The salary your employer quotes you when you initially get hired isn’t the actual amount that’s deposited into your bank account. In Canada, there’s a variety of deductions made to your salary, which means the earnings you’re left (net salary) with are lower than what your employer originally paid you (gross salary).
If you want to know exactly how much pay you take home, you’ll need to figure out what deductions will be made. Understanding what your ‘net’ salary is, can help you better budget, save and ensure that you can comfortably cover all your debt payments.
Let’s go over the different deductions that are made across Canada to help you determine your actual take home pay.
How To Calculate Your Take-Home Pay In Canada
To calculate your net salary or take-home pay, you’ll need to figure out how much federal and provincial taxes you’ll need to pay. Other deductions such as Canada Pension Plan (CPP), Quebec Pension Plan (QPP), Provincial Parental Insurance Plan (PPIP), Quebec Parental Insurance Plan (QPIP) and Employment Insurance (EI), should also be taken into consideration.
Federal Tax
Federal tax is calculated based on gross taxable income after non-refundable tax credits have been applied, including CPP/QPP, QPIP, and EI premiums. In Canada, income is taxed at multiple tax brackets. In general, those with lower incomes pay a lower percentage in taxes than those with higher incomes.
Federal Tax brackets In Canada
| Federal Tax Rate | Federal Income Tax Brackets |
| 15% | Applicable to taxable income up to $55,867 |
| 20.5% | Applicable to taxable income over $55,867 up to $111,733 |
| 26% | Applicable to taxable income over $111,733 up to $173,205 |
| 29% | Applicable to taxable income over $173,205 up to $246,752 |
| 33% | Applicable to taxable income over $246,752 |
Provincial Tax
Like federal tax, provincial tax is calculated using different tax brackets as well, after tax credits are applied. Each province has its own respective tax brackets.
The Canada Revenue Agency (CRA) handles individual income taxes for the government, except for Quebec.
Tax Rate By Province In Canada
Each province and territory has its own tax brackets based on annual salaries. The following chart outlines the tax rates in the four major provinces in Canada:
Tax Rate In Quebec
| Quebec | – 15% applicable to the first $46,295 of taxable income – 20% applicable to taxable income from over $46,295 to $92,580 – 24% applicable to taxable income from over $92,580 to $112,655 – 25.75% applicable to taxable income amounts over $112,655 |
Tax Rate In Ontario
| Ontario | – 5.05% applicable to the first $46,226 of taxable income – 9.15% applicable to the next $92,454 of taxable income – 11.16% applicable to the next $150,000 of taxable income – 12.16% applicable to the next $220,000 of taxable income – 13.16% applicable to taxable income amounts over $220,000 |
Tax Rate In British Columbia
| British Columbia | – 5.06% applicable to the first $43,070 of taxable income – 7.7% applicable to the next $86,141 of taxable income – 10.5% applicable to the next $98,901 of taxable income – 12.29% applicable to the next $120,094 of taxable income – 14.7% applicable to the next $162,832 of taxable income – 16.8% applicable to the next $227,091 of taxable income – 20.5% applicable to taxable income amounts over $227,091 |
Tax Rate In Alberta
| Alberta | – 10% applicable to the first $131,220 of taxable income – 12% applicable to the next $26,244 of taxable income – 13% applicable to the next $52,488 of taxable income – 14% applicable to the next $104,976 of taxable income – 15% applicable to taxable income amounts over $314,928 |
How Much Provincial Taxes Would You Pay?
Using the example from above, let’s see how much provincial taxes you’d pay on a $150,000 annual income.
| Provincial Tax | Federal Tax | CPP/EI/QPP/QPIP | Total Tax | Net Salary | |
| Quebec | $27,897 | $24,870 | $4935 | $57,701 | $92,299 |
| Ontario | $17,360 | $30,717 | $4,453 | $52,530 | $97,470 |
| British Columbia | $13,611 | $30,717 | $4,453 | $48,781 | $101,219 |
| Alberta | $14,931 | $30,717 | $4,453 | $50,101 | $99,899 |
How Do QPIP, CPP/QPP, And EI Premiums Affect Your Take-Home Pay?
As mentioned, in addition to the federal and provincial taxes, other deductions such as QPIP, CPP/QPP, and EI premiums are also deducted by employers directly from your pay. As such, when calculating your net take-home pay, you must include the following deductions:
- Canada Pension Plan (CPP) – The CPP contributions are made for retirement pensions. When you retire in the future, you’ll be able to apply for a pension and receive regular income from the government.
- Quebec Pension Plan (QPP) – Quebec has its own pension plan called the Quebec Pension Plan. Instead of making contributions to the CPP, you’ll make contributions to the QPP.
- Employment Insurance (EI) – EI provides temporary financial relief for those who are unemployed due to job loss, pregnancy, illness and other reasons.
What Is QPIP?
Another deduction you may see from your salary is the QPIP. The Quebec Parental Insurance Plan (QPIP) is a mandatory social insurance program that provides financial assistance to parents of newborn or adopted children who take parental leave from work. It’s administered by the province of Quebec. In fact, Quebec is the only province in Canada that offers such a program.
This benefit pays parents a percentage of their income while they’re off caring for their children.
For 2022, QPIP deductions are as follows:
- Employees: 0.494% of salaries up to $88,000 for a maximum premium of $434.72
- Employers: 0.692% contribution rate for a maximum premium of $608.96
- Self-employed: 0.878% for a maximum premium of $772.64
Net Salary By Income In Canada
As mentioned earlier, the provincial tax varies by province. For illustration purposes, the following chart outlines what Ontario employees pay in federal tax, provincial tax, CPP, and EI benefits based on various gross salaries:
| Gross Salary | Federal Tax | Provincial Tax | CPP Deduction | EI Deduction | Total Tax | Net Salary |
| $10,000 | $1,228 | $443 | $371 | $158 | $2,199 | $7,801 |
| $30,000 | $4,009 | $1,715 | $1,511 | $474 | $7,709 | $22,291 |
| $60,000 | $8,721 | $3,984 | $3,221 | $948 | $16,874 | $43,126 |
| $100,000 | $16,878 | $8,655 | $3,500 | $953 | $29,986 | $70,014 |
| $150,000 | $30,717 | $17,360 | $3,500 | $953 | $52,530 | $97,470 |
Average Salary In Canada
According to Statistics Canada, the average salary as of 2020 is $51,300 for Canadians over the age of 16. That’s an increase of more than $2,000 from 2019, when the average salary was $49,200.
When broken down by gender, the average and median salary in Canada is as follows:
| 2019 | 2020 | |
| Average Income For Women | $41,600 | $44,200 |
| Average Income For Men | $56,900 | $58,600 |
| Median Income For Women | $32,500 | $34,700 |
| Median Income For Men | $44,200 | $45,000 |
Minimum Wage Rates In Canada
The minimum wage rate is the lowest amount that an employer can legally pay their workers in Canada. Most employees are eligible for minimum wage, regardless of their employment status and pay structure (ie. part-time or full-time, hourly rate pay or salary, etc). However, some employees have jobs that are exempt from the minimum wage regulations under each province’s respective employment standards legislation.
Minimum wage amounts typically change every year and are tied to the Consumer Price Index.
There is no federal minimum wage in Canada. Instead, each province has its own minimum wage thresholds, as illustrated in the chart below (as of June 1, 2022):
| Province / Territory | Minimum Hourly Wage (2021) | Minimum Hourly Wage (2020) |
| Alberta | $15.00 | $15.00 |
| British Columbia | $15.20 | $13.85 |
| Manitoba | $11.95 | $11.65 |
| New Brunswick | $11.75 | $11.50 |
| Newfoundland and Labrador | $12.75 | $11.65 |
| Northwest Territories | $15.20 | $13.46 |
| Nova Scotia | $12.95 | $11.55 |
| Nunavut | $16.00 | $13.00 |
| Ontario | $14.35 | $14.00 |
| Prince Edward Island | $13.00 | $12.25 |
| Quebec | $13.50 | $12.50 |
| Saskatchewan | $11.81 | $11.32 |
| Yukon | $15.20 | $12.71 |
How To Read Your Pay Stub In Canada
Like most individuals when you receive your take-home pay, you may not really look at much except for the net pay. However, there are plenty of other figures on your pay stub that you should understand.
The following are some common factors included on your pay stubs in Canada:
- Year to date. This section includes the total amount you’ve earned and total deductions from January 1st of the current year right up to your current pay period.
- Gross income. This is the total amount of pay you’ve earned before deductions are made.
- Employment insurance (EI). As previously mentioned, EI premiums are deducted by employers directly from your pay.
- CPP/QPP. Like EI benefits, you also contribute towards your pension.
- Other. Other deductions may be listed, such as the following:
- Health insurance premiums
- Union fees
- Private pension plans
- Transfers to registered accounts
- Charitable donations
- Net pay. This figure represents the amount of pay left after all deductions are made. This is your actual take-home pay.
Benefits Of Calculating Your Take-Home Pay
Your gross salary (ie. your salary before taxes are deducted) doesn’t give you an accurate picture of what you’re actually taking home. Instead, it’s your net salary that matters, as this represents your true take-home pay once you’ve taken care of your tax obligations.
Calculating your net salary offers the following benefits:
- You’ll be able to budget more effectively and accurately
- You’ll know exactly what you can afford when it comes to some of the bigger monthly payments, like rent and mortgage payments
- You can compare offers from different employers
- You can negotiate your net salary during a job interview
Take-Home Pay Across Canada
- Calculate Your Take-Home Pay In Nova Scotia
- Calculate Your Take-Home Pay In PEI
- Calculate Your Take-Home Pay In Saskatchewan
- Calculate Your Take-Home Pay In Newfoundland and Labrador
- Calculate Your Take-Home Pay In Alberta
- Calculate Your Take-Home Pay In British Columbia
- Calculate Your Take-Home Pay In Ontario
Take-Home Pay FAQs
Why do I have to pay EI premiums?
How are my CPP/QPP deductions calculated?
How much tax would I pay for minimum wage?
Final Thoughts
Understanding the difference between your gross pay versus your net pay allows you to more accurately and effectively budget your household expenses. Be sure to find out what your deductions are in the province or territory you reside in to help you calculate your net salary.
