Canada just lowered EI rates for 2026 but here's why some employees will actually pay more

The Government of Canada has released the new employment insurance rates for 2026, and while the premium may be dropping, many Canadians will end up actually seeing more taken off their paycheques.

The federal government announced earlier this month that it is dropping the EI premium rate slightly for 2026, which might sound like good news for your wallet — but there's a catch.

If you've ever wondered how EI in Canada affects your take-home pay, here's the low-down on how it works and what's changing next year.

EI max contribution & rates for 2026

According to Employment and Social Development Canada (ESDC), the EI premium rate for 2026 is going down by one cent — from $1.64 to $1.63 per $100 of insurable earnings. The drop brings it back in line with where it was in 2023.

That means if you earn under a certain amount, you'll be paying less in EI contributions next year than you did this year.

But here's where it gets tricky: At the same time, the feds are bumping up the maximum insurable earnings (MIE) — the cap on how much of your income is subject to EI contributions — from $65,700 in 2025 to $68,900 in 2026.

That means that if you earn more than about $66,103, you'll actually be paying more into EI in 2026, even with the lower rate — because more of your income will be subject to the premium.

The total maximum annual EI contribution for employees is going up by $45.59, hitting $1,123.07 next year. For employers, who pay 1.4 times the employee rate, the increase is even bigger — up $63.83 to $1,572.30 per worker.

How does EI work?

Every employed person in Canada pays into the EI program, which provides temporary income support if you lose your job or need to take time off for specific life events like illness or becoming a parent. For example, maternity and parental leave are employment insurance benefits.

Most of the time, your employer takes care of paying EI for you, and you'll see it as a deduction on your paycheque.

You pay a percentage of your income — the EI premium rate — but only up to the MIE limit. Once you hit that threshold, you stop contributing for the rest of the year.

The 2026 rate is based on the Canada Employment Insurance Commission's seven-year break-even forecast, which is meant to keep the EI Operating Account balanced by the end of 2032. ESDC says this year's reduction is due to a combination of factors, including lower-than-expected unemployment and the removal of some planned programs that were never rolled out.

Is EI different in Quebec?

Quebec runs its own parental leave program rather than using EI for that benefit, so the EI rate in the province is lower.

In 2026, the premium in Quebec is also dropping 1 cent — down to $1.30 per $100 of insurable earnings for employees and $1.82 for employers.

The same MIE rules apply though, so higher earners there would still see an increase in contributions too.

What if you're self-employed?

Self-employed individuals can choose to opt into the EI program to access the benefits. They pay the same rate as regular employees, and do not have to pay the employer portion.

The minimum earnings needed to access special EI benefits like maternity or sickness leave will rise to $9,254 in 2026, in line with the increase to the maximum insurable earnings.

Bottom line

So while EI premiums are technically going down, the higher earnings cap means many Canadians — especially those making over $66K — could still end up with smaller paycheques starting in January.

Whether you're a salaried employee, self-employed or running a business, it's worth keeping an eye on your deductions and understanding how changes to EI in Canada might affect your paycheque. Because even a few dollars a month can add up over time — and it's your money, after all.

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