The Government of Canada has updated its payroll deductions formulas to the 122nd Edition, effective January 1, 2026. This change affects how businesses calculate employee deductions for income tax, CPP, and EI. The new T4127 (122nd ed.) replaces the previous version for all payroll processing starting next year.
Businesses must use the updated T4127 formulas to ensure payroll deductions align with current federal and provincial requirements. The document specifies rounding procedures and claim codes for personal tax credits. Employers can see exactly how every number is calculated, trace every deduction, and check it yourself using the CRA-compliant T4127 (122nd ed.) reference.