How to calculate your net pay in Canada (2025)

When you receive a paycheque in Canada, there are a number of statutory deductions that reduce your gross earnings to your net (take‑home) pay. These include contributions to the Canada Pension Plan (CPP), Employment Insurance (EI) premiums and federal and provincial income taxes. You also benefit from non‑refundable credits like the federal and provincial TD1 personal amounts and the Canada Employment Amount.

1. Start with your gross pay

Your gross pay is the amount you earn before any deductions. For salaried employees this is typically your annual salary divided by the number of pay periods (e.g. weekly, bi‑weekly, semi‑monthly or monthly). For hourly workers, multiply your hourly rate by the number of hours worked during the pay period.

2. Calculate CPP and EI premiums

CPP contributions apply to employment earnings above the Year’s Basic Exemption (YBE) up to the Year’s Maximum Pensionable Earnings (YMPE). For 2025 the CPP rate is 5.95% on earnings between $3,500 and $71,300, with an additional tier of 4% on earnings between the YMPE and the Year’s Additional Maximum Pensionable Earnings (YAMPE). EI premiums are 1.64% of insurable earnings up to the annual maximum ($65,700 in 2025).

3. Determine taxable income for tax purposes

Subtract any RRSP contributions you deduct from your gross pay. The remaining amount is used to calculate federal and provincial tax. Each province has its own tax brackets and rates; in 2025 the first federal bracket rate blends 15% and 14% due to a mid‑year rate change. Our Net Pay calculator automatically applies the correct provincial brackets based on your selected province.

4. Apply non‑refundable credits

The federal basic personal amount (default $16,129 in 2025) and provincial TD1 amounts reduce the tax you owe. Additional credits include the CPP/EI credit (federal and provincial), the Canada Employment Amount and certain disability credits. The calculator uses the appropriate credit rate for each province.

5. Calculate tax payable

Using progressive tax brackets, compute the federal tax and provincial tax on your taxable income. Subtract the credits from the gross tax to get net tax. Add CPP and EI premiums to your net tax to find total deductions.

6. Arrive at net pay

Finally, subtract total deductions (CPP, EI, federal tax, provincial tax) from your gross pay to arrive at your net pay. If you contribute a percentage of gross pay to an RRSP, the calculator accounts for that as well.

Our Net Pay calculator combines these steps automatically. Simply enter your province, pay frequency, gross pay and RRSP percentage, and the tool will estimate your take‑home pay and provide an annual breakdown.