CPP2 is the second additional Canada Pension Plan contribution. It applies to pensionable earnings above the regular CPP maximum (YMPE) up to a second, higher ceiling called YAMPE. It took effect January 1, 2024 as part of the CPP enhancement.

What are the CPP2 rates for 2024 and 2025?

The CPP2 contribution rate is 4% for both the employee and employer (8% total, or 8% for self-employed). In 2024 CPP2 applied on earnings between $68,500 (YMPE) and $73,200 (YAMPE), a maximum of $188 each. In 2025 it applies between $71,300 (YMPE) and $81,200 (YAMPE), a maximum of $396 each.

Any employee whose pensionable earnings for the year exceed the YMPE. Once earnings pass the YMPE, both the employee and employer start contributing CPP2 at 4% until earnings hit the YAMPE ceiling. Quebec workers pay QPP2 instead, administered by Revenu Québec.

How do I remit CPP2 to the CRA?

CPP2 is remitted with your regular source deductions (payroll remittance) on the same schedule as CPP, EI, and income tax. On the PD7A it is reported as a separate line, and on the T4 it goes in Box 16A (employee) and Box 17A (Quebec / QPP2).

Is CPP2 tax-deductible for employees?

Yes. Like the first additional CPP contribution, the employee portion of CPP2 is fully deductible from taxable income (not just a tax credit). Payroll software should reduce the federal and provincial tax withheld to reflect this.

CPP2 Contributions Explained: A Small Business Guide (2025)

What is CPP2?

CPP2 is the second additional Canada Pension Plan contribution. It's the final phase of the CPP enhancement that Canada began rolling out in 2019. Starting January 1, 2024, higher-earning workers and their employers began contributing an extra 4% on a slice of pensionable earnings above the regular CPP maximum. In return, those workers earn a larger CPP retirement pension in the future.

CPP2 does not replace regular CPP contributions — it sits on top of them, and only applies once an employee's year-to-date pensionable earnings pass the first ceiling (YMPE).

The two earnings ceilings: YMPE and YAMPE

YMPE — Year's Maximum Pensionable Earnings. The regular CPP ceiling. Base CPP (5.95%) and first additional CPP are collected up to this amount.
YAMPE — Year's Additional Maximum Pensionable Earnings. The new second ceiling introduced for CPP2. Earnings between YMPE and YAMPE are subject to the 4% CPP2 rate.

2024 and 2025 rates at a glance

Year	YMPE	YAMPE	CPP2 rate	Max CPP2 (each)
2024	$68,500	$73,200	4% employee / 4% employer	$188.00
2025	$71,300	$81,200	4% employee / 4% employer	$396.00

Self-employed workers pay both halves themselves — 8% on the CPP2 band. Quebec residents are covered by QPP2, which mirrors CPP2 at the same 4% rate but is administered by Revenu Québec.

Who has to pay CPP2?

Every employee whose pensionable earnings pass the YMPE for the year. Once year-to-date pensionable earnings cross that first ceiling, payroll starts deducting CPP2 at 4% (with a matching 4% from the employer) until earnings reach the YAMPE. Once YAMPE is hit, both CPP and CPP2 stop for the rest of the year.

Employees under 18, employees who elected out of CPP at age 65+, and employees receiving a CPP retirement pension while working past 70 are treated the same for CPP2 as they are for base CPP.

How to calculate CPP2 on a pay run

Take the employee's pensionable earnings for the pay period.
Add them to the year-to-date pensionable earnings. If the running total is still below the YMPE, no CPP2 yet.
Once the running total exceeds YMPE, the portion above YMPE (and up to YAMPE) is the CPP2 pensionable amount for that pay period.
Multiply that amount by 4% for the employee deduction, and 4% for the employer share.
Stop as soon as year-to-date pensionable earnings hit YAMPE.

Remitting and reporting CPP2

PD7A remittance: CPP2 is reported on a separate line from base CPP. Include both employee and employer portions. Same remittance schedule as your other source deductions.
T4 slips: Report the employee CPP2 in Box 16A. Quebec employers report QPP2 in Box 17A. Box 26 (pensionable earnings) still reflects total pensionable earnings up to YAMPE.
Employee pay stubs: Show CPP2 as a distinct deduction so employees can see what changed after they cross the YMPE mid-year.

Common CPP2 mistakes

Forgetting to start CPP2 in the pay period where YMPE is crossed — deductions can't be delayed to the next pay run.
Continuing to deduct CPP2 after YAMPE is reached, creating a T4 over-contribution the employee has to reclaim.
Using the CPP rate (5.95%) instead of the CPP2 rate (4%) on the band above YMPE.
Missing the employer's 4% matching contribution when budgeting labour cost.
Reporting CPP2 in Box 16 instead of Box 16A on the T4.

How Canadian Payroll handles CPP2

Canadian Payroll tracks each employee's year-to-date pensionable earnings and automatically switches from base CPP to CPP2 the moment they cross the YMPE, stopping again at YAMPE. CPP2 shows on every pay stub as its own line, and the PD7A and T4 reports pre-fill Box 16A / 17A for you.

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This guide summarizes CRA guidance on the second additional CPP contribution for 2024 and 2025 for general information. Always verify current rates at canada.ca — CPP2 contribution rates and maximums.