On November 1, 2024, the Canada Revenue Agency announced that the 2025 CPP maximum pensionable earnings will be $71,300, up from $68,500. The basic exemption amount for 2025 remains at $3,500.
The employee and employer contribution rates for 2025 will remain at 5.95 per cent, and the self-employed contribution rate will remain at 11.90 per cent.
The maximum employer and employee contribution to the plan for 2025 will be $4,034.10 each, and the maximum self-employed contribution will be $8,068.20.
The 2024-2025 yearly maximum pensionable earnings, exemption, contribution rate, and maximum CPP contribution are summarized as follows:
|
CPP Rates |
||
|
|
2024 CPP |
2025 CPP |
|
Maximum pensionable earnings |
$68,500.00 |
$71,300.00 |
|
Annual basic exemption |
$3,500.00 |
$3,500.00 |
|
Contributory earnings |
$65,000.00 |
$67,800.00 |
|
Contribution rate |
5.95% |
5.95% |
|
Employee-employer maximum contribution |
$3,867.50 |
$4,034.10 |
2025 CPP2 limit
Effective January 1, 2025, a higher second earnings ceiling of $81,200, known as the Year’s Additional Maximum Pensionable Earnings (YAMPE), will be used to determine second additional CPP contributions (CPP2). This CPP2 is part of the CPP enhancement.
As a result, pensionable earnings between $71,300 and $81,200 are subject to CPP2 contributions.
The 2024-2025 CPP2 maximums and rates are summarized as follows:
|
CPP2 Rates |
||
|
|
2024 |
2025 |
|
Year’s Additional Maximum Pensionable Earnings |
$73,200.00 |
$81,200.00 |
|
Year’s Maximum Pensionable Earnings |
$68,500.00 |
$71,300.00 |
|
Basic Exemption |
N/A |
N/A |
|
Contributory Earnings |
$4,700.00 |
$9,900.00 |
|
Contribution Rate |
4.00% |
4.00% |
|
Maximum Contribution |
$188.00 |
$396.00 |
Employers should:
-
Adjust their payroll systems to accommodate the increased contribution rates for employees and employers. The contribution rates will rise incrementally.
-
Inform their employees about the upcoming changes, including how the increased contributions will affect their take-home pay.
-
Advise Finance, HR and senior management team to ensure 2025 budgets reflect the increases of both the basic and enhanced employer CPP contributions.
-
Ensure accurate payroll deductions reflecting the new contribution rates starting in 2025.
-
Stay updated on any legislative changes and ensure their practices align with the latest regulations concerning CPP and CPP2.
By fulfilling these obligations, employers can ensure compliance and help their employees understand the benefits of the enhanced pension plan.