Canada CPP2 Calculator 2025
Calculate your CPP1 and CPP2 contributions for 2025. CPP2 applies a 4% rate on earnings between $68,500 and $73,200 — the new second ceiling.
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How to use this calculator
- 1
Enter your annual employment income in Canadian dollars.
- 2
Select your employment type — self-employed individuals pay both the employee and employer portions of CPP.
- 3
CPP1 applies the 5.95% rate on earnings between the basic exemption ($3,500) and the first ceiling ($68,500).
- 4
CPP2 applies a 4% rate only on earnings between $68,500 and $73,200 — so it only affects earners above the CPP1 maximum.
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The maximum CPP1 contribution is $3,867 per year (employee) and the maximum CPP2 contribution is $188 per year.
Frequently asked questions
What is CPP2 and when did it start?
CPP2 (the Canada Pension Plan second additional contribution) was introduced as part of the CPP enhancement that began phasing in January 2019. CPP2 came into effect on January 1, 2024. It applies a 4% contribution rate on annual earnings between the Year's Maximum Pensionable Earnings (YMPE — $68,500 in 2025) and the Year's Additional Maximum Pensionable Earnings (YAMPE — $73,200 in 2025). The purpose of CPP2 is to create an additional earnings tier for enhanced retirement income, targeting workers who earn above the original CPP ceiling.
What is the maximum CPP2 contribution in 2025?
In 2025, the CPP2 earnings range is $68,500 (YMPE) to $73,200 (YAMPE) — a band of $4,700. At a 4% rate, the maximum CPP2 employee contribution is $188 per year, and the employer also contributes $188, for a total CPP2 contribution of $376 per year. For self-employed individuals, who pay both the employee and employer portions, the maximum CPP2 contribution is $376 per year. This is in addition to the CPP1 maximum of $3,867 employee contribution ($7,734 total for self-employed).
Does CPP2 affect the tax deduction on my T4?
Yes, but differently from CPP1. CPP1 contributions are treated as a tax credit (reducing tax payable at the 15% federal rate). CPP2 employee contributions are treated as a tax deduction, meaning they reduce your taxable income directly — which is more valuable for higher-income earners. On your T4, CPP1 and CPP2 contributions are reported in separate boxes. The CRA provides a separate deduction line on Schedule 1 for CPP2 contributions. Self-employed individuals can deduct the employer-equivalent portion of both CPP1 and CPP2 as a business expense.
What pension benefit does CPP2 provide?
CPP2 contributions build towards an enhanced retirement pension on top of the CPP1 benefit. At full CPP2 entitlement (contributing for 40 years), the maximum additional monthly benefit from CPP2 is expected to be approximately $163/month (in 2024 dollars), on top of the CPP1 maximum of about $1,364/month. The CPP2 benefit is based on a target replacement rate of 33% of average lifetime earnings in the CPP2 earnings band ($68,500–$73,200). Since CPP2 only started in 2024, full CPP2 benefits will not be payable until workers who started contributing in 2024 retire — approximately 2064.
Canada CPP2 Calculator 2025 — CPP1 + CPP2 Contributions for Employees and Self-Employed
Understanding CPP1 and CPP2 in 2025
The Canada Pension Plan has two contribution tiers as of 2024–2025. CPP1 has been in place for decades and applies a 5.95% rate on annual earnings between the basic exemption ($3,500) and the Year's Maximum Pensionable Earnings ($68,500 in 2025). The maximum CPP1 employee contribution is $3,867/year. CPP2 is new — introduced January 1, 2024 — and applies a 4% rate on a narrow band above the CPP1 ceiling: between $68,500 and $73,200. The CPP2 maximum employee contribution is $188/year, with employers matching it. For most Canadian workers earning below $68,500, CPP2 does not apply and only CPP1 contributions are deducted from their paycheques. For workers earning $73,200 or more, both CPP1 and CPP2 are maxed out.
Self-employed CPP obligations in Canada
Self-employed Canadians face a unique CPP burden: they must pay both the employee and employer portions of both CPP1 and CPP2. For CPP1, a self-employed person earning over $68,500 pays $7,734/year in CPP1 (double the $3,867 employee maximum). Adding CPP2, they pay an additional $376/year for a total maximum CPP of $8,110. These contributions are split for tax purposes: the employee-equivalent half of CPP1 is claimed as a non-refundable tax credit, while the employer-equivalent half is deducted as a business expense. For CPP2, both halves are treated as deductions from income, which is more favourable. Self-employed workers building a retirement nest egg through CPP should factor these mandatory contributions into their quarterly installment tax planning.
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →