Canada Reduces Employment Insurance Tax Rates for 2020 | Mercer

Canada Reduces Employment Insurance Tax Rates for 2020

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Canada Reduces Employment Insurance Tax Rates for 2020
Canada Reduces Employment Insurance Tax Rates for 2020
Calendar18 September 2019

Canada’s standard Employment Insurance (EI) tax rates will decrease for employers and employees in 2020. The employee rate will be 1.58%, down from 1.62%; and the employer rate will be 2.21% (1.4 times the employee’s rate), down from 2.27%. The maximum employment income subject to EI taxes will increase to C$54,200 in 2020, up from C$53,100. The tax funds EI benefits and employment programs and services for eligible workers.

Lower Québec rates. Employees who are residents of Québec will pay a reduced EI tax rate of 1.2% in 2020, down from 1.25%; and the employer rate will be 1.68%, down from 1.75%. The Québec rate is lower because the province provides maternity, parental and adoption benefits under the Québec Parental Insurance Plan.

Reduced premiums available. Employers that provide qualified wage-loss plans meeting certain criteria can take advantage of the Premium Reduction Program (PRP). The program offers annually adjusted rate reductions for four categories of qualified plans, reflecting their average EI savings. Approximately 29,400 employers have registered to participate in the PRP.

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