Ontario payroll deductions
The amounts to withhold from a Ontario paycheque this period: federal tax, provincial tax, employee CPP, and EI.
Net pay
$
Your deductions
Federal tax
Provincial tax
CPP
CPP2
EI
Total
Employer pays
These amounts are not withheld from you. They are the employer’s statutory CPP and EI premiums on this pay.
Employer CPP
Employer CPP2
Employer EI
Employer cost (gross + premiums)
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Show the working
| Factor | Value | Definition |
|---|---|---|
| A | Annual taxable income. (T4127 Chapter 4, Step 1) | |
| R | Federal tax rate that applies to the annual taxable income A. (T4127 Chapter 8, Table 8.1) | |
| K | Federal constant; the tax overcharged when applying the higher federal rates to A. (T4127 Chapter 8, Table 8.1) | |
| K1 | Federal non-refundable personal tax credit (lowest federal tax rate × TC). (T4127 Chapter 4, Step 2) | |
| K2 | Federal tax credit for base CPP contributions and EI premiums for the year. (T4127 Chapter 4, Step 2) | |
| K4 | Federal non-refundable tax credit calculated using the Canada employment amount. (T4127 Chapter 4, Step 2) | |
| T3 | Annual basic federal tax. (T4127 Chapter 4, Step 2) | |
| T1 | Annual federal tax deduction. (T4127 Chapter 4, Step 3) | |
| V | Provincial or territorial tax rate for the year. (T4127 Chapter 8, Table 8.1) | |
| KP | Provincial or territorial constant. (T4127 Chapter 8, Table 8.1) | |
| K1P | Provincial or territorial non-refundable personal tax credit (lowest provincial rate × TCP). (T4127 Chapter 4, Step 5) | |
| K2P | Provincial or territorial tax credit for base CPP contributions and EI premiums for the year. (T4127 Chapter 4, Step 5) | |
| T4 | Annual basic provincial or territorial tax. (T4127 Chapter 4, Step 4) | |
| V1 | Provincial surtax calculated on the basic provincial tax (Ontario only). (T4127 Chapter 4, Step 5) | |
| V2 | Ontario Health Premium calculated on taxable income. (T4127 Chapter 4, Step 5) | |
| S | Provincial tax reduction (Ontario and British Columbia). (T4127 Chapter 4, Step 5) | |
| T2 | Annual provincial or territorial tax deduction (except Quebec). (T4127 Chapter 4, Step 5) | |
| T | Estimated federal and provincial or territorial tax deductions for the pay period: round((T1+T2)/P)+L. This is the combined Step 6 quotient. It may differ by one cent from employee.total_tax, which is the sum of the separately rounded federal and provincial lines PDOC displays (round(T1/P)+L and round(T2/P)). Compare screen totals to employee.total_tax; keep breakdown.T as the T4127 figure. (T4127 Chapter 4, Step 6) | |
| C | Canada (or Quebec) Pension Plan contributions for the pay period. (T4127 Chapter 6) | |
| C2 | Second additional Canada (or Quebec) Pension Plan contributions for the pay period. (T4127 Chapter 6) | |
| EI | Employment insurance premiums for the pay period. (T4127 Chapter 7) | |
| F5 | Deductions for Canada Pension Plan additional contributions for the pay period. (T4127 Chapter 4, Step 1) | |
| BPAF | Federal Basic Personal Amount. (T4127 Chapter 2; Table 8.2) | |
| K3 | Other federal non-refundable tax credits authorized by a tax services office or tax centre. (T4127 Chapter 4, Step 2) | |
| K3P | Other provincial or territorial non-refundable tax credits authorized by a tax services office or tax centre. (T4127 Chapter 4, Step 5) | |
| K4P | Territorial non-refundable tax credit calculated using the provincial or territorial Canada employment amount. (T4127 Chapter 4, Step 5) | |
| K5P | Provincial supplemental non-refundable tax credit (lowest provincial tax rate). (T4127 Chapter 4, Step 5) | |
| LCF | Federal labour-sponsored funds tax credit. (T4127 Chapter 4, Step 3) | |
| LCP | Provincial or territorial labour-sponsored funds tax credit. (T4127 Chapter 4, Step 5) | |
| Y | Additional Ontario tax-reduction amount based on the number of eligible dependants, used in Factor S. (T4127 Chapter 4, Step 5) | |
| F5A | CPP additional-contribution deduction for the pay period taken from periodic income. (T4127 Chapter 4, Step 1) | |
| F5B | CPP additional-contribution deduction for the pay period taken from the non-periodic payment. (T4127 Chapter 4, Step 1) | |
| D | Employee’s year-to-date (before the pay period) Canada Pension Plan contribution with the employer. (T4127 Chapter 6) | |
| D1 | Employee’s year-to-date (before the pay period) employment insurance premium with the employer. (T4127 Chapter 7) | |
| D2 | Employee’s year-to-date (before the pay period) second additional CPP contribution with the employer. (T4127 Chapter 6) | |
| P | The number of pay periods in the year. (T4127 Chapter 4, Step 1) | |
| PR | The number of pay periods left in the year (including the current pay period). (T4127 Chapter 4, Step 1) | |
| PM | Total months during which CPP and/or QPP contributions are required (used to prorate the maximum contribution). (T4127 Chapter 6) | |
| CEA | Canada Employment Amount, a non-refundable tax credit used in the calculation for K4 and K4P. (T4127 Chapter 8, Table 8.2) | |
| TC | Total claim amount reported on federal Form TD1. (T4127 Chapter 2) | |
| TCP | Total claim amount reported on the provincial or territorial Form TD1. (T4127 Chapter 2) | |
| IE | Insurable earnings for the pay period, including insurable taxable benefits, bonuses, and retroactive pay increases. (T4127 Chapter 7) | |
| QPIP | Quebec Parental Insurance Plan premium for the pay period. (T4127 Chapter 8, Table 8.29) |
Sources
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the employer","table":"T4127 Ch. 6","hash":"toc46"},"D1":{"what":"Employee’s year-to-date (before the pay period) employment insurance premium with the employer","table":"T4127 Ch. 7","hash":"toc61"},"D2":{"what":"Employee’s year-to-date (before the pay period) second additional CPP contribution with the employer","table":"T4127 Ch. 6","hash":"toc46"},"P":{"what":"The number of pay periods in the year","table":"T4127 Ch. 4, Step 1","hash":"toc21"},"PR":{"what":"The number of pay periods left in the year (including the current pay period)","table":"T4127 Ch. 4, Step 1","hash":"toc21"},"PM":{"what":"Total months during which CPP and/or QPP contributions are required (used to prorate the maximum contribution)","table":"T4127 Ch. 6","hash":"toc46"},"CEA":{"what":"Canada Employment Amount","table":"T4127 Ch. 8, Table 8.2","hash":"toc65"},"TC":{"what":"Total claim amount reported on federal Form TD1","table":"T4127 Ch. 2","hash":"toc11"},"TCP":{"what":"Total claim amount reported on the provincial or territorial Form TD1","table":"T4127 Ch. 2","hash":"toc11"},"IE":{"what":"Insurable earnings","table":"T4127 Ch. 7","hash":"toc61"},"QPIP":{"what":"Quebec Parental Insurance Plan premium","table":"T4127 Ch. 8, Table 8.29","hash":"toc65"}} Ontario Health Premium and surtax are employee-only. Employer cost in Ontario is still the CPP match (including CPP2) plus 1.4× EI. Do not add OHP to the employer remittance of CPP/EI.
Ontario T2 includes three extra Chapter 4 pieces no other province has in this combination: the two-step surtax, the Ontario Health Premium, and the Ontario tax reduction.
Ontario surtax (V1 / V2)
After basic Ontario tax, a 20% surtax applies once Ontario tax exceeds $5,818, and 36% once it exceeds $7,446. That is a surtax on tax, not a sixth income bracket. A biweekly cheque that looks like it is still in the 9.15% band can already be paying surtax because T4 is annual.
Ontario Health Premium
The OHP is withheld with provincial tax. It is $0 under $20,000 of taxable income, then climbs through $300 / $450 / $600 / $750 caps to $900 above $200,000. It is not a separate payroll line in T4127: it sits inside T2. Employers do not match it.
Ontario tax reduction
Factor Y: $300 plus $554 per eligible dependant under 19 (or disabled dependant). It is a reduction of Ontario tax, not a credit at the lowest rate, and it phases out as Ontario tax rises. Claim-code 1 alone does not add dependants; that is a separate request field.
Brackets and BPA, 2026
5.05% to $53,891; 9.15% to $107,785; 11.16% to $150,000; 12.16% to $220,000; 13.16% above. TCP is $12,989 (fixed). Lowest rate used for K1P is 5.05%. Ontario did not change tables on 1 July 2026.