. Most employees will end up slightly ahead — but the details are worth knowing, because a pay stub that looks almost the same can still hide real money. And with the Bank of Canada’s October 28 decision also moving borrowing costs this fall, it’s a good season to check your numbers.
Here’s exactly what changes, with the numbers for three common salaries.
The CPP cut: your deduction goes down
The Canada Pension Plan base contribution rate is being cut for the first time since 2003. The base rate you pay drops from 4.95% to 4.75% of your pensionable earnings, and your employer gets the same 0.20 percentage-point reduction on their side. This isn’t a proposal or an election promise — it’s law, made by Bill C-30, the Spring Economic Update 2026 Implementation Act, which received royal assent in June 2026.
One clarification: the number you actually see on your stub isn’t just the base rate. Since the CPP enhancement began phasing in, employees pay the base rate plus a first additional contribution of 1.00%. That extra 1.00% isn’t changing. So the total CPP rate on your earnings falls from 5.95% to 5.75%.
What stays the same:
- CPP2 — the extra 4.00% charged on earnings above the first ceiling — is untouched.
- The $3,500 basic exemption — frozen since 1996 — doesn’t move.
- Your benefits — the cut affects what you pay in, not what you’re entitled to draw. Canada’s chief actuary has confirmed the reduced rate still sustains the plan over the long term.
What does it save you? Someone earning $70,000 keeps about $133 more over the year — roughly $5.12 per biweekly pay. Their employer saves the same $133. A self-employed person at $70,000, who pays both shares, saves about $266. The full breakdown of the CPP changes includes the rate tables if you want them.
The EI rise: your deduction goes up
While CPP falls, Employment Insurance premiums move the other way. The Canada Employment Insurance Commission confirmed the 2027 numbers on September 14, 2026, and two things change at once:
- The rate rises from $1.63 to $1.64 per $100 of insurable earnings (outside Quebec).
- The ceiling — maximum insurable earnings — rises from $68,900 to $70,800.
Together, the most a worker can pay in EI premiums in a year goes from $1,123.07 to $1,161.12 — an increase of $38.05. Employers pay 1.4 times the employee rate, so their maximum rises $53.27 to $1,625.57.
Why is it going up? The EI rate is set by a seven-year break-even mechanism: the Commission sets the rate the chief actuary forecasts will return the EI Operating Account to balance, this time by the end of 2033. It’s an actuarial exercise, not a policy choice. The full EI explainer walks through all three numbers that move.
One thing worth noting: because the ceiling rises too, everyone earning at or above $70,800 pays more EI next year even though the rate itself moved only one cent.
Three worked examples: what it means for your pay
Here’s the combined effect for three typical salaries, outside Quebec. (CPP figures assume the 2026 earnings ceiling of $74,600 for illustration — the 2027 ceilings aren’t published until November; see the fine print below.)
| Salary | CPP 2026 | CPP 2027 | You save (CPP) | EI 2026 | EI 2027 | You pay more (EI) | Net change per year | Per biweekly pay |
|---|---|---|---|---|---|---|---|---|
| $55,000 | $3,064.25 | $2,961.25 | $103.00 | $896.50 | $902.00 | $5.50 | +$97.50 | +$3.75 |
| $70,000 | $3,956.75 | $3,823.75 | $133.00 | $1,123.07 | $1,148.00 | $24.93 | +$108.07 | +$4.16 |
| $90,000 | $4,646.45 | $4,504.25 | $142.20 | $1,123.07 | $1,161.12 | $38.05 | +$104.15 | +$4.01 |
The $90,000 row includes the CPP2 contribution ($416 in both years) on earnings above the first ceiling — that part doesn’t change.
The pattern: the CPP saving beats the EI increase at every income level, so almost everyone outside Quebec keeps a little more. It’s not life-changing money — about $4 per pay — but it’s the rare government change that leaves you ahead.
The fine print (read this part)
The 2027 earnings ceilings aren’t out yet. The rate change is settled law, but the dollar ceilings it applies to — the Year’s Maximum Pensionable Earnings and the second ceiling for CPP2 — are published by the CRA in early November. Until then, any exact maximum-contribution figure for 2027 is a projection. We’ll update this article when they’re announced.
In Quebec, the story is different. EI premiums are separate because of the Québec Parental Insurance Plan: $1.29 per $100 for employees and $1.81 for employers in 2027. And Bill C-30 cut the CPP base rate — Quebec’s plan (QPP) is separate and unaffected.
You don’t need to do anything. Both changes apply automatically through payroll from the first pay period of 2027. But don’t change your CPP start date because of the cut — it affects contributions, not your entitlement.
What to do with an extra ~$100 a year
It’s a modest windfall, which makes it perfect for something you’d never notice but will thank yourself for later. A few ideas:
- Start or top up an emergency fund. Even small automatic transfers add up — see these emergency fund myths to get the setup right.
- Put it in your TFSA automatically. $8–$9 a month won’t change your life, but the habit might — and these TFSA mistakes quietly cost people thousands.
- Throw it at your mortgage. If you’re renewing in 2027, an extra payment plus a renewal strategy is a powerful combination.
- Park it somewhere better than 0%. If your cash sits in a chequing account, the high-yield savings trap explains what to do instead.
And if your budget is finally starting to breathe, here’s how to start investing with the room you have.
Your January checklist
- Compare your first 2027 stub to your last 2026 stub at the same gross pay. The CPP line should be slightly smaller; the EI line slightly larger.
- Verify the math. CPP should be about 0.20 percentage points lower on contributory earnings; EI should be at $1.64 per $100 (outside Quebec).
- Employers: confirm payroll software is updated for the 4.75% base rate before the first 2027 pay run — and wait for the CRA’s November announcement before locking in annual maximums. (RNC Canada’s employer breakdown has the full tables.)
- Self-employed: factor the lower rate into your 2027 instalment planning once the ceilings are published.
- Everyone: bookmark this page — we’ll refresh the worked examples when the 2027 ceilings land in November.
Your paycheque is your financial foundation — which is why betting your whole financial life on it is worth thinking about. But this January, at least, it gets a tiny bit stronger.
This article will be updated when the CRA publishes the 2027 pensionable earnings ceilings in November 2026.