Why Is So Much Tax Deducted From My Paycheque?
A Canadian paycheque can look very different from your gross salary because employers are required to withhold certain amounts. The three deductions employees notice most often are income tax, Canada Pension Plan contributions and Employment Insurance premiums.
The amount withheld during the year is an estimate based on payroll rules. Your final tax return calculates the actual income-tax result for the year.
Income tax
Employers use CRA payroll tables or approved calculation methods to determine federal and provincial or territorial tax withholding. The calculation depends on income, province of employment, pay frequency and information provided on tax-credit forms.
CPP contributions
Most employees outside Quebec contribute to CPP on pensionable earnings up to annual limits. The employer also contributes. An additional CPP contribution can apply to earnings within the second contribution range.
EI premiums
Employment Insurance premiums are deducted on insurable earnings up to an annual maximum. The employer also pays an employer premium.
Why the tax return can still be different
Payroll withholding does not know everything about your financial life. A second job, self-employment, investment income, deductions or credits can change the final result when all income is combined on the return.
FAQ
Does every employee pay the same deductions?
No. Deductions depend on income, province or territory, payroll frequency and other factors.
Why do CPP or EI deductions sometimes stop later in the year?
Once annual maximum contributions are reached, payroll deductions can change.
Can too much tax be withheld?
Yes. If more tax is withheld than your final tax liability, the difference can contribute to a refund.
Call to action
If your paycheque deductions and final tax result do not make sense together, GROWS Financial can review the return and explain the difference.
Related services: Personal Tax, Payroll.
Related reading: What Is a T4 Slip and When Will I Receive It?
Official sources for fact-checking
Last reviewed: October 21, 2026.