CPP2 in Ontario 2026 Explained
Learn what CPP2 is and how the second earnings ceiling affects employee contributions.
What CPP2 is
Since 2024, the CPP has two tiers. CPP (tier 1) covers pensionable earnings from $3,500 to the YMPE ($74,600 for 2026) at 5.95%. CPP2 (tier 2) covers earnings from $74,600 to the YAMPE ($85,000 for 2026) at 4%. If you earn under $74,600, CPP2 never touches your paycheque.
2026 numbers
| CPP (tier 1) | CPP2 (tier 2) | |
|---|---|---|
| Employee rate | 5.95% | 4% |
| Earnings range | $3,500 – $74,600 | $74,600 – $85,000 |
| Maximum (employee) | $4,230.45 | $416.00 |
Combined maximum employee CPP for 2026: $4,646.45. Your employer matches both tiers dollar for dollar; self-employed workers pay both halves.
Why it exists
CPP2 is part of the CPP enhancement: the extra contributions buy a larger retirement benefit on earnings above the old ceiling. The trade-off is straightforward — slightly smaller paycheques now (at most $416 a year extra) for a bigger pension later.
Key points
- CPP2 only applies between $74,600 and $85,000 of earnings (2026).
- Maximum extra cost: $416/year for employees.
- Your employer matches it; the self-employed pay double.
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2026 CPP and CPP2: what leaves your paycheque
In 2026 your paystub carries two Canada Pension Plan deductions. Base CPP covers earnings up to $74,600; the second tier (CPP2, in place since 2024) covers earnings from $74,600 to $85,000. Here are the exact 2026 maximums for an Ontario employee:
| Tier | Earnings band | Rate | 2026 maximum |
|---|---|---|---|
| CPP (base) | $3,500 – $74,600 | 5.95% | $4,230.45 |
| CPP2 (second tier) | $74,600 – $85,000 | 4% | $416.00 |
| Combined | $4,646.45 |
The math: ($74,600 − $3,500 basic exemption) × 5.95% = $4,230.45, and ($85,000 − $74,600) × 4% = $416.00.
Worked example: an $85,000 salary
At $85,000 you hit both ceilings. CPP: ($74,600 − $3,500) × 5.95% = $4,230.45. CPP2: ($85,000 − $74,600) × 4% = $416.00. Total employee CPP deductions for 2026: $4,646.45 — and your employer matches that amount on top, so the match never appears on your paystub.
What it costs each payday
$4,646.45 a year is $387.20 a month, or $178.71 every two weeks on a 26-pay schedule. Someone earning $74,600 pays only the $4,230.45 base amount — CPP2 never touches them. The bite is real, but CPP2 also buys a larger future pension: the enhanced CPP targets 33.33% income replacement on earnings up to the second-tier ceiling, so today's $416 builds tomorrow's benefit.
FAQ
Do I pay CPP2 if I earn $70,000?
No. CPP2 only starts above $74,600 of pensionable earnings (2026). You pay regular CPP up to its $4,230.45 maximum and nothing more.
Are these official CRA calculations?
No. This site is an educational resource. Use CRA tools, payroll tables and your own CRA account for official information.
Does my employer pay CPP2 too?
Yes. Employers match employee CPP and CPP2 contributions dollar for dollar. If you are self-employed, you pay both halves — up to $8,460.90 of CPP plus $832.00 of CPP2 at the 2026 maximums.
What happens when I hit the CPP maximum mid-year?
Payroll stops deducting CPP and CPP2 for the rest of the calendar year and restarts each January. If two employers each deducted the full maximum, the excess comes back to you as a refund on your tax return.
Do CPP2 contributions increase my future pension?
Yes. The second tier builds its own enhanced benefit based on your CPP2 contributions — separate from base CPP — so higher earners accrue a meaningfully larger retirement pension than under the old single-tier system.