Guide · Tax year 2026
Gross pay versus net pay
Gross pay is the number in the offer letter. Net pay is the number in your bank account. Everything interesting happens between them.
What comes off, and who decides it
Deductions fall into two groups, and the difference matters because only one of them is the same for everybody.
Statutory deductions are set by legislation and apply to every employee in the same circumstances: federal income tax, provincial or territorial income tax, the Canada Pension Plan or the Quebec Pension Plan, employment insurance, and in Quebec the parental insurance premium. Those are what this site calculates, and they are the same at your employer as at any other.
Workplace deductions are whatever else your employer takes off: contributions to a registered pension plan, group health and dental premiums, union dues, a payroll RRSP, parking, a share purchase plan, a court-ordered garnishment. None of them are modelled here, because they are specific to one employer and one person. Some of them, a payroll RRSP or a pension contribution for example, reduce the income your tax is calculated on, which makes the tax lower than the figures here.
Net pay is a smaller share of gross at higher salaries
Because income tax is progressive, the share of gross that survives falls as gross rises. It falls smoothly, though. There is no salary at which earning more leaves you with less.
| Gross | Income tax | CPP and EI | Net a year | Net a month | Kept |
|---|---|---|---|---|---|
| $40,000 | $4,363 | $2,824 | $32,814 | $2,734 | 82.0% |
| $60,000 | $8,320 | $4,340 | $47,340 | $3,945 | 78.9% |
| $80,000 | $14,127 | $5,570 | $60,303 | $5,025 | 75.4% |
| $100,000 | $20,024 | $5,770 | $74,207 | $6,184 | 74.2% |
| $150,000 | $39,911 | $5,770 | $104,319 | $8,693 | 69.5% |
| $250,000 | $87,685 | $5,770 | $156,546 | $13,045 | 62.6% |
At $40,000 the deductions take 18.0% of gross. At $250,000 they take 37.4%. Notice that the pension and insurance contributions are almost identical in dollar terms at the top and bottom of the table, $2,824 against $5,770, because both are capped. As a share of pay they shrink to nothing as salary climbs, which partly offsets the rising tax.
Gross is not what you cost your employer either
The employer matches your pension contribution dollar for dollar and pays 1.4 times your employment insurance premium, and in several provinces pays a payroll levy on top. The full cost of employing you is meaningfully above your gross salary. That is useful context when negotiating, and none of it is money that passes through your hands, so none of it appears in any figure on this site.
Turning net back into gross
The more useful question is often the reverse one: what salary do I need in order to take home a particular amount each month. That cannot be answered by dividing, because the relationship between gross and net is not linear. The desired take-home calculator solves it by searching for the gross figure that produces the net you asked for.
Common questions
Is net pay the same as take-home pay?
Yes. Net pay, take-home pay and pay after deductions all mean the amount that reaches your bank account after everything has come off.
Why is my first pay cheque of the year smaller than my last one?
Pension contributions and employment insurance premiums both stop once you reach an annual ceiling. Early in the year both are being deducted; late in the year one or both may have finished, so the same gross pay produces a larger net amount.
Does a salary offer of a given amount mean gross or net?
In Canada a salary figure in an offer is always gross, before any deductions. Employers quote annual gross and pay it out across the pay periods in the year.
Why does my pay stub not match this calculator exactly?
Three ordinary reasons. Your employer applies the credits you claimed on your TD1 form and this calculator assumes only the basic claim. Payroll works per pay period and prorates the pension basic exemption across each one, while this works annually. And your employer may deduct benefits, pension or union dues that are specific to your workplace.
Related
- Reading your pay statement
- The full calculation
- Marginal versus average
- Salary after tax calculator
- Desired take-home
- All guides
Sources
- Current year tax rates and income brackets (2026) · Canada Revenue Agency · checked
- CPP contribution rates, maximums and exemptions, 2026 · Canada Revenue Agency · checked
- T4032 Payroll Deductions Tables, January 2026 · Canada Revenue Agency · checked
- Canada Employment Insurance Commission sets the 2026 Employment Insurance premium rate · Employment and Social Development Canada · checked
Reviewed 2026-08-18