Gross Income vs Net Income Term Definition Example ($70,000 salary in Ontario) Gross income Total salary/wages before deductions $70,000 Net income (take-home) What you receive after all deductions ~$54,000 CRA line 23600 net income Gross income minus specific tax deductions (RRSP, union dues, childcare) Varies Taxable income Net income minus personal amounts — what your tax rate applies to Varies
What Gets Deducted from Your Paycheque Mandatory Deductions Deduction 2026 Rate Maximum Annual Purpose CPP (Canada Pension Plan) 5.95% of pensionable earnings ($3,500–$71,300) ~$3,867 (base) + CPP2 Retirement pension CPP2 (second ceiling) 4% on earnings $71,300–$81,200 ~$396 Enhanced retirement pension EI (Employment Insurance) 1.64% of insurable earnings ~$1,077 Unemployment, parental leave Federal income tax 15–33% (progressive brackets) Varies Federal government services Provincial income tax 5–21% (varies by province) Varies Provincial government services
Optional/Employer Deductions Deduction Typical Amount Notes Employer pension (DB or DC) 3–9% of salary Matched by employer Group RRSP Varies May include employer match Health/dental benefits $50–200/month Employer-sponsored plan Union dues 1–3% of salary If unionized Parking / transit Varies If applicable Life insurance / disability Varies Employer-sponsored
Net Income by Salary Level (Ontario, 2026) Gross Annual Salary Biweekly Gross Federal Tax Provincial Tax CPP EI Biweekly Net Annual Net $40,000 $1,538 $110 $55 $75 $25 ~$1,273 ~$33,100 $50,000 $1,923 $165 $85 $100 $32 ~$1,541 ~$40,100 $60,000 $2,308 $225 $130 $125 $38 ~$1,790 ~$46,500 $70,000 $2,692 $295 $180 $150 $44 ~$2,023 ~$52,600 $80,000 $3,077 $370 $230 $150 $50 ~$2,277 ~$59,200 $100,000 $3,846 $530 $345 $150 $50 ~$2,771 ~$72,000 $120,000 $4,615 $715 $465 $150 $50 ~$3,235 ~$84,100 $150,000 $5,769 $990 $630 $150 $50 ~$3,949 ~$102,700
Estimates assume single, no dependents, only basic personal tax credits. Actual amounts vary.
Net Income by Province ($70,000 Salary) Province Provincial Tax Rate Approximate Annual Net Effective Tax Rate Alberta 10% flat (first bracket) ~$55,400 ~20.9% British Columbia 5.06–20.5% ~$53,900 ~23.0% Ontario 5.05–20.53% ~$52,600 ~24.9% Quebec 14–25.75% (+ lower CPP) ~$50,500 ~27.9% Manitoba 10.8–17.4% ~$52,100 ~25.6% Saskatchewan 10.5–14.5% ~$53,000 ~24.3% Nova Scotia 8.79–21% ~$51,800 ~26.0% New Brunswick 9.4–19.5% ~$52,200 ~25.4%
Quebec has its own pension plan (QPP) instead of CPP with slightly different rates.
How to Read Your Pay Stub Line What It Shows Where It Goes Gross pay Total earnings this period Starting point Federal tax Income tax withheld for CRA Federal government Provincial tax Income tax withheld for province Provincial government CPP/QPP Pension contribution Your future CPP pension EI Employment insurance premium EI fund Other deductions Benefits, pension, union, etc. Various Net pay What hits your bank account Your account YTD earnings Cumulative gross pay this year Reference YTD deductions Cumulative deductions this year Reference
Net Income for Tax Purposes (Line 23600) CRA “net income” on your tax return (line 23600) is different from your paycheque net income:
What Reduces CRA Net Income Example RRSP contributions Deduct contributions from gross income Union/professional dues Deduct from gross income Childcare expenses Deduct eligible amounts Moving expenses (for work/school) Deduct if you moved 40+ km closer Employment expenses (if eligible) Home office, vehicle, supplies
CRA net income affects eligibility for benefits like CCB, GST/HST credit, and OAS clawback.
Net income calculation example (Ontario, $70,000 salary, 2025) Item Amount Gross salary $70,000 Federal income tax −$9,640 Ontario provincial tax −$4,910 CPP contributions −$3,867 EI premiums −$1,049 After-tax take-home ~$50,534
Approximate; excludes Ontario surtax phase-in, additional credits, RRSP deductions.
Take-home is approximately 72% of gross salary at this income level in Ontario. The percentage varies by province:
Province Take-home % at $70K Key driver Alberta ~74% No provincial sales tax; lower provincial rate Ontario ~72% Average BC ~72% Similar to Ontario Quebec ~67% High provincial tax + Quebec Pension Plan Nova Scotia ~70% Higher provincial rates
Frequently asked questions What is the difference between net income and take-home pay?
Net income (Line 23600 on your T1) is your total income minus certain deductions (RRSP contributions, union dues, childcare, etc.) — used for calculating benefit eligibility and provincial income tax. Take-home pay is what actually deposits in your bank account after all payroll deductions (taxes, CPP, EI). They are different numbers: net income does not subtract income taxes owed; take-home pay does.
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