Most of the figures which will determine your income in 2027 have already been set and the others will be out in the coming weeks. Each one may not be earth-shattering on its own but all of them combined alter the equations for employees, owner-managers and anyone handling payroll in Ontario. This is what is confirmed, what is still predicted, and what you should check before January 1.
RRSP contribution limit increases to $35,390
CRA has set the RRSP contribution limit for 2027 at $35,390, an increase of $1,580 from $33,810 in 2026. This is just the ceiling, not your individual limit. Your limit will be the lower of the RRSP dollar limit and 18% of your earned income in 2026, less any pension adjustment and any unused room from previous years. It will take about $196,600 in earned income to reach the maximum. For instance, someone earning $120,000 would generate $21,600 in a new room, way below the ceiling. You can find your own limit on your most recent notice of assessment and in CRA My Account.
The CRA announces the RRSP limit one year ahead of time since it is related to the money purchase pension limit, which is based on average earnings growth. That’s why the 2027 number is known, but not the TFSA limit.
There are two practical tips. Contributions made before March 1, 2027 can still be claimed on your 2026 tax return. And if you are self-employed, keep in mind that the source of room depends on your income. Salary generates RRSP room, not dividends.
CPP rate decreases on January 1
More importantly, however, it will affect your pay stub. Bill C-30, the Spring Economic Update 2026 Implementation Act, received Royal Assent in June and decreased the base CPP rate from January 1, 2027. Thus, the base amount decreases from 4.95% to 4.75% for both the employer and the employee, which brings the total CPP rate for earnings up to the year’s maximum pensionable earnings (YMPE) down from 5.95% to 5.75%. The Chief Actuary analysed the reduction and concluded that the base plan is sustainable at this rate.
The estimated saving is around $133 per year for an individual earning $70,000 – it equals roughly $11 a month, and the employer will have the same saving. A self-employed individual will have the savings doubled to around $266 because he or she pays both contributions. With 2026 limits, the maximum possible savings for an individual is around $142 a year, and $284 if you’re self-employed. The additional plan CPP2 for earnings above YMPE is not affected. The 2026 YMPE is $74,600, and the Canada Revenue Agency normally makes its announcement about the 2027 limit on November 1.
EI shifts in an opposite direction
Employment Insurance gets an increase. As per the 2027 employee rate, $1.64 is payable per $100 of insurable earnings, compared to $1.63 per $100 of insurable earnings applicable for 2026, and maximum insurable earnings become $70,800 compared to $68,900 in the previous year. The maximum employee premium is $1,161.12. For employers, they contribute 1.4 times the employee rate of $1.625.57 per employee in comparison to the same in 2026 which works out to be $53 more.
TFSA 2027: confirmed vs. estimated
The limit for the TFSA in 2026 is $7,000, which means that the total room from 2009 to date for any individual who has not yet contributed is $109,000. The limit for 2027 has not been released. The CRA usually releases it between late November and December 1. The limit is indexed for inflation and rounded to the nearest $500, which is why the limit has remained unchanged at $7,000 for the last three years. Experts forecast $7,500 for 2027, meaning the total room will be $116,500. Consider it an estimate until the CRA releases it.
| Item | 2026 | 2027 | Status |
| RRSP dollar limit | $33,810 | $35,390 | Confirmed |
| CPP rate, each of employee and employer, up to YMPE | 5.95% | 5.75% | Legislated |
| YMPE | $74,600 | Not yet announced | Expected around November 1 |
| EI rate (employee) and maximum insurable earnings | 1.63% / $68,900 | 1.64% / $70,800 | Confirmed |
| TFSA dollar limit | $7,000 | Not yet announced (estimate: $7,500) | Expected late November to December 1 |
Other figures that will be important to track
Several other figures have already been decided or are very close to being finalised. For instance, the labour mobility deduction for construction tradespeople will also increase from $4,000 to $10,000 in 2026 and onward, and the qualifying distance will fall from 150 km to 120 km. In addition, Bill C-30 makes the capital gains exemption for disposition of a business interest to an employee ownership trust or worker co-operative permanently available, up to $10 million in gains.
Regarding personal figures, the 2026 basic personal amount will be $16,452 for net income below $181,440 and will phase out to $14,829 once net income hits $258,482. Indexation for the 2027 bracket and credit hasn’t been announced. It is usually announced at the end of the year.
What employees will notice
The first pay stub in January should reflect a little less being deducted from CPP, something like $11 a month with a salary of $70,000. The EI deduction will go up but by a smaller amount. This is a small increase, so you have to decide right now how you will spend it: top up your TFSA, RRSP, or mortgage.
Implications of the Change for Ontario Business Owners
For business owners who manage their own payroll, there are two tasks. First, ensure that you have installed the new CPP rate and EI rate on your payroll system or with your payroll provider by the time of your first January pay run; adjust YMPE when the number is announced. If you use old rates, your payroll will be either overpaid or underpaid right from the start, and you’ll have to do more work to correct the mistake than get it right initially.
The other task is budgeting. Five employees each earning $70,000 would save approximately $665 on the cost of employer CPP; however, increased EI payments would offset some of this savings. The sum is insignificant, but it still needs to be planned for.
With a corporation as the source of payment, there is an impact of the new amounts on the choice of salary versus dividends. Salary is now a little cheaper in CPP and provides RRSP room of 18% of earnings up to $35,390. Dividends do not provide any room. Neither is necessarily best for everyone since it depends on your other sources of income, corporate earnings, and your intention to retain the money within the corporation. Self-employed individuals face a reduced version of that issue in light of the self-employed CPP rates.
Timing becomes important in making the decision in this case. Employment income helps generate RRSP room in the year that the income is actually received. Therefore, any bonuses accrued at the end of the year but paid in the new year generate RRSP room in the next year, not the current year. The decision should be made well before the contribution deadline, which is December 31.
What lies ahead?
Three more things are coming out. The 2027 YMPE of the CRA will likely be released around the beginning of November, the TFSA limit around late November or December 1, and the bracket and credit indexation sometime in the year. Taking a second look at your strategy in early December when all three are released is better than making moves based on projections.
The end of the year is the time to test your RRSP, TFSA, and owner-pay strategy against real figures and not in March. Beta Taxes is a licensed CPA firm in Ontario, staffed by licensed CPAs across Canada, and we deal with employees and owner-managers across the GTA from our Oakville office. If you need assistance with implementing these changes to your payroll or pay structure, contact us at – 437 974 0596.
