How to read a Canadian paystub

The first time you see a paycheque, the math feels broken. Your offer letter said $70,000. Your bank deposit says something a lot smaller. The paystub is the document that explains the gap, and once you can read it, you understand exactly where every dollar between your salary and your bank account goes.

A Canadian paystub has two halves. The top is what you earned (your gross pay). The bottom is everything subtracted before the money reaches you (your deductions). What lands in your account is the difference: your net pay, sometimes called take-home pay.

Most of the deductions are not optional and not negotiable. Two are taxes, two are mandatory federal programs, and the rest depend on your employer and your benefits. This post walks through each line, then puts them together in a real example.

Your earnings — the top of the stub

The earnings section shows what you are being paid for this period. For a salaried employee it is usually one line: your annual salary divided by the number of pay periods. Paid bi-weekly means 26 cheques a year; paid semi-monthly means 24. Hourly workers see hours times rate, often split into regular and overtime lines.

Two numbers usually appear for each line: the amount for this pay period, and the year-to-date (YTD) total. The YTD column is worth watching, because some deductions stop partway through the year once you hit an annual cap.

The deductions, line by line

Federal and provincial income tax

Two separate lines, withheld together by your employer and sent to the CRA on your behalf. The amount is an estimate of what you will owe based on your annual income and the TD1 form you filled out when you were hired. It applies your marginal tax rate to your taxable income, period by period.

Because it is an estimate, the year-end reconciliation when you file your T1 return settles the difference. Withheld too much across the year and you get a refund. Withheld too little and you owe. A large refund is not free money; it means you lent the government your money interest-free all year.

CPP — Canada Pension Plan

The Canada Pension Plan deduction funds your future CPP retirement benefit. The employee rate is 5.95%, charged on your earnings above a $3,500basic exemption, up to the year's maximum pensionable earnings (around $74,000 for 2026, indexed annually). Your employer matches your contribution dollar for dollar.

Earn above the maximum and a second tier kicks in: CPP2, charged at 4% on earnings between the first ceiling and a higher second ceiling (around $85,000 for 2026). Both CPP lines stop for the year once you hit the caps, which is why higher earners see their take-home pay rise slightly in the final months of the year. Quebec workers pay into the QPP instead, at a slightly higher rate.

EI — Employment Insurance

Employment Insurance funds benefits for job loss, parental leave, sickness, and compassionate care. The employee premium rate is about 1.64% of insurable earnings, up to an annual maximum (insurable earnings cap around $67,000 for 2026). Like CPP, it stops once you hit the cap. Your employer pays 1.4 times your premium on top. Quebec has a lower federal EI rate because the province runs its own parental-insurance plan (QPIP), which appears as a separate line.

RPP — registered pension plan

If your employer offers a pension, your contribution shows up here. Unlike CPP and EI, RPP contributions are deducted from your taxable income, so they lower the income tax withheld on the same paystub. If your employer matches your pension contributions, declining to participate is leaving free money on the table. This line only appears if you have a workplace pension.

Other deductions

Below the mandatory lines you may see union dues, extended health and dental premiums, group life insurance, a stock purchase plan, charitable donations, or a court-ordered garnishment. Some of these (like union dues and RRSP contributions made through payroll) reduce your taxable income; others (like benefit premiums) do not. The stub should label each one.

A sample paystub, walked through

Here is a single bi-weekly paystub for a salaried $70,000 Ontario employee with no workplace pension. Numbers are approximate and rounded; your exact withholding depends on your TD1, your province, and your benefits.

On a $70,000 salary, this Ontario earner takes home about $2,095 every two weeks, or roughly $54,500 a year. The total deduction rate is about 22%. Of that, only about half is income tax; CPP and EI together account for a meaningful chunk, and unlike income tax they are not refundable at year-end.

Gross vs net vs taxable income

These three numbers trip people up constantly, so it is worth being precise:

• Gross income is your total earnings before anything comes out. It is the number on your offer letter.
• Net income is your take-home pay after all deductions. It is what you actually budget with.
• Taxable income is gross minus the deductions the CRA lets you subtract before calculating tax: RPP contributions, union dues, RRSP contributions, and a few others. CPP and EI do not reduce taxable income; instead they generate tax credits. This is why your taxable income on your T4 is often a little lower than your gross salary but not by the full amount of your deductions.

When a lender asks for your income, they usually mean gross. When you build a budget, you should use net. When you estimate your tax bill, you use taxable. Mixing them up is one of the most common personal-finance mistakes.

What to check on every paystub

Most people glance at the net number and file the stub away. Worth a thirty-second check each period:

• Your gross matches your expected salary divided by pay periods.
• Your CPP and EI have stopped if your YTD has passed the annual maximums (a sign you are near the ceilings).
• Any benefit or pension deductions match what you actually signed up for.
• Your vacation pay accrual, if shown, is tracking correctly.