With a New Year comes new hits to your wallet

I welcomed the start of this New Year like many of you however 2013 comes with some extra hits to our wallets – namely increases to the Canada Pension Plan (CPP) and Employment Insurance (EI) premiums.

Canadians earning more than $51,100 will be contributing up to $2.356.20 to CPP in 2013.  You can see the CPP contributions below for the last few years:

CPP

To go even further back, click this link.

Canadians earning at least $47,400 will pay $891.12 in EI premiums this year.  You can see the EI premiums for the last few years here:

EI

To go even further back, click this link.

So, some Canadians will be short $100 or more in 2013 thanks to CPP and EI contributions.  Not great I suppose but it could always be worse for some of you…

For Quebecers, an extra income tax bracket will be added, more contributions for the province’s pension plan will be required and last but not least, sin taxes on alcohol and tobacco will be higher this year.

How will less money in your pocket due to CPP and EI contributions this year change your ways?

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16 Responses to "With a New Year comes new hits to your wallet"

  1. Hi Mark,

    Thanks for publishing those tables. The CPP increase in maximum pensionable earnings seems to match the CPI increase from 2011-09 to 2012-09. So, CPP seems to be staying roughly steady in real (after inflation) terms.

    However, EI took a big increase way out of line with inflation. On a certain level, this annoys me because I can’t ever collect. I would have to lose my job early in the year and not find another until the next year or else all the benefits would be taxed back. I’m not opposed to helping the unemployed, but it should be called a tax and not “insurance”.

    Michael

    Reply
  2. If they keep increasing EI and CPP with inflation, and the wages don’t increase with them, then theres going to be a BIG problem down the road.

    Government needs to realize not everyone has cost of living increases like they do! I had to make cuts in my budget because fees, taxes and bills were increasing every year yet my paycheck stayed the same for the last 5 years.

    Like Michael, I can never collect EI without being penalized, even though I’ve been paying into it for almost 20 years. They need to start creating private accounts so that the hard working Canadians who actually pay the insurance, get it when they need it.

    Reply
  3. I’m not surprised about all the payroll tax increases. CPP is indexed to inflation so as payouts increase to recipients, somebody else has to cover the shortfall. As for EI I think part of the reason EI has increased so much, and out paced inflation, might be because so many people are having babies these days. In which case this is a good thing. I know in the company I work at there are at least 5 women on maternity leave right now, and we have a total 200 to 300 employees in the company. My employer doesn’t pay for most of their mat leave. Instead, for the majority of the time they are on leave, the mothers are getting IE payments. This seems to be more and more common in Canada. I don’t mind paying higher EI premiums, as long as it’s helping our country’s population grow organically because we really have to invest in the young people of the future. I could be wrong about lots of people have kids though as it’s only an anecdote based on one company and I have no idea if that’s the case country wide 😀

    Reply
    1. I’m not surprised by CPP by any means, but at least the increase is modest. It increased by recent inflation figures…about 2%. EI jumped by about 6%. Not good.

      You are correct, many mothers are using EI payments when on mat leave, especially for extended leaves.

      Reply
  4. Those of us in the US got hit too.

    I got paid today and my net is down 5% from last year thanks to the state and federal governments taking out more in taxes. I’m really annoyed by this. Health insurance premiums went up too, taking out another chunk of money for many people.

    Consequently, I just got done cutting back on my budgeted spending for the year so that I can keep my savings rate targeted at 50%.

    Reply
    1. Welcome Financial Independence Journey! Yeah, I read that. The health insurance premiums are critical, but taxes are on the way up for you guys state-side.

      If your savings rate is 50%, that is outstanding!

      Reply
  5. The CPP contribution you pay is actually twice as much as you see. Your employer has to put in an equal amount, which they could otherwise pay to you to increase your salary. Only self-employed people know the real CPP contributions they are paying (they don’t really pay more than anyone else).

    Reply

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