Paycheque looking smaller? This could be why your take-home pay has decreased

Have you noticed your take-home pay decrease on your paycheque in the last couple of months?

Don’t worry — it’s likely not an issue you’ll need to confront your employer’s payroll department over.

Changes to the Canada Pension Plan and federal Employment Insurance (EI) have impacted your take-home pay.

As of January 1, 2024, the EI premium rate increased from $1.63 to $1.66 for every $100 for employees and from $2.28 to $2.32 for every $100 for employers.

And it’s not just EI premium rates that have increased this year.

Each year, employees pay into EI until they hit the income threshold — known as Maximum Insurable Earnings or MIE. Now, that number has also risen, increasing from $61,500 to $63,200 in 2023. This means an employer’s maximum annual EI contribution has increased by $65.34 to $1,468.77 per employee.

Regarding CPP contributions, an annual ceiling of 5.95% has to be paid, and the maximum contribution is now $3,867.50 — up from $3,754.45 in 2023.

According to the federal government, the maximum pensionable earnings under the CPP this year are $68,500, up from $66,600 in 2023.

The Canadian Federation of Independent Business (CFIB) notes that these changes mean payroll taxes have increased for employers by $366 per employee, and total employer contributions for CPP and EI could add up to $5,524 per employee this year.

What’s more, this doesn’t consider a business’s location. An employer could pay between three to seven payroll taxes depending on location.

The CFIB spoke out about these changes last year.

“When a government increases payroll taxes, it increases the cost of labour, forcing many business owners to make tough decisions,” said Christina Santini, CFIB’s director of national affairs, in a previous statement to Daily Hive.

“It may require some business owners to review their wage and hiring plans, decrease expenditures, or increase the price of their products and services. But businesses can only raise prices so much while remaining competitive.”

On January 4, the CFIB emphasized that the changes put employees in “an even tougher position, especially when many employees will be looking for a salary increase at the beginning of the year.”

According to a recent CFIB survey, most small businesses (77%) want governments to focus on addressing the rising prices and the cost of business, and 74% want governments to reduce the “tax burden.”

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