CPP2: the 4% contribution between $74,600 and $85,000

Two ceilings instead of one

Until 2023, CPP contributions stopped at the year’s maximum pensionable earnings, the YMPE. Since 1 January 2024 there is a second ceiling, the year’s additional maximum pensionable earnings or YAMPE, and earnings between the two carry the second additional contribution, CPP2. The rate is 4 percent for the employee and 4 percent for the employer. Nothing is due on earnings above the YAMPE.

The second ceiling was phased in over two years. In 2024 the YMPE was $68,500 and the YAMPE $73,200, so the most an employee paid was $188. In 2025 the ceilings were $71,300 and $81,200, for a maximum of $396. In 2026 they are $74,600 and $85,000: the band is $10,400 wide and the maximum is $416. Since 2025 the YAMPE has been set at about 114 percent of the YMPE, and both ceilings are set again each year.

How CPP2 sits on top of the 5.95 percent

Below the YMPE nothing changed. Employees pay the base contribution of 4.95 percent plus the first additional contribution of 1 percent, 5.95 percent in total, on earnings between the $3,500 basic exemption and the YMPE. In 2026 that comes to $3,362 on a $60,000 salary, $4,016 on $71,000 and $4,230 at $74,600, the most anyone pays at that rate.

CPP2 starts with the next dollar. On $75,000 it adds $16, on $80,000 it adds $216, and from $85,000 it adds the full $416. An employee earning $85,000 or more therefore pays $4,646 of CPP in 2026, and the employer pays the same amount again on top of the salary. Someone earning $100,000 or $150,000 pays exactly the same as someone on $85,000.

How other countries compare

The table shows the marginal rate, all deductions, on a salary of CA$80,000 converted into each country’s currency, beside the countries Canada is most often compared with. At that salary the Canadian figure includes the 4 percent CPP2 contribution.

Converted at the exchange rates of October 2, 2026. Each country uses the calculator’s default profile and its latest enacted tax year. Living costs are not compared.

• Canada vs Germany
• Canada vs Australia
• Canada vs United Kingdom
• Canada vs United States

How the calculator treats CPP for income tax

The two parts of CPP are taxed differently, and the calculator follows that split. The enhanced contributions, which are the 1 percent first additional contribution and all of CPP2, are deducted from income before federal and provincial tax is worked out. The 4.95 percent base contribution is not deducted; it earns a non-refundable credit at the lowest tax rate, 14 percent federally in 2026 and 5.05 percent in Ontario.

Because CPP2 is deductible, it costs less than 4 cents per extra dollar. In Ontario in 2026, the next dollar of salary at $80,000 loses 32.5% to tax and contributions; just above $85,000, where CPP2 stops, it loses 29.7%. The difference, 2.8%, is what CPP2 adds to the marginal rate after the tax it saves. Below the YMPE the marginal rate is higher again, 34.4% at $71,000, because the full 5.95 percent applies there and only one percentage point of it is deductible. EI premiums stop at $68,900 of insurable earnings in 2026, so none of these three salaries pays EI on the next dollar.

What CPP2 pays for

CPP2 is part of the CPP enhancement that began in 2019. According to Employment and Social Development Canada, the enhancement raises the share of earnings the retirement pension replaces from one quarter to one third of covered earnings after 2019, and the second ceiling lets earnings up to the YAMPE count towards it. Someone who makes enhanced contributions for 40 years would see the maximum retirement pension rise by more than 50 percent. The enhancement also feeds into the post-retirement benefit and the disability and survivor’s pensions.

The extra pension builds up year by year, in proportion to what you pay in. People retiring in the next few years get a small increase; people starting work now get the full effect. The calculator shows what CPP2 costs today. It does not estimate the pension it earns.

Quebec has the same second ceiling

Quebec employees contribute to the Québec Pension Plan instead of the CPP, and its additional plan has the same second layer. Retraite Québec describes extra contributions on earnings between the maximum pensionable earnings and $85,000 in 2026, shared equally by employee and employer, the same ceilings as the CPP. The calculator applies the same 4 percent each on that slice. The QPP base rate is higher, 5.3 percent each in 2026, before the 1 percent first additional contribution. Choose Quebec in the calculator to see these rates together with Quebec income tax.

Two jobs, part years and exemptions

Each employer deducts CPP2 as if it were your only employer, up to the annual maximum. If you work for two employers, or change jobs during the year, the total can exceed $416. The CRA refunds the overpayment when you file your income tax and benefit return.

Some employees do not contribute at all: those under 18 or aged 70 and over, those considered disabled under the CPP or QPP, and those aged 65 to 69 who give their employer a completed Form CPT30 to stop contributions. The maximum is prorated in the year one of these starts to apply, for example the year you turn 18 or 70. The calculator assumes a full year of contributions from one employer, so check your own situation against these cases.

Checks for your CPP2

• Compare your gross salary with the $74,600 and $85,000 ceilings for 2026 to see how much of it carries CPP2.
• Check that each employer stops deducting CPP2 once your pay with that employer passes $85,000 for the year.
• If you had two employers or changed jobs, check your return for a refund of CPP overpaid above $416.
• When you budget for a hire above $74,600, add the employer’s matching CPP2 to the salary cost.

Sources and model coverage

What the estimate covers

The calculator estimates employment income using its supported country rules and selected inputs. Benefits, collective agreements and personal circumstances that are not modelled are excluded. Official rules determine your actual liability.

• RRSP contributions are not deducted from taxable income in this model.

Official sources

• Canada Revenue Agency – Second additional CPP contribution (CPP2) rates and maximums
• Canada Revenue Agency – CPP contribution rates, maximums and exemptions
• Canada Revenue Agency – Canada Pension Plan (CPP): deducting contributions
• Canada Revenue Agency – The Canada Pension Plan enhancement: what it means for you
• Canada Revenue Agency – T4127 Payroll Deductions Formulas, 122nd edition, effective 1 January 2026
• Employment and Social Development Canada – Canada Pension Plan enhancement
• Retraite Québec – Enhancement of the Québec Pension Plan