EI and Taxes: Withholding, the T4E and Tax-Time Repayment

EI is taxable income, and tax comes off every payment

Canada.ca is blunt about it: EI benefits are taxable whatever type you receive: regular, sickness, maternity, parental or caregiving. The amounts you see, such as the 2026 maximum of $729 a week (55% of average insurable earnings), are before tax. Service Canada deducts federal tax, and provincial or territorial tax where it applies, from each payment, so your direct deposit is smaller than your benefit rate.

The deduction from each payment is a standard withholding. It isn't based on your full-year picture: your salary before the layoff, severance, a spouse's income or a new job later in the year. If you earned a good salary for part of the year, the withholding on your EI may not cover what you owe. You can ask Service Canada to deduct more tax from your payments by contacting it or visiting a Service Canada Centre. Many people do this to avoid a bill in April.

Your T4E slip

The T4E is the EI version of a T4. It shows the benefits paid to you in the calendar year, the tax deducted, and whether a benefit repayment might apply.

• When: online in My Service Canada Account as early as February 1. Mailed slips should arrive before mid-March. If you haven't received yours by then, contact Service Canada.
• Online or mail: you can switch to online-only delivery in My Service Canada Account. Mailed slips go to the address on file, so update it if you move.
• Quebec: if you live in Quebec on December 31 you get a T4E(Q), with an extra copy for your provincial return.
• On your return: total benefits (box 14, less any tax-exempt amount in box 18) go on line 11900, and the tax deducted is claimed as tax already paid. The back of the slip explains each box.
• Amended slips: if your benefits for the year change later (a returned payment, a change of benefit type), Service Canada sends an amended T4E to the CRA. Your return isn't adjusted automatically, so if you've already filed you need to ask the CRA to change it.

The benefit repayment (the "clawback")

Separate from ordinary income tax, higher-income claimants who've used regular EI before may have to pay some of it back through their tax return. For the 2026 tax year, the rule is:

• Threshold: net income above $86,125 for 2026. For the 2025 tax year it was $82,125. The law sets it at 1.25 times the year's maximum insurable earnings ($68,900 in 2026).
• Amount: 30% of whichever is smaller: your net income above the threshold, or the regular benefits (including regular fishing benefits) paid to you in the year.
• Exempt if: your net income is at or below the threshold, or you received less than one week of regular or fishing benefits in the 10 tax years before this one.
• Never repaid: special benefits (maternity, parental, sickness, compassionate care and family caregiver). If you got both regular and special benefits in a year, only the regular part counts.

Your T4E flags this. When a repayment may apply, the repayment rate in box 7 is 30%, and the back of the slip has a chart to work out the amount, which goes on line 23500 of your return and is added to what you owe.

Worked example (2026 tax year)

Jordan earned salary from January to June 2026, then got $9,000 of regular EI in the fall. Jordan also had a regular EI claim in 2019. Jordan's 2026 net income, including the EI, is $96,125.

• Income above the threshold: $96,125 − $86,125 = $10,000
• Regular benefits paid in 2026: $9,000
• Smaller of the two: $9,000. Repayment: 30% × $9,000 = $2,700

If Jordan had never claimed regular benefits in the 10 tax years before 2026, the repayment would be $0, even at the same income. If the $9,000 had been parental benefits instead, it would also be $0.

A claim can straddle two calendar years. Canada.ca's examples show that you can be exempt in the first year (no regular benefits in the previous 10 years) but not in the second, because by then the first year's regular benefits fall within the 10-year look-back.

How to avoid a surprise at tax time

• Do a rough estimate in the fall. Add your employment income, severance and EI for the year. If the total is near or above $86,125 for 2026 and you've had a regular claim in the past 10 years, plan for the 30% repayment.
• Ask for extra withholding if you expect to owe. It's easier to receive slightly smaller payments now than to find a lump sum in April.
• Watch the severance year. Severance is taxable. A temporary measure (Pilot Project No. 25, claims starting October 11, 2026 to October 9, 2027) stops severance from delaying EI, so more people receive both in the same year. That suspension changes EI timing, not tax. See severance, vacation pay and EI.
• Remember that net income is after deductions. The test uses net income from your return, which is after deductions such as RRSP contributions, not your gross pay.
• Part-time work while on EI is employment income on your T4 from that employer, and it also reduces your EI that week. See working while on EI.

The 2026 tax return is normally due April 30, 2027, and any balance owing is due the same day. Confirm the dates on the CRA's important-dates page. For a personal tax question, the CRA is the right contact; for your EI file, Service Canada is.

Every claim is decided by Service Canada, not by MyEI. MyEI is an independent information and estimate tool and is not affiliated with Service Canada or the Government of Canada. For your own file, call Service Canada at 1-800-206-7218 or start from canada.ca/en/services/benefits/ei.html.