Canada Employee Benefits News and Trends - ebs
Employment Insurance Premium Rate: 2025 Update for Canadians
The Employment Insurance premium rate in Canada for 2025 has been set at $1.64 per $100 of insurable earnings, down 2 cents from $1.66 in 2024. This change impacts millions of Canadian workers and employers who contribute to the EI program, which provides temporary financial assistance to unemployed Canadians. At the same time, they search for work or upgrade their skills. The EI system also provides special benefits for specific life events, such as illness, pregnancy, caring for a newborn or newly adopted child, or providing care for a critically ill family member.
The Employment Insurance premium rates are determined through a structured process managed by the Canada Employment Insurance Commission (CEIC), which has been responsible for setting the annual rate since April 1, 2016. The CEIC announced this rate change following its annual actuarial assessment, which forecasts program expenditures and revenues over a seven-year period. Understanding these changes is essential for both employers managing payroll deductions and employees planning their finances for the coming year.
What are the Employment Insurance (EI) Premium Rates for 2025?
The Canada Employment Insurance Commission has set the 2025 EI premium rate at $1.64 per $100 of insurable earnings for workers and $2.30 per $100 for employers.
The table below shows yearly Employment Insurance Premium Rates since 1998
| Year | Maximum Insurable Earnings | Federal Employee Premium Rate | Federal Employer Premium Rate |
|---|---|---|---|
| 2025 | $65,700 | 1.64% | 2.296% |
| 2024 | $63,200 | 1.66% | 2.324% |
| 2023 | $61,500 | 1.63% | 2.282% |
| 2022 | $60,300 | 1.58% | 2.212% |
| 2021 | $56,300 | 1.58% | 2.212% |
| 2020 | $54,200 | 1.58% | 2.212% |
| 2019 | $53,100 | 1.62% | 2.268% |
| 2018 | $51,700 | 1.66% | 2.324% |
| 2017 | $51,300 | 1.63% | 2.282% |
| 2016 | $50,800 | 1.88% | 2.632% |
| 2015 | $49,500 | 1.88% | 2.632% |
| 2014 | $48,600 | 1.88% | 2.632% |
| 2013 | $47,400 | 1.88% | 2.632% |
| 2012 | $45,900 | 1.83% | 2.562% |
| 2011 | $44,200 | 1.78% | 2.492% |
| 2010 | $43,200 | 1.73% | 2.422% |
| 2009 | $42,300 | 1.73% | 2.422% |
| 2008 | $41,100 | 1.73% | 2.422% |
| 2007 | $40,000 | 1.80% | 2.52% |
| 2006 | $39,000 | 1.87% | 2.618% |
| 2005 | $39,000 | 1.95% | 2.73% |
| 2004 | $39,000 | 1.98% | 2.772% |
| 2003 | $39,000 | 2.1% | 2.94% |
| 2002 | $39,000 | 2.2% | 3.08% |
| 2001 | $39,000 | 2.25% | 3.15% |
| 2000 | $39,000 | 2.4% | 3.36% |
| 1999 | $39,000 | 2.55% | 3.57% |
| 1998 | $39,000 | 2.7% | 3.78% |
The premium rate decreased by 2 cents federally (and 1 cent for Quebec) compared to the prior year, contributing to minor savings for employees and employers. However, the maximum insurable earnings threshold increased as outlined next.
For residents of Quebec, the 2025 EI rate is $1.31 per $100 (employees) and $1.83 per $100 (employers) due to the province administering its own Quebec Parental Insurance Plan.
Source: EI premium rates and maximums, Government of Canada
Maximum Insurable Earnings (MIE) for 2025
The Maximum Insurable Earnings (MIE) for 2025 is $65,700, representing a 3.96% increase from the 2024 level of $63,200. The MIE is the maximum annual earnings on which EI premiums are paid and benefits are calculated.
The MIE is indexed annually based on growth in average weekly earnings as reported by Statistics Canada. This ensures that EI coverage keeps pace with wage growth in the Canadian economy, maintaining the relative value of insured income over time.
The calculation for the 2025 MIE percentage increase was based on:
- The average weekly earnings for the 12-month period ending April 30, 2024
- Divided by the average for the 12-month period ending April 30, 2023
- This percentage increase was then multiplied by the prior year’s MIE (before rounding)
- The result was rounded down to the nearest $100
This systematic approach ensures that EI coverage remains relevant to current wage levels in the Canadian economy.
Source: Employment Insurance (EI) Premium Rates, taxtips.ca
How Much Will I Pay in EI Premiums in 2025?
The amount you’ll pay in EI premiums in 2025 depends on your earnings, up to the Maximum Insurable Earnings threshold of $65,700. For most Canadian workers earning at or above this threshold, the maximum annual contributions will be:
| Contributor | Premium Rate (per $100) | Maximum Annual Contribution | Difference from 2024 |
|---|---|---|---|
| Employees (outside Quebec) | $1.64 | $1,077.48 | +$28.36 |
| Employers (outside Quebec) | $2.296 | $1,508.47 | +$39.70 |
| Employees (Quebec) | $1.31 | $860.67 | +$26.43 |
| Employers (Quebec) | $1.834 | $1,204.94 | +$37.00 |
Although the premium rate has decreased for 2025, the maximum annual contributions have increased due to the higher MIE. This means workers and employers will pay more in total premiums if earnings reach or exceed the maximum insurable amount.
It’s important to note that if an employee’s insurable earnings are $2,000 or less during the year, their EI premiums are fully refunded, though there is no formal basic exemption for EI as there is with the Canada Pension Plan.
Why Did the Premium Rate Decrease for 2025?
In 2025, the federal EI rate dropped by 2 cents due to a combination of downward and upward pressures on the 7-year break-even rate forecast by the Senior Actuary.
According to the 2025 Actuarial Report, the 2-cent reduction can be attributed to the following key factors:
- A higher projected deficit in the EI Operating Account. A deficit applies upward pressure to the rate.
- Increased unemployment rate forecasts from 2025 to 2031. More unemployment raises EI expenditure projections.
- Higher forecasted average weekly benefit payments to claimants. This increases expected EI costs as well.
- Increased administration expenditure predictions. More spending on operations equates to a higher rate.
Conversely, the following elements contributed to downward rate pressure:
- Growth in the number of Canadian workers, resulting in higher expected EI contributions.
- Temporary EI measures enacted in recent years are associated with lower anticipated costs. Some measures are set to phase out by 2025.
On net, the downward pressures on the rate outweighed the upward pressures on it, leading to a 2-cent reduction for 2025.
The premium rate impacts the EI account balance significantly since all employee and employer contributions are deposited into the centralized EI Operating Account. A ± 1 cent premium rate change equates to ±$1.656 billion in the account balance over 2025 to 2031.
How Does the Premium Reduction Program (PRP) Work?
The Premium Reduction Program (PRP) allows employers to pay reduced EI premiums if they provide their employees with qualified wage-loss plans that meet certain requirements and reduce the demand for EI special benefits, particularly sickness benefits.
There are four categories of qualified plans, each with its own rate of reduction determined annually:
| Categories | Category 1 | Category 2 | Category 3 | Category 4 |
|---|---|---|---|---|
| Premium reduction (per $100 of insurable earnings) | $0.21 | $0.37 | $0.37 | $0.41 |
In 2025, approximately 25,200 employers will be registered in the PRP, covering an estimated $392 billion in insurable earnings. These reductions will provide registered employers and their employees with approximately $1.365 billion in premium savings in 2025.
Employers must register their wage-loss plans with the program to qualify for these reductions. The categories are based on the waiting period and level of benefits provided by the employer plans, with higher reductions for more comprehensive coverage.
Source: 2025 Actuarial Report, Employment and Social Development Canada
FAQs about EI Premium Rates in Canada
Who Has to Pay Employment Insurance Premiums?
Most employees and employers pay mandatory EI premiums; however, some occupations, such as self-employed workers, are exempt from contributions. Non-arm's length employees, like spouses, may also be exempt. Additionally, employees with less than $2,000 in yearly insurable earnings receive full EI premium refunds.
Is There a Basic Exemption for EI Premiums?
No, there is no basic exemption. However, EI premiums are only deducted from insurable earnings up to the annually determined maximum insurable earnings threshold. For 2025, premiums do not need to be paid on any salary above $65,700.
How Does the EI Operating Account Function?
The EI Operating Account sits within the Consolidated Revenue Fund of Canada. All EI contributions are deposited into the Account, which is then used to fund EI benefit payments and program administration costs on an ongoing basis. This centralized account allows the system to pool contributions and expenses nationally rather than track individual balances.
The Bottom Line
The 2025 Employment Insurance premium rate of $1.64 per $100 of insurable earnings (or $1.31 for Quebec residents) represents a modest decrease from 2024, while the Maximum Insurable Earnings has increased to $65,700. These changes reflect the balance between maintaining program sustainability, responding to economic conditions, and keeping premiums predictable for workers and employers.
Despite the lower rate, most contributors will see slightly higher total premiums due to the increased earnings ceiling. The EI program continues to evolve, with recent expansions for seasonal workers and new benefits for parents through adoption or surrogacy. It is also planning technological modernization.
Staying informed about these annual changes is essential for employers managing payroll systems and workers planning their finances. The EI system remains a crucial safety net for Canadian workers, providing financial support during periods of unemployment and for specific life circumstances that require time away from work.
This also applies to those nearing retirement, as EI benefits can still be helpful during this transition. To learn more, check out our post: How to Qualify for EI Benefits During Retirement in Canada.
Employment Insurance Premium Rate: 2025 Update for Canadians
Ben Nguyen