CPP2 is the second additional Canada Pension Plan contribution — a separate 4.00% deduction that applies only to earnings above the $74,600 Year's Maximum Pensionable Earnings (YMPE), up to a second ceiling of $85,000 for 2026 (the Year's Additional Maximum Pensionable Earnings, or YAMPE). The maximum 2026 CPP2 contribution is $416.00 for the employee and $416.00 for the employer, matched dollar-for-dollar. Someone earning $74,600 or less pays no CPP2 at all.
Why CPP2 exists
CPP2 is the last stage of the CPP enhancement program that has been phasing in since 2019. The first phase gradually raised the base CPP rate to its current 5.95% between 2019 and 2023. The second phase added an entirely new contribution — CPP2 — on a second, higher band of earnings, starting in 2024 at a lower ceiling and reaching its 2025 structure the following year. For 2026, CPP2 is fully in effect: a flat 4.00% rate on the band between the YMPE and the YAMPE.
The purpose is to replace a larger share of pre-retirement income for higher earners, who previously stopped accumulating CPP entitlement once they crossed the YMPE. CPP2 gives them additional pensionable earnings — and additional future benefit — up to the higher YAMPE ceiling.
The 2026 numbers
| 2026 value | |
|---|---|
| YMPE (where CPP2 starts) | $74,600 |
| YAMPE (where CPP2 stops) | $85,000 |
| CPP2 earnings band | $10,400 |
| CPP2 rate | 4.00% |
| Maximum CPP2 — employee | $416.00 |
| Maximum CPP2 — employer | $416.00 |
| Maximum CPP2 — self-employed (both shares) | $832.00 |
The math: $85,000 − $74,600 = $10,400 in CPP2-eligible earnings; 4.00% × $10,400 = $416.00 per side. These figures sit inside the wider 2026 CPP/CPP2/EI picture covered in our CPP and EI maximum contributions 2026 guide.
Who actually pays it
CPP2 only touches earnings above the YMPE. In practical terms:
- An employee earning $70,000 crosses no CPP2 threshold and pays $0 in CPP2.
- An employee earning $80,000 pays CPP2 on the $5,400 above $74,600: 4.00% × $5,400 = $216.00.
- An employee earning $85,000 or more pays the full $416.00 maximum.
Employers match the employee's CPP2 contribution dollar-for-dollar, the same way they match base CPP. There is no employer multiple the way there is for EI.
CPP2 and the first ceiling: two separate stop-points
Base CPP and CPP2 stop at different points, and payroll systems need to track both independently per employee:
- Base CPP stops once year-to-date pensionable earnings reach $74,600.
- CPP2 does not start until that $74,600 point is crossed, and then stops once year-to-date pensionable earnings reach $85,000.
For an employee paid biweekly with a rising salary or a mid-year bonus, this means CPP2 can appear on a pay stub partway through the year — the first time a paycheque pushes cumulative earnings past $74,600 — and disappear again once the $85,000 ceiling is reached. This is one of the more common CPP2 payroll errors: an employee crossing the YMPE mid-year should start seeing a CPP2 line, and if that line is missing, the employer is under-withholding. See our CPP, CPP2 and EI explained guide for how this interacts with mid-year hires and multiple employers in the same year.
Self-employed treatment
Self-employed individuals — including many incorporated owner-managers who draw a salary from their own corporation — pay both the employee and employer share of CPP2 because there is no separate employer to match them. That is 8.00% combined on the same $74,600-$85,000 band, for a 2026 maximum of $832.00. As with base CPP, the employer-equivalent half is deductible and the employee-equivalent half earns a tax credit. This CPP2 cost is one more factor in the salary vs dividends decision for owner-managers deciding how to pay themselves.
How CPP2 shows up on a T4
CPP2 is reported separately from base CPP on the annual T4 slip:
- Box 16 — employee's base CPP contributions
- Box 16A — employee's CPP2 contributions
- The employer's own CPP2 remittance is tracked and reconciled against the same box 16A totals across all employees
Keeping the two boxes correctly separated matters at year-end reconciliation — a mismatch between what was withheld through the year and what the T4 boxes show is a common source of amended-T4 filings. Employers remit CPP2 to the CRA alongside base CPP, CPP2, EI and income tax withholdings on their assigned remittance schedule; see our source deductions employer guide for the mechanics of remitting and what a late remittance costs.
How RN Canada helps
RN Canada sets up and runs payroll for owner-managed companies across Alberta and British Columbia, including tracking base CPP and CPP2 separately for every employee through the $74,600 and $85,000 stop-points, correct T4 box 16/16A reporting, and modelling the CPP2 cost of a raise or bonus before it happens. Our bookkeeping & payroll service handles the calculation and remittance; the employer payroll cost calculator models the all-in cost of a hire including CPP2. See our payroll FAQ for more.
Frequently asked questions
CPP2 is the second additional Canada Pension Plan contribution, introduced in 2024 as the final stage of the CPP enhancement. It applies a separate 4.00% rate to earnings above the Year's Maximum Pensionable Earnings (YMPE), up to a second ceiling called the YAMPE. It is fully in effect for 2026.
Only employees (and self-employed individuals) earning more than the YMPE — $74,600 for 2026. Someone earning $70,000 pays no CPP2. Someone earning $85,000 or more pays the full 2026 maximum of $416.00 on each side, employee and employer.
For 2026, CPP2 applies to the $10,400 band between the $74,600 YMPE and the $85,000 YAMPE at a rate of 4.00%. The maximum contribution is $416.00 for the employee and $416.00 for the employer, matched dollar-for-dollar.
Base CPP (5.95%) applies to earnings between the $3,500 basic exemption and the $74,600 YMPE. CPP2 (4.00%) applies only to earnings above the YMPE, up to the $85,000 YAMPE. They are separate contributions with separate ceilings and are reported in separate T4 boxes.
Employee CPP2 is reported in box 16A, separate from base CPP in box 16. Employer CPP2 has its own reporting line as well. The separation exists because CPP2 stops at a different earnings point ($85,000) than base CPP does ($74,600).
Yes. Self-employed individuals pay both the employee and employer share of CPP2 because there is no employer to match them — 8.00% combined on the same $74,600-$85,000 band, for a 2026 maximum of $832.00.