Employer payroll taxes in Quebec: All you need to know

Employer payroll taxes in Quebec are an unavoidable part of payroll costs. These contributions, calculated on payroll and eligible earnings, help fund important public plans such as the Quebec Pension Plan (QPP), the Quebec Parental Insurance Plan (QPIP) and Employment Insurance (EI). Employers must pay their share to ensure compliance with the Canada Revenue Agency (CRA) and Quebec regulations.

In this article, we explain the 2025 contribution rates, how they are calculated, and practical tips to optimize their management, including guidance on payroll deductions, employer contributions, and federal and provincial tax deductions that can reduce the overall payroll tax burden.

What are the mandatory payroll taxes for employers in Quebec in 2025?

Employers' payroll taxes in Quebec include a number of mandatory contributions that fund essential social programs. These mandatory payroll deductions vary depending on the size of the payroll, the sector of activity and the pensionable income of the employees. Employers need to understand their responsibilities because these payroll contributions are critical to funding programs such as the Quebec Pension Plan (QPP) and other provincial initiatives.

Here is an overview of the major payroll taxes and required deductions expected in 2025:

Quebec Pension Plan (QPP)

The QPP is a mandatory public pension plan. It guarantees a retirement pension based on contributions accumulated throughout a person's working life. Employers and employees must share these contributions, making it a key element of employer payroll taxes in Quebec.

• The total QPP contribution rate is 6.4%, divided equally between the employer (3.2%) and the employee (3.2%).
• The maximum amount of pensionable earnings is set at $71,300, with a general exemption of $3,500. This results in a maximum QPP contribution of $2,169.60 per employer, a significant portion of overall payroll deductions.

Employers should ensure accurate calculation of payroll deductions and timely remittance to the Canada Revenue Agency (CRA) or the provincial authorities to remain compliant.

Quebec Parental Insurance Plan (QPIP)

The Quebec Parental Insurance Plan (QPIP) provides financial benefits to employees on parental, maternity, or adoption leave. This essential program ensures that new parents receive remuneration during their absences, helping to maintain financial stability for families while supporting workplace flexibility.

• The contribution rate for employers is 0.692%, applied to a maximum of $98,000 of insurable earnings per employee.
• The maximum employer contribution is $678.16 per employee annually.

Employers must calculate these payroll deductions accurately and include them in their overall payroll taxes to remain compliant with provincial payroll regulations.

Health Services Fund (HSF)

The Health Services Fund (HSF) plays a critical role in financing Quebec's health care system and ensuring access to health care for all citizens. Employers contribute to this fund based on their total payroll (called the MST) and their industry. These employer payroll taxes are mandatory and calculated on a sliding scale.

For the primary and manufacturing sectors:

• MST ≤ $1M: 1.25%
• MST ≥ $7.8M: 4.26%

For other sectors:

• MST ≤ $1M: 1.65%
• MST ≥ $7.8M: 4.26%

These variable rates are designed to encourage manufacturing companies to maintain a lower payroll in order to benefit from reduced rates.

Employment Insurance (EI)

Employment Insurance (EI) provides essential financial protection to workers in the event of job loss, illness or compassionate care leave. Administered at the federal level, this program ensures support for workers during difficult times while sharing financial responsibility between employers and employees.
 

• In Quebec, the employer contribution rate is 1.834%, which is 1.4 times the employee contribution rate under federal income tax rules.
• The maximum insurable earnings are $65,700, resulting in a maximum employer contribution of $1,204.94 per employee per year.

CNESST

The CNESST is responsible for protecting employees against work-related accidents and occupational illnesses. It provides financial compensation and rehabilitation services to ensure employees receive support in the event of an incident. These employer contributions are mandatory and calculated based on the level of risk associated with the business sector.

Premium rates vary significantly depending on the industry and the associated risk level. For example:

• The manufacturing sector has an average rate of 1.86%.
• The service sector typically faces a lower rate of 1.34%

These contributions are a vital part of an employer’s responsibilities under Quebec’s payroll tax system, ensuring the protection and well-being of their workforce.

How do I calculate payroll deductions and social security contributions?

Calculating payroll deductions and social security contributions may seem complex, but by following a clear methodology, you can ensure accuracy while improving efficiency. Properly determining the amount of tax to be withheld, including federal and state tax deductions, is essential for compliance and cost management.

Using specialized tools and seeking expert advice can save you time and avoid costly mistakes.

Steps to calculate social security contributions

1. Determine the employee's gross pay: Include all forms of compensation, such as base pay, bonuses, and extra pay. Gross pay is the basis for calculating payroll deductions and applying the appropriate contribution rates.
2. Apply the applicable rates for each program: Multiply eligible earnings by the applicable rates for each payroll tax program. For example:
   • QPP: Employer rate of 3.2% on a maximum of $69,700.
   • QPIP: Employer rate of 0.692% on a maximum of $98,000.
   • EI: Employer rate of 1.834% on a maximum of $65,700.
   • HSF (Health Services Fund): Variable rate based on payroll and industry.
3. Verify your calculations with a specialized tool: Use accounting software or online payroll deduction calculators, such as those provided by Revenu Québec or the Canada Revenue Agency (CRA).

A practical example

Let's take an employee with an annual salary of $50,000 in 2025 :

• QPP : $50,000 × 3.2% = $1,600
• QPIP : $50,000 × 0.692% = $346
• EI : $50,000 × 1.834% = $917
• FSS (Manufacturing sector, MST ≤ $1M): $50,000 × 1.25% = $625
• Total employer contributions: $3,488.

Note: Amounts may vary by industry, company size and program limits.

The benefits of good employer payroll taxes management

Rigorous management of payroll deductions and social security contributions is more than just a legal obligation. It is also a strategic lever for optimizing your finances and ensuring the stability of your business. Effective payroll management integrates compliance, planning, and proactive strategies to reduce costs and improve operational efficiency.

Here's how good payroll management can make a difference:

Anticipate your expenses for better budget management

Social security contributions represent a significant portion of total payroll costs. Accurately forecasting these required deductions allows companies to incorporate them into their annual financial planning and avoid unpleasant surprises.

By taking into account factors such as pay periods, employer contributions, and tax withholding limits, you can ensure smooth cash flow and better allocate resources.

Comply to avoid costly penalties

Failure to meet your social insurance obligations can result in penalties from Revenu Québec, the CNESST or the Canada Revenue Agency (CRA). These penalties can include fines for errors or late filing, as well as accumulated interest on unpaid amounts.

Complying with the rates, limits, and deadlines set by these organizations will help ensure compliant payroll management and reduce the risk of costly errors. Employers should use tools such as the online payroll deduction calculator to ensure compliance and maintain accurate records.

Maximize resources with proactive management

Proactive payroll management allows companies to identify and take advantage of specific tax credits or deductions. For example, companies in certain industries, such as manufacturing or small business, may qualify for tax relief or assistance programs designed to ease the financial burden.

In addition, efficient management can uncover savings opportunities, such as spreading payroll tax payments to limit their impact on cash flow. By monitoring employer payroll taxes, businesses can optimize resources and improve financial performance.

Frequently asked questions about payroll taxes

What are the contribution rates for 2025?

Contribution rates vary by program and company characteristics. Here's an overview of the major payroll deduction rates for this year:

• Quebec Pension Plan (QPP): Total rate of 6.4%, split between the employer (3.2%) and the employee (3.2%).
• Quebec Parental Insurance Plan (QPIP): Employer rate of 0.692% on a maximum of $98,000.
• Employment Insurance (EI): Employer rate of 1.834% on a maximum of $65,700.
• Health Services Fund (HSF): Rates vary by payroll and industry and range from 1.25% to 4.26%.

For more information on the rates applicable to your business, contact Revenue Québec, the Canada Revenue Agency (CRA) or a payroll tax management professional.

How much do payroll taxes cost an employee?

On average, payroll taxes represent between 12% and 15% of an employee's gross pay. This cost depends on several factors, including:

• Contribution rates for programs such as QPP, QPIP, EI and HSF.
• Your company's total payroll and industry.

How can I avoid Social Security withholding errors?

To avoid costly payroll deduction errors, follow these practical tips:

• Automate your calculations: Use reliable accounting software or tools such as the online payroll deduction calculator provided by Revenu Québec or the CRA.
• Stay informed: Check regularly for updates on tax rates, deduction thresholds and program rules.
• Work with experts: Professionals such as T2inc.ca can ensure accurate and compliant payroll tax calculations.

What do I do about retroactive contributions?

If you need to address missed contributions or correct an error, follow these steps:

1. Identify the missing amounts: Review your pay stubs, statements, and payroll reports for discrepancies.
2. Use correction tools: Platforms such as Revenu Québec's online services can help you submit retroactive adjustments efficiently.
3. Consult an expert: Working with a payroll professional minimizes the risk of penalties or interest for late filings.

How T2inc.ca can help you optimize your payroll taxes

Effectively managing payroll taxes for Quebec employers in 2025 is a complex but essential task to ensure compliance and optimize your company's financial health. With contribution rates, thresholds and deduction rules that vary based on many factors, calculating payroll deductions and managing them on a day-to-day basis can be challenging.

At T2inc.ca, we provide integrated solutions for your company's accounting and tax management, from the T2 corporate tax return to general accounting services. While we don't directly handle payroll tax management, our network of expert partners specialize in payroll services, including assistance with payroll deductions, tax credits and employer contributions. By working with our partners, you can streamline your social and tax procedures, ensure compliance with CRA and Revenu Québec regulations, and focus on growing your business.

Need assistance? Contact us today to be connected with our specialized partners and benefit from customized solutions to simplify your payroll tax responsibilities and optimize your financial performance.