Check your pay cheque: Here's why your take-home pay will decrease this month

Have you noticed your take-home pay decrease on your pay cheque this month?

That’s because there have been changes to the Canada Pension Plan and federal Employment Insurance (EI) impacting 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 will be going up.

Each year, employees pay into EI until they hit the income threshold — known as Maximum Insurable Earnings or MIE. But in 2024, that number is also rising. It will increase from $61,500 to $63,200 in 2023. This means the maximum annual EI contribution for an employer goes up 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 will be $3,867.50 — up from $3,754.45 in 2023.

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

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

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

The CFIB has recently spoken out about these changes.

“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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