# CPP and CPP2 Explained: Contributions and Pension 2026

> How CPP and CPP2 contributions work in 2026: the YMPE and YAMPE, maximum contributions, what self-employed people pay, and how your future pension is set.

Source: https://trykosh.com/learn/cpp-and-cpp2-explained

Guide - Wealth and retirement

# CPP and CPP2 explained: what you pay in 2026 and what you get back

Every paycheque has a CPP deduction, and since 2024 higher earners see a second one, CPP2. Here's what each is, how much you'll pay in 2026, how it's treated at tax time and how it turns into a pension.

Updated October 31, 20263 min readBy the Kosh team

On this page[What is CPP?](#what)[How much CPP do I pay in 2026?](#how-much)[What is CPP2?](#cpp2)[Is CPP tax-deductible?](#tax)[What do self-employed people pay?](#self-employed)[How much will my CPP pension be?](#pension)[When should I start CPP?](#when)[FAQs](#faq)

## What is CPP?

The Canada Pension Plan is a mandatory, contributory pension for workers outside Quebec (Quebec has the similar Quebec Pension Plan, QPP). You and your employer each contribute on your earnings; in return you get a retirement pension for life, plus disability, survivor and death benefits.

## How much CPP do I pay in 2026?

In 2026, employees pay **5.95%** on earnings between the $3,500 basic exemption and the **Year's Maximum Pensionable Earnings (YMPE) of $74,600**. Employers match it. The maximum employee contribution is **$4,230.45**.

## What is CPP2?

CPP2 is a second, additional contribution on earnings between the YMPE and the **Year's Additional Maximum Pensionable Earnings (YAMPE) of $85,000**. The employee rate is **4%**, matched by the employer, so the most an employee pays in 2026 is **$416**. If you earn under $74,600, you don't pay CPP2.

Employee CPP and CPP2 in 2026 (outside Quebec)

Salary

CPP

CPP2

Total

$60,000

$3,361.75

$0.00

$3,361.75

$100,000

$4,230.45

$416.00

$4,646.45

Once you hit the maximum, deductions stop for the rest of the year, which is why high earners often see a bigger paycheque in the fall. If you change jobs, each employer deducts from zero; any overpayment across employers comes back when you file your return.

## Is CPP tax-deductible?

Partly deductible, partly a credit. The "base" part of CPP (4.95% of the 5.95%) earns a non-refundable tax credit. The "enhanced" part, the first additional 1% and all of CPP2, is **deducted** from your income, which is worth more to higher earners. Your tax software splits these for you from your T4.

## What do self-employed people pay?

Self-employed people pay both the employee and employer shares: 11.9% on net self-employment earnings up to the YMPE (a maximum of $8,460.90) and 8% for CPP2 up to the YAMPE (up to $832). It's paid with your income tax return, not through payroll. Half is deductible and part earns a credit. See [self-employed taxes in Canada](/learn/self-employed-taxes-canada).

## How much will my CPP pension be?

The maximum CPP retirement pension starting at 65 is $1,507.65 a month (January 2026); the average being paid is $858.34 (July 2026). To get the maximum you need to have contributed at the maximum for most of your working life. The enhancement that began in 2019, including CPP2, raises future pensions gradually for people who contribute to it over many years.

Your own estimate is in your My Service Canada Account, along with your contribution history. Check it for gaps, for example years abroad or years with low earnings. Some low-earning years can be dropped out of the calculation automatically, including periods raising young children.

## When should I start CPP?

Start at

Change to your pension

60

Reduced 0.6% for each month before 65, up to 36% less

65

Standard amount

70

Increased 0.7% for each month after 65, up to 42% more

Starting later pays more per month for life; starting earlier pays more months. Health, other income, and whether you need the money now all matter. There's no benefit to waiting past 70.

[Free tool**CPP calculator**Enter your CPP estimate at 65 and see what you'd get starting anywhere from 60 to 70, and the age at which waiting pays off.](/tools/cpp-calculator)[Free tool**Take-home pay calculator**Turn a salary or hourly wage into what actually lands in your account each payday, after federal and provincial tax, CPP and EI.](/tools/take-home-pay-calculator)

**Where Kosh fits**

Kosh reads your payslip deductions from your statements and works out your tax including the enhanced CPP and CPP2 deduction, so take-home and refund estimates match reality. It can't see your Service Canada record; pull your CPP estimate from there and Kosh folds it into your retirement plan.

## Frequently asked questions

What is the maximum CPP contribution for 2026?

For employees outside Quebec, the maximum base and first additional CPP contribution is $4,230.45 and the maximum CPP2 contribution is $416. Employers pay the same amounts again.

What is CPP2?

CPP2 is a second additional CPP contribution of 4% on earnings between the YMPE of $74,600 and the YAMPE of $85,000 in 2026. It increases your future CPP pension.

Is CPP2 tax deductible?

Yes. CPP2 and the first additional part of CPP are deducted from your income. The base part of CPP earns a non-refundable tax credit instead.

Why did my CPP deductions stop?

Once you reach the maximum contribution for the year, your employer stops deducting CPP (and CPP2 once that maximum is reached). Deductions restart in January.

Can I get a CPP overpayment back?

Yes. If you had more than one employer and together they deducted more than the annual maximum, the excess is refunded or credited when you file your tax return.

## Sources

-   [CRA: CPP contribution rates, maximums and exemptions](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/canada-pension-plan-cpp/cpp-contribution-rates-maximums-exemptions.html)
-   [CRA: T4127 Payroll Deductions Formulas](https://www.canada.ca/en/revenue-agency/services/forms-publications/payroll/t4127-payroll-deductions-formulas.html)
-   [Canada.ca: CPP retirement pension amount](https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/amount.html)
-   [Canada.ca: CPP, when to start](https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/when-start.html)

Written by the Kosh team and checked against the rules in force on October 31, 2026. This guide is general information, not tax, legal or investment advice. Kosh is an educational financial planning tool by Primedepth Labs. It is not registered with any Canadian securities regulator as an adviser or dealer, does not recommend specific securities, and does not hold your money or execute trades. Tax figures are estimates; confirm with the CRA or a qualified professional before acting. Investing carries risk.

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