Payroll Question: Income tax deduction increases once the CPP & EI amounts are reached.

Question

I was wondering why the income tax amounts would increase after the CPP and EI max amounts had reached. Anyone have any ideas?

C White · Accepted Answer

This is correct. If you get ahold of a T4 slip and look at the back, you'll see that the CPP and EI deductions go to lines 30800, 22215, and 31200 of your tax return. Each of those lines reduces your overall tax owing for the year. So, when you stop deducting CPP and EI from someone's paycheque, this means that all further payments for them this year need slightly higher taxes.

Sage 50 Canada

Payroll Question: Income tax deduction increases once the CPP & EI amounts are reached.

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