A CPP deduction is not simply your pay multiplied by one percentage. The Canada Pension Plan uses a basic exemption, an annual earnings ceiling and, for higher earners, a second CPP2 earnings band. Those pieces determine how much comes off your pay and when deductions stop for the year.
For 2026, employees contribute 5.95% on contributory earnings up to the $74,600 Year’s Maximum Pensionable Earnings (YMPE). Employers contribute the same amount. The 2026 maximum regular CPP contribution is $4,230.45 each. CPP2 adds another 4% on earnings between $74,600 and $85,000, up to $416 each.
2026 CPP Contribution Rates and Limits
The starting point is the $3,500 basic exemption, which is the portion of annual earnings excluded from regular CPP contributions. The 2026 YMPE is $74,600, leaving maximum regular contributory earnings of $71,100. Employees and employers each contribute 5.95% on those earnings, producing the 2026 maximum regular CPP contribution of $4,230.45.
The 5.95% rate includes the base CPP contribution and the first additional contribution created through the CPP enhancement. It is useful to think of the rate as one payroll percentage even though the components receive different tax treatment. Your CPP pensionable earnings and the YMPE determine how much of your income falls within this first contribution range.
For example, an employee earning $45,000 in 2026 has $41,500 of regular contributory earnings after the $3,500 basic exemption. Multiplying $41,500 by 5.95% gives a 2026 employee CPP contribution of $2,469.25. The employer contributes another $2,469.25. This calculation is useful for understanding the annual amount, although actual payroll deductions apply the basic exemption across individual pay periods.
How CPP Deductions Work on Your Paycheque
Employers calculate CPP throughout the year rather than deducting the annual amount at once. The $3,500 basic exemption is divided according to the number of pay periods. For example, the 2026 CPP basic exemption per pay period is $134.61 for a 26-pay-period biweekly schedule and $145.83 for a 24-pay-period semi-monthly schedule.
CPP deductions continue until you reach the applicable annual maximum with that employer. Once the maximum is reached, the employer stops deducting that portion for the rest of the year. This can make later paycheques larger for someone who reaches the ceiling before December.
Changing employers can complicate that pattern. A new employer generally calculates CPP based on the employment with that employer and cannot simply stop deductions because another employer already deducted CPP earlier in the year. If your combined deductions create an overpayment, eligible excess CPP contributions are refunded through your income tax return.
How CPP2 Changes the Maximum Deduction
CPP2 applies above the regular CPP earnings ceiling. For 2026, the Year’s Additional Maximum Pensionable Earnings (YAMPE) is $85,000. Employees and employers each pay 4% on pensionable earnings between the $74,600 YMPE and $85,000 YAMPE. That $10,400 band creates a maximum 2026 CPP2 contribution of $416 each.
An employee earning at least $85,000 in 2026 can therefore contribute a maximum of $4,646.45 when regular CPP and CPP2 are combined. The employer can contribute the same total. Earnings above $85,000 do not produce further CPP contributions in 2026. The separate CPP2 contribution rules matter mainly to workers whose earnings cross the first ceiling.
CPP Rates for Self-Employed Canadians
Self-employed workers generally pay both sides of CPP themselves. The 2026 regular self-employed rate is 11.90%, with a maximum contribution of $8,460.90. CPP contributions are generally based on net business income after expenses rather than gross business revenue.
CPP2 also doubles for self-employed workers because they cover both shares. The 2026 CPP2 rate is 8% on net self-employment income between $74,600 and $85,000, with a maximum CPP2 contribution of $832. A self-employed person with enough 2026 earnings to reach both maximums can therefore pay up to $9,292.90 in combined regular CPP and CPP2 contributions. The CPP rules for self-employed Canadians are worth checking when budgeting for taxes because there is no employer paying the other half.
Why Your CPP Deduction Can Change
A different CPP deduction does not necessarily mean your employer made an error. Your deduction can change because your pensionable pay changed, you received a bonus or other pensionable payment, you reached an annual maximum, or CPP deductions started or stopped because of an age-related rule.
CPP normally starts from the first pay dated in the month after an employee turns 18 and ends after the last pay dated in the month the employee turns 70. Workers aged 65 to 69 who are already receiving a CPP or QPP retirement pension can also meet the conditions to elect to stop contributing. The rules for when CPP contributions stop cover those age-based situations separately.
For your own records, compare the year-to-date CPP and CPP2 amounts on your pay stub with the applicable 2026 maximums rather than judging one deduction in isolation. You can also review your longer-term CPP contribution record to confirm the pensionable earnings recorded toward your future CPP benefits.
