Canada Tax Changes 2027: Lower CPP, New EI Rate, Indexation in November
The first cut to the base CPP rate is law and starts on 1 January 2027. EI premiums are set. Brackets, personal amounts and the CPP ceiling are published in November.
Main change for 2027
Employee CPP rate on earnings up to the YMPE
Canada payroll and tax parameters: 2026 vs 2027
| Parameter | 2026 | 2027 | Status |
|---|---|---|---|
| Base CPP rate, employee and employer each | 4.95% | 4.75% | Adopted (Bill C-30) |
| Total employee CPP rate up to the YMPE | 5.95% | 5.75% | Adopted |
| Self-employed CPP rate up to the YMPE | 11.9% | 11.5% | Adopted |
| YMPE (CPP ceiling) / basic exemption | $74,600 / $3,500 | Not yet published / $3,500 | Pending: CRA, early Nov |
| CPP2 rate / YAMPE (second ceiling) | 4% / $85,000 | 4% / not yet published | Pending: CRA, early Nov |
| EI rate (outside Quebec) / maximum insurable earnings | 1.63% / $68,900 | 1.64% / $70,800 | Adopted (EI Commission) |
| Maximum employee EI premium | $1,123.07 | $1,161.12 | Adopted |
| Federal and Ontario tax rates | 14β33% / 5.05β13.16% | Unchanged | Adopted |
| Federal brackets (first ends at) and basic personal amount | $58,523; $16,452 | Not yet published | Pending: CRA, mid/late Nov |
| Ontario brackets (first ends at) and basic personal amount | $53,891; $12,989 | Not yet published | Pending: indexation |
| Ontario non-eligible dividend tax credit | 2.9863% | 1.9863% | Announced, not confirmed as law |
Quebec has its own pension plan (QPP) and an EI rate of 1.29% in 2027 (1.30% in 2026). Ontario's $150,000 and $220,000 thresholds are not indexed.
Take-home pay on $70,000 in Ontario: 2026 vs 2027
Adopted CPP and EI changes; brackets and credits kept at 2026 values
Single employee in Ontario, no children, standard credits, one employer, same gross in both years. The salary is below the YMPE ($74,600 in 2026), so CPP applies to all $66,500. Base CPP and EI earn the credit, so it shrinks on $133.00 β $24.93 = $108.07. Indexation of brackets and personal amounts is pending and will add to the result.
Employees
Who gains from the CPP cut
Everyone with employment income outside Quebec pays 0.2% less on earnings between $3,500 and the YMPE, temporary foreign workers included. Employers save the same.
Higher earners: a higher 2027 YMPE (pending) partly offsets the cut, because more pay falls under CPP.
EI goes the other way: the rate edges up to 1.64% and the ceiling rises by $1,900, so the maximum premium grows by $38.05.
Brackets and credits: November
Rates do not change, but thresholds, the basic personal amount and the Canada employment amount ($1,501 in 2026) are indexed to inflation: average CPI for October 2025 to September 2026 against the previous 12 months. September CPI comes out around 19β20 October; CRA usually posts the 2027 amounts in mid to late November (the 2026 page went up on 24 November 2025). The federal Budget 2026 is expected in November, date not yet announced, and it or the Ontario Fall Economic Statement could add 2027 measures.
Self-employed and business owners
You pay both halves, so you save twice
Self-employed CPP falls from 11.9% to 11.5%. At $70,000 of net self-employment income that is 0.4% Γ $66,500 = $266 a year before tax; after tax a little less, because part of CPP is a credit and part a deduction. CPP2 stays at 8%, and EI for the self-employed remains optional. Paying yourself non-eligible dividends from an Ontario corporation? Ontario Budget 2026 announced a cut in their tax credit from 2.9863% to 1.9863% from 2027, not yet confirmed as enacted.
Newcomers
Same rules as residents
Canada has no special tax regime for newcomers, and no 2027 change for them was found. If you become resident partway through the year, the basic personal amount and other personal credits are prorated. The CPP cut applies to anyone with Canadian employment income outside Quebec, whatever their status.
Payslips change in January, returns don't
FAQ
How much will the CPP rate cut save me in 2027?
Employees save 0.2% of earnings between $3,500 and the YMPE: $133 a year on $70,000, or about $108 after the smaller tax credit. The self-employed save 0.4%. The maximum saving depends on the 2027 YMPE, due in early November.
What are the EI rate and maximum for 2027?
Outside Quebec, 1.64% on insurable earnings up to $70,800, so the maximum employee premium is $1,161.12. Employers pay 1.4 times that, up to $1,625.57. In Quebec the employee rate is 1.29%.
When will the 2027 tax brackets and basic personal amount be published?
CRA usually publishes the indexation in mid to late November, after September CPI comes out around 19β20 October. Until then the latest official values are for 2026: federal BPA $16,452, first bracket up to $58,523.
Does the CPP cut reduce my future pension?
No. CPP benefits are not reduced. The lower rate is possible because the Chief Actuary's 33rd report found the plan sustainable.
