CPP employee tax is the payroll deduction that funds the Canada Pension Plan. If you work in Canada outside Quebec, are between 18 and 70, and earn more than $3,500 in a year, your employer withholds 5.95% of your pensionable earnings up to an annual ceiling and remits it to the Canada Revenue Agency, matching your contribution dollar for dollar. For 2026, the most a regular employee pays in base CPP is $4,230.45, with a smaller second layer kicking in for higher earners.
Who Pays Into CPP
Contributions come off your paycheque automatically once you turn 18 and earn more than $3,500 in a calendar year. They keep coming off until the pay period you turn 70, unless you elect to stop between 65 and 70 (more on that below).
Quebec is the one geographic exception. It runs its own Quebec Pension Plan with a parallel structure, so employees working there don’t pay into CPP.
Some income never triggers CPP at all. Investment income like dividends, interest, and capital gains sits outside the system because it isn’t pensionable earnings. Members of a religious order who have taken a vow of perpetual poverty are also excluded under the Canada Pension Plan Act, which treats their work as “excepted employment.”1Canada Revenue Agency. Employment of a Member of a Religious Order Who Has Taken a Vow of Poverty Certain employer-provided benefits, such as some housing allowances in remote areas, may also fall outside pensionable earnings depending on how they’re structured.
How Your 2026 Contribution Is Calculated
Three numbers do all the work: the Year’s Basic Exemption ($3,500), the Year’s Maximum Pensionable Earnings ($74,600), and the 5.95% employee rate.2Canada Revenue Agency. CPP Contribution Rates, Maximums and Exemptions
You pay nothing on your first $3,500 of annual earnings. Everything above that, up to $74,600, gets hit with the 5.95% rate. The 5.95% already bundles the original base CPP rate and the “first additional” contribution from the enhancement that phased in between 2019 and 2023; you won’t see them split on your pay stub.3Canada Revenue Agency. Canada Pension Plan (CPP) and the CPP Enhancement
For someone earning $74,600 or more in 2026, the math looks like this:
- Pensionable earnings: $74,600
- Less basic exemption: $3,500
- Contributory earnings: $71,100
- Rate: 5.95%
- Maximum annual employee contribution: $4,230.45
Your employer pays a matching $4,230.45 on your behalf. Earn less than $74,600 and your contribution scales down proportionally. Earn more, and the base deduction stops at the ceiling; your payroll system should automatically halt withholding for the year once you hit $4,230.45.4Government of Canada. Canada Pension Plan (2026) and Old Age Security (January to March)
The Second Layer for Higher Earners (CPP2)
Since 2024, a second bracket has applied to income above the regular ceiling. It’s called CPP2, and for 2026 it works out to 4% on the slice of earnings between $74,600 and $85,000.5Canada Revenue Agency. Second Additional CPP Contribution (CPP2) Rates and Maximums
That bracket is $10,400 wide, so the maximum employee CPP2 deduction is $416, again matched by your employer. CPP2 only starts coming off after you’ve maxed out your regular CPP contributions for the year, so in most pay periods you won’t see both layers hitting the same cheque.
Add it all up and an employee earning $85,000 or more in 2026 pays a combined maximum of $4,646.45 in CPP contributions across both layers.
Contributions After Age 65
Between 65 and 70, contributions become optional. If you’re still working and want to stop, file Form CPT30 with the CRA and give a copy to your employer.6Canada.ca. CPT30 Election to Stop Contributing to the Canada Pension Plan Skip the form and deductions keep coming off until the pay period you turn 70, at which point they stop for good even if you keep working.7Government of Canada. Contributions to the Canada Pension Plan
There’s a reason to keep paying. Each additional year of contributions while you’re collecting a CPP retirement pension generates a Post-Retirement Benefit that stacks on top of your existing pension. The maximum PRB for 2026 is $54.69 per month, so several extra years of contributions can add up.8Government of Canada. Canada Pension Plan Post-Retirement Benefit (PRB) – How Much Could You Receive
Getting Money Back When Too Much Is Withheld
Working two jobs in the same year is the most common way to overpay. Each employer calculates CPP independently, with no knowledge of what the other is deducting, so your combined contributions can sail past the annual maximum. You don’t need to chase this. When you file your personal tax return, the CRA compares your total contributions against the annual cap and credits any excess back to you automatically.9Canada Revenue Agency. Correct Deduction Errors
Claiming CPP on Your Tax Return
Your CPP contributions aren’t lost to the deduction column. The base portion qualifies for a non-refundable federal tax credit calculated at the lowest federal rate, which you claim on line 30800 of your personal return.10Canada Revenue Agency. Businesses, Individuals, and Self-Employed – What It Means for You
The enhanced portion and the CPP2 portion are treated differently: they come off your income as deductions rather than credits, which is slightly more valuable if you’re in a higher bracket. The distinction matters because credits reduce tax owed at the lowest rate, while deductions reduce taxable income before your marginal rate is applied. Tax software handles the split for you. If you’re filing by hand, watch which line each portion belongs on.