Canadians are about to take home less from each paycheque starting in January, as income taxes are set to increase.
Federal Employment Insurance (EI) and the Canada Pension Plan (CPP) will have changes made to them in 2024 that will lessen the amount of how much Canadians will ultimately take home.
The Canadian Federation of Independent Business (CFIB) provided a breakdown of what the new year will look like for both employees and employers.
Beginning on Jan. 1, the EI premium rate will go from $1.63 to $1.66 per $100 earned for employees and from $2.28 to $2,32 for every $100 earned by employers.
Additionally, the rate for Maximum Insurable Earnings (MIE) will be increased from $61,500 to $63,200.
The MIE is the maximum threshold that employees have to pay into EI, meaning that the annual maximum for EI will increase for employers to $1,468.77 per employee, a $65.34 difference compared to last year.
CPP contributions, which have an annual ceiling of 5.95%, will have its maximum contribution raised from $3,754.45 to $3,867.50.
The maximum pensionable earnings under the CPP will also increase from $66,000 to $68,500 next year, according to the federal government.
In 2024, a second CPP ceiling will also be introduced that will require a 4% contribution from middle-income employees and their employers on incomes from $68,500 to $73,200, which makes for a maximum contribution of $188 for both the employer and employee.
These changes will make for an increase in payroll taxes for employers by $366 per employee, according to the CFIB.
Total employer contributions with CPP and EI combined could add up to $5,524 per employee in 2024.
Depending on where a business is located in Canada, an employer could wind up paying anywhere from three to seven various payroll taxes.
The CFIB released a statement in October expressing their discontent with the federal government for not utilizing the opportunity to reject the hike for the EI premium.
“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 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.”
“Payroll tax increases make it less affordable for employers to raise wages and create new jobs,” added Santini.
