Glossary
CPP Basic Exemption
The CPP basic exemption is the amount of an employee's annual earnings excluded from base CPP contributions before the contribution rate applies, set at $3,500 for 2026. It is prorated across pay periods, so a portion is excluded from every pay cheque rather than only the first one of the year. Only earnings above the exemption and up to the YMPE count as pensionable earnings for base CPP; CPP2 applies with no equivalent exemption of its own. Unlike the YMPE, which is indexed and rises most years, the basic exemption has stayed at $3,500 for decades. Our 2026 CPP and EI maximums guide shows the exemption applied to a full year's pay.
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