This guide is for general information only. It’s not intended as tax, legal, or financial advice. Legislation and contribution limits may change, so we recommend consulting your tax advisor or the Canada Revenue Agency (CRA) to confirm how these rules apply to your organization.
Canada Pension Plan (CPP)
The Canada Pension Plan provides retirement income to Canadians who’ve contributed during their working years. Contributions are shared equally between employees and employers, based on pensionable earnings.
Recent enhancements introduced a second earnings threshold for higher-income earners, creating an additional layer of contributions that can grow retirement income over time.
2025 and 2026 contribution limits:
| Contribution | 2025 | 2026 |
|---|---|---|
| Annual maximum pensionable earnings | $71,300 | $74,600 |
| Annual basic exemption | $3,500 | $3,500 |
| Basic contribution basis | $67,800 | $71,100 |
| Basic contribution rate | 5.95% | 5.95% |
| Maximum basic annual contributions | ||
| Employee | $4,034.10 | $4,230.45 |
| Employer | $4,034.10 | $4,230.45 |
| Second contribution level (CPP2) | ||
| Second contribution level maximum | $81.200 | $85,000 |
| Maximum second contribution level basis | $9,900 | $10,400 |
| Second contribution level rate | 4% | 4% |
| Employee maximum (CPP2) | $396 | $416 |
| Employer maximum (CPP2) | $396 | $416 |
Key considerations
CPP enhancements are increasing long-term retirement income potential, while also impacting payroll costs. Many organizations are reviewing how public and private programs work together to maintain a balanced and competitive total rewards strategy.
Quebec Pension Plan (QPP)
The Quebec Pension Plan operates similarly to CPP but applies exclusively to employees working in Quebec. Like CPP, QPP includes an enhanced structure with additional contributions for higher earnings.
QPP contribution limits:
| Contribution | 2025 | 2026 |
|---|---|---|
| Annual maximum pensionable earnings | $71,300 | $74,600 |
| Annual basic exemption | $3,500 | $3,500 |
| Basic contribution basis | $67,800 | $71,100 |
| Basic contribution rate | 6.40% | 6.30% |
| Maximum basic annual contributions | ||
| Employee | $4,339.20 | $4,479.30 |
| Employer | $4,339.20 | $4,479.30 |
| Second contribution level (QPP2) | ||
| Second contribution level maximum | $81,200 | $85,000 |
| Maximum second contribution level basis | $9,900 | $10,400 |
| Second contribution level rate | 4% | 4% |
| Employee maximum (QPP2) | $396 | $416 |
| Employer maximum (QPP2) | $396 | $416 |
Maximum monthly benefits (2026)
| Type of benefit | CPP | QPP |
|---|---|---|
| Retirement pension (at age 65) | $1,507.65 | $1,507.65 |
| Death benefits | ||
| 65 and older | $904.59 | $881.48 |
| 64 and under (maximum) | $803.54 | $1,173.58 |
| Under 45 (disabled) | $803.54 | $1,173.58 |
| Under 45 (not disabled, with dependent child) | $803.54 | $1,129.95 |
| Under 45 (not disabled, without dependent child) | $803.54 | $719.50 |
| Lump sum | $2,500 | $2,500 |
| Each child | $307.81 | $307.81 |
| Disability benefits | ||
| Contributor (maximum) | $610.46 | $610.43 |
| Each child | $307.81 | $97.74 |
Key consideration
Public pension programs provide a foundation for retirement income, but are not designed to fully replace earnings. A well-structured employer program can help bridge this gap and provide greater long-term financial confidence for employees.
Employment Insurance (EI)
Employment Insurance provides temporary income support to individuals who are unemployed through no fault of their own and are actively seeking work. Employers are responsible for deducting employee premiums and contributing at a higher rate.
For new or adoptive parents
For illness or injury
For supporting a critically ill family member
Contribution details
| Detail | 2025 | 2026 |
|---|---|---|
| Maximum weekly benefit | $695 | $729 |
| Maximum annual insurable earnings | $65,700 | $68,900 |
| Employees | ||
| Employee contribution rate (Quebec) | 1.31% | 1.30% |
| Maximum employee cost (Quebec) | $860.67 | $895.70 |
| Employee contribution rate | 1.64% | 1.63% |
| Maximum employee cost | $1,077.48 | $1,123.07 |
| Employers | ||
| Employer contribution rate (Quebec) | 1.834% | 1.82% |
| Maximum employer cost (Quebec) | $1,204.94 | $1,253.98 |
| Employer contribution rate | 2.296% | 2.282% |
| Maximum employer cost | $1,508.47 | $1,572.30 |
Many employers integrate EI with disability and leave programs to create a more consistent and supportive experience for employees during periods away from work.
Quebec Parental Insurance Plan (QPIP)
Income replacement for eligible employees taking parental leave in Quebec, designed to support families during early stages of caregiving.
| Detail | 2025 | 2026 |
|---|---|---|
| Maximum annual insurable earnings | $98,000 | $103,000 |
| Employee contribution rate | 0.494% | 0.430% |
| Employer contribution rate | 0.692% | 0.602% |
| Maximum employee cost | $484.12 | $442.90 |
| Maximum employer cost | $678.16 | $620.06 |
Registered plans & savings limits
Registered plans are a key part of a well-designed benefits strategy. They provide tax-efficient ways for employees to save for retirement and long-term financial goals. Many organizations are moving toward flexible plan designs that combine multiple savings vehicles, allowing employees to align their savings strategy with their stage of life.
Plan types
2026 annual contribution limits
$35,390
$33,810
$17,695
$7,000
Provincial medical programs
Canada’s publicly funded healthcare system provides access to essential medical services across all provinces and territories. Each region determines additional coverage beyond the federal standard, creating variability in services such as prescription drugs, vision care, and paramedical support.
Key consideration
Because public coverage varies by region, employer-sponsored benefits play an important role in creating a consistent experience for employees across Canada. This is especially important for organizations with a distributed workforce.
Workers' compensation
Workers’ compensation programs provide coverage for workplace injury or illness. Employers fund these programs through premiums based on assessable earnings, with maximum assessable earnings varying by province.
Maximum assessable earnings by province
| Province / Territory | 2025 | 2026 |
|---|---|---|
| Alberta | $106,400 | $110,900 |
| British Columbia | $121,500 | $127,500 |
| Manitoba | $167,050 | $171,500 |
| New Brunswick | $82,100 | $85,800 |
| Newfoundland and Labrador | $79,345 | $80,935 |
| Northwest Territories / Nunavut | $112,600 | $116,000 |
| Nova Scotia | $76,300 | $79,900 |
| Ontario | $117,000 | $121,700 |
| Prince Edward Island | $82,900 | $89,300 |
| Quebec | $98,000 | $103,000 |
| Saskatchewan | $104,531 | $107,599 |
| Yukon | $104,975 | $107,599 |
Employer health taxes
Certain provinces require employers to contribute payroll-based taxes to support public healthcare systems. These contributions vary based on payroll size and jurisdiction and represent a meaningful cost factor to consider alongside benefits spend.
| Province | Gross annual payroll | 2026 rate |
|---|---|---|
| British Columbia — Employer Health Tax | ||
| $1,000,000 or less | Exempt | |
| $1,000,000.01 to $1,500,000 | 5.85% × (B.C. remuneration − $1,000,000) | |
| Greater than $1,500,001 | 1.95% × total B.C. remuneration | |
| Manitoba — Health & Post Secondary Education Tax Levy | ||
| $2,250,000 or less | Exempt | |
| $2,500,000.01 to $5,000,000 | 4.3% on amount in excess of $2.5M | |
| Greater than $5,000,000.01 | 2.15% of total payroll | |
| Ontario — Employer Health Tax | ||
| $200,000 or less | 0.98% | |
| $200,000.01 to $230,000 | 1.101% | |
| $230,000.01 to $260,000 | 1.223% | |
| $260,000.01 to $290,000 | 1.344% | |
| $290,000.01 to $320,000 | 1.465% | |
| $320,000.01 to $350,000 | 1.586% | |
| $350,000.01 to $380,000 | 1.708% | |
| $380,000.01 to $400,000 | 1.829% | |
| Over $400,000 | 1.95% | |
| Quebec — Health Services Fund | ||
| Any amount | 4.26% (public sector) | |
| $1,000,000 or less | 1.25% (primary/manufacturing); 1.65% (other) | |
| $1,000,000.01 to $7,800,000 | Graduated formula applies | |
| $7,800,000.01 or more | 4.26% | |
| Newfoundland and Labrador — Health & Post Secondary Education Tax | ||
| $2,000,000 or less | Exempt | |
| Over $2,000,000 | 2% | |
| All other provinces | Government-funded | N/A |
Key consideration
Employer health taxes are a meaningful cost factor. When evaluated alongside benefits spend, they provide a more complete view of total investment in employee health and well-being.
Taxation of group benefits
Employer-paid premiums may create taxable benefits for employees, depending on the type of coverage. Understanding the tax treatment of each benefit type is critical to plan design — small structural decisions can affect both employer costs and employee outcomes.
Sales taxes on group insurance premiums
Ontario
8%
Provincial sales tax
Quebec
9%
Provincial sales tax
Manitoba
7%
On select benefts
Other provinces do not apply sales tax to group insurance premiums.
Taxability of group benefit premiums and payments
| Benefit | Premium taxable to employee? | Payments taxable to employee? |
|---|---|---|
| Life Insurance | Yes | No |
| Dependent Life | Yes | No |
| Accidental Death & Dismemberment (AD&D) | Yes | No |
| Critical Illness | Yes | No |
| Short and Long-Term Disability | No | No / Yes* |
| Health Care | No (Yes in Quebec) | No |
| Dental Care | No (Yes in Quebec) | No |
| Employee Assistance Program (EAP) | No | No |
| Health Care Spending Account (HCSA) | N/A | No (Yes in Quebec) |
| Lifestyle/Wellness Spending Account (LSA/WSA) | N/A | Yes |
| Diagnostic Specialist Access Insurance (DSAI) | No | No |
* Disability payments are taxable to the employee if the employer pays a portion of the premium for short-term and/or long-term disability. The employee is entitled to receive benefits equal to their contributions on a non-taxable basis when premium costs are shared.
Premium tax by province
| Province / Territory | Premium tax rate |
|---|---|
| British Columbia, Manitoba, New Brunswick, Ontario | 2% |
| Alberta, Northwest Territories, Nova Scotia, Nunavut, Saskatchewan | 3% |
| Prince Edward Island | 3.75% |
| Quebec | 3.30% |
| Newfoundland and Labrador | 5% |
| Yukon | 4% |
Harmonized sales tax (HST)
Certain employer-paid benefits may be subject to GST, HST, or provincial levies. These amounts may need to be included in taxable benefit calculations. Consult your tax advisor for specifics.
Canadian Dental Care Plan reporting
Employers are required to report whether employees had access to dental coverage during the tax year. This reporting requirement applies regardless of whether the employee used the benefit.
Reporting requirements
T4
Box 45
Standard employee income tax slip
T4A
Box 015
If applicable
Coverage codes
- The employee has no access to dental care insurance or coverage of dental services of any kind.
- Access to dental care insurance of coverage for employee only.
- Access to dental care insurance or coverage for employee, spouse, and dependents. If family coverage is available, use code 3 regardless of the employee’s selection (e.g. family, single, waived).
- Access to dental care insurance or coverage for employee and spouse only.
- Access to dental care insurance or coverage for employee and dependents only.
Key consideration
Accurate reporting is essential to ensure compliance and avoid potential penalties. Clear processes and regular review can help organizations stay aligned with evolving requirements.
Download the full tax guide
"*" indicates required fields
Need some help?
Visit client support
Check out our resources page for helpful content or connect with our client support team.
Contact Client Support