Employment Insurance in Canada works as a mandatory payroll deduction on the way in and as taxable income on the way out. For 2026, employees outside Quebec pay 1.63 percent of insurable earnings up to a yearly maximum of $1,123.07, and any EI benefits you later collect are taxed like other income, with tax withheld from each payment and an extra repayment owed if your net income for the year climbs above $86,125. That is the shape of EI tax in Canada: a premium going in, withholding on benefits going out, and a clawback at the top.
What You Pay in EI Premiums in 2026
Your employer deducts EI premiums automatically from every paycheque. The 2026 rate for employees outside Quebec is 1.63 percent of insurable earnings, applied to gross earnings each pay period before any other deductions. Insurable earnings include regular wages, salaries, commissions, and bonuses.
Premiums stop once your year-to-date insurable earnings reach $68,900, the Maximum Insurable Earnings ceiling for the year. At that point your employer stops deducting EI for the rest of the calendar year and your take-home pay ticks up. The most any employee outside Quebec will pay in 2026 is $1,123.07.1Canada.ca. EI Premium Rates and Maximums
Quebec residents pay a lower rate of 1.30 percent, capped at $895.70 for the year, because Quebec runs its own parental insurance plan through the Quebec Parental Insurance Plan.
If you hold more than one job, each employer deducts EI independently, without knowing what the others have taken. When your combined premiums exceed the annual maximum, the Canada Revenue Agency refunds the overpayment when you file your return, or applies it against any balance you owe.2Canada.ca. Line 45000 – Employment Insurance Overpayment
What Your Employer Pays
Employers contribute 1.4 times whatever is deducted from your pay. In 2026 that puts the employer’s maximum annual premium at $1,572.30 per employee, remitted to the CRA through the regular payroll process alongside income tax and CPP.1Canada.ca. EI Premium Rates and Maximums
How EI Benefits Are Taxed When You Collect
EI benefits are taxable income. Service Canada withholds income tax from each payment before it lands in your account, in the same way an employer withholds tax from wages.3Government of Canada. EI and Repayment of Benefits at Income Tax Time
There is normally a one-week waiting period at the start of a claim during which no benefits are paid, similar to a deductible on an insurance policy. As a temporary measure, the waiting period is waived for all new EI claims starting between March 30, 2025 and April 11, 2026.4Canada.ca. Temporary Employment Insurance Measures to Respond to Major Economic Conditions
The withholding rate applied to EI payments is a basic rate that does not account for wages you already earned earlier in the year. If you worked several months before losing your job, your wages plus benefits can push you into a higher tax bracket than the withholding assumes, and you end up owing money at filing time. You can ask Service Canada through your My Service Canada Account to withhold extra tax from each EI payment, which spreads the cost over the year instead of leaving a bill in April.
The EI Clawback for Higher Earners
On top of regular income tax, higher-income recipients repay part of their benefits directly. If your net income for 2026 is more than $86,125, you must repay 30 percent of the lesser of two amounts: your net income above the threshold, or the total regular benefits you received during the tax year.3Government of Canada. EI and Repayment of Benefits at Income Tax Time
Two exemptions matter. The clawback applies only to regular benefits and regular fishing benefits, so recipients of special benefits — maternity, parental, sickness, compassionate care, or family caregiver benefits — are exempt regardless of income. You are also exempt if you received less than one week of regular or fishing benefits in the ten tax years before the current one, which usually covers first-time claimants.
A claim that spans two calendar years can qualify for the exemption in the first year and lose it in the second, because by the second year there is at least one week of regular benefits in the preceding ten-year window.3Government of Canada. EI and Repayment of Benefits at Income Tax Time
Reporting EI on Your Tax Return
After year-end, Service Canada issues a T4E slip showing your total EI benefits and the tax already withheld. The T4E is available in My Service Canada Account as early as February 1, and paper copies arrive by mid-March for anyone not on electronic delivery.5Employment and Social Development Canada. Employment Insurance Tax Information
Take the amount in Box 14, subtract any amount in Box 18 (which applies only to tax-exempt benefits under the Indian Act), and report the result on line 11900 of your federal return. The income tax already withheld in Box 22 goes on line 43700. Any clawback repayment shown on the slip is reported on line 23500.6Canada Revenue Agency. T4E Slip: Statement of Employment Insurance and Other Benefits
The CRA receives a copy of every T4E, so leaving EI income off your return will lead to a reassessment. Any balance owing from underwithholding or clawback repayment accrues interest if you do not pay by the filing deadline.
Self-Employed Workers and EI
Self-employed workers do not pay EI premiums by default, and they cannot collect regular EI benefits if their business slows down. They can voluntarily opt in for special benefits only by entering an agreement with the Canada Employment Insurance Commission through My Service Canada Account.7Government of Canada. Self-Employed Benefits – Who Can Qualify
The agreement has to be in force for at least 12 months before a first claim. Premiums are paid on the annual tax return rather than through payroll: 1.63 percent of self-employment income up to $1,123.07 in 2026 outside Quebec, or 1.30 percent up to $895.70 in Quebec. Self-employed participants do not pay the employer’s 1.4 share, and in return they have access only to special benefits, not regular EI for lack of work.8Canada.ca. Self-Employed Special Benefits – Premiums
Qualifying claimants receive up to 55 percent of their earnings, to a maximum of $729 per week in 2026, and those payments are taxed the same way as employee EI benefits.9Government of Canada. Benefits for Self-Employed People