How the calculator works
CanadaPaycheque implements the payroll formulas that the Canada Revenue Agency publishes for software developers, and tests them against the CRA's own online calculator.
The source: CRA T4127
The CRA publishes the T4127 Payroll Deductions Formulas twice a year, in January and July. We use the 123rd edition, effective July 1, 2026, with every rate, threshold and constant copied from its tables (and from the January edition for the parts the July edition does not reproduce).
For each paycheque we follow "Option 1" of the guide, the same method behind the CRA's tables and its online calculator:
- Work out CPP, CPP2 and EI for the pay, with the per-period basic exemption and the yearly maximums.
- Annualize the taxable pay: gross pay minus RRSP/RPP, union dues and the enhanced part of CPP, times the number of pays in the year.
- Apply the federal brackets and subtract credits for the basic personal amount, base CPP, EI and the Canada employment amount.
- Do the same with the provincial or territorial brackets and credits, plus the local extras: Ontario surtax, Health Premium and tax reduction, the BC tax reduction, Alberta's supplemental credit and so on.
- Divide each tax by the number of pays and round to the cent.
Rounding follows the guide and the PDOC: amounts are rounded half up to the cent, the per-period CPP exemption is truncated, and intermediate credits are rounded to the cent.
Quebec: Revenu Québec's formulas
Quebec runs its own payroll rules, published by Revenu Québec in the TP-1015.F-V formulas guide. For Quebec employees we:
- Withhold the Quebec Pension Plan (QPP, 6.3%) instead of CPP, the Quebec Parental Insurance Plan (QPIP, 0.43%) and EI at the Quebec rate of 1.3%.
- Work out Quebec income tax on the annualized pay minus RRSP/RPP, the enhanced part of the QPP and the 6% deduction for workers, with the four Quebec brackets and a 14% credit on the TP-1015.3 amount.
- Calculate federal tax as everywhere else, with credits for QPP, EI and QPIP, then take off the 16.5% Quebec abatement.
Checked against the PDOC and WebRAS
Every time the site starts, it recalculates 214 paycheques taken from the CRA's Payroll Deductions Online Calculator (PDOC): every province and territory, salaries of $30,000, $50,000, $75,000, $100,000 and $150,000, weekly, biweekly and monthly pay, plus extra cases for low incomes, top brackets, CPP2 and the year-to-date maximums. Federal tax, provincial tax, CPP, CPP2, EI and net pay must all match to the cent.
In Quebec the PDOC only covers the federal side (federal tax, QPP and EI), so Quebec tax, QPP and QPIP are also checked against Revenu Québec's WebRAS calculator. In one case WebRAS gives one cent less QPP than the PDOC (it rounds the per-period exemption instead of truncating it); we follow the written formula and the PDOC, as Revenu Québec says the formulas prevail.
Today: 214 of 214 paycheques match.
| Province / territory | Cases | Match | Result |
|---|---|---|---|
| Ontario | 20 | 20 | ✓ to the cent |
| Quebec (PDOC + WebRAS) | 23 | 23 | ✓ to the cent |
| British Columbia | 16 | 16 | ✓ to the cent |
| Alberta | 16 | 16 | ✓ to the cent |
| Manitoba | 16 | 16 | ✓ to the cent |
| Saskatchewan | 15 | 15 | ✓ to the cent |
| Nova Scotia | 16 | 16 | ✓ to the cent |
| New Brunswick | 15 | 15 | ✓ to the cent |
| Newfoundland and Labrador | 15 | 15 | ✓ to the cent |
| Prince Edward Island | 16 | 16 | ✓ to the cent |
| Northwest Territories | 15 | 15 | ✓ to the cent |
| Yukon | 16 | 16 | ✓ to the cent |
| Nunavut | 15 | 15 | ✓ to the cent |
Two calculators, two questions
Payroll (for employers) answers "how much do I withhold from this paycheque?". It uses exactly what the CRA tells employers to use from July 1, 2026, including the catch-up rates for British Columbia, Newfoundland and Labrador and Prince Edward Island, which changed their 2026 rules in the middle of the year.
Salary after tax (for employees) answers "how much will I keep this year?". It calculates the whole year at once with the full-year 2026 rates, so it is closer to what your tax return will show for employment income.
Defaults and limits
- Without TD1 amounts we use the basic personal amounts. Above $181,440 of income the federal basic personal amount (and Yukon's) shrinks using the CRA formula; the PDOC pre-fills the full $16,452, so very high incomes can differ there unless you enter the same TD1 amount.
- We do not handle bonuses, commissions, taxable benefits, pensions, Indian Act exemptions or employees transferred into or out of Quebec yet.
- In Quebec we do not include Fonds de solidarité FTQ or Fondaction share purchases through payroll, and the employer cost leaves out the health services fund, CNESST and other employer levies, which depend on the business.
- Payroll withholding is an estimate of your final tax. Other income, deductions and credits on your return can change what you owe or get back.
Updates
When the CRA publishes a new edition (every January and July), we add its constants, take a new set of PDOC cases and only publish once they match.