CPP2 explained: the second CPP contribution on earnings over $74,600
Most Canadians know the Canada Pension Plan contribution stops once earnings pass the yearly maximum. Since 2024 it does not stop entirely: a second, smaller contribution applies to earnings above that maximum, up to a higher ceiling.
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What is CPP2?
The second additional CPP contribution, a 4% contribution each for the employee and the employer on pensionable earnings between the year's maximum pensionable earnings ($74,600 in 2026) and the year's additional maximum pensionable earnings ($85,000 in 2026). The most it adds is $416 for an employee and $832 for a self-employed person.
The 2026 numbers
The Canada Revenue Agency's tables give the 2026 figures below, with 2025 for comparison.
| 2026 | 2025 | |
|---|---|---|
| Maximum pensionable earnings (YMPE) | $74,600 | $71,300 |
| Additional maximum (YAMPE) for CPP2 | $85,000 | $81,200 |
| CPP2 rate, employee and employer | 4% | 4% |
| Maximum CPP2, employee or employer | $416 | $396 |
| Maximum CPP2, self-employed | $832 | $792 |
| Maximum base CPP, employee | $4,230.45 | $4,034.10 |
What it adds up to
On earnings of $80,000 an employee pays CPP2 of 4% × ($80,000 − $74,600) = $216.00. At $85,000 or more it reaches the maximum of $416, and it stays there. A self-employed person pays 8% on the same slice, so $432.00 at $80,000 and $832 at the ceiling.
The income tax calculator includes CPP2 in take-home pay, and the self-employed tax and CPP calculator shows the full split for a sole proprietor.
How it is treated for tax
For the self-employed, the CRA says all CPP2 contributions are tax deductible, unlike the base contribution, half of which is a credit and half a deduction. The CPP2 therefore reduces your taxable income by the full amount.
CPP2 at different incomes
CPP2 only starts above the year's maximum pensionable earnings of $74,600 and stops at $85,000, so it is a small, capped amount. The table shows what an employee pays (4%) and what a self-employed person pays (8%, both halves) at several incomes.
| Pensionable earnings | Employee pays | Self-employed pays |
|---|---|---|
| $74,600 | $0.00 | $0.00 |
| $76,000 | $56.00 | $112.00 |
| $78,000 | $136.00 | $272.00 |
| $80,000 | $216.00 | $432.00 |
| $82,000 | $296.00 | $592.00 |
| $85,000 | $416.00 | $832.00 |
| $100,000 | $416.00 | $832.00 |
Common mistakes
The slip-ups below come up most often when people check a paystub or fill in a tax return.
- Applying 4% to the whole income instead of only the slice between $74,600 and $85,000.
- Forgetting that the employer pays a matching 4% on top of what comes off your paycheque.
- Treating CPP2 as part of the base CPP amount: the CRA deducts CPP2 from income in full, while only part of the base contribution is a credit.
- Expecting CPP2 on every paycheque: it starts partway through the year, once earnings pass $74,600, so later paycheques show a new deduction.
- Using last year's limits: the $74,600 and $85,000 figures change every year with wage growth.