The CPP enhancement makes CPP pensions larger in return for higher contributions. It came in two phases: from 2019, higher contributions on earnings up to the Year’s Maximum Pensionable Earnings (YMPE), and from 2024, a second tier of contributions, CPP2, on earnings above the YMPE up to a second ceiling. This page covers both phases, how the contributions are taxed, and what they add to your pension. This year’s rates and your own contributions are on the CPP contribution rates page, and all CPP guides are in the Canada Pension Plan hub.
Phase 1: higher contributions and pensions on earnings up to the YMPE (2019 to 2023)
Before the enhancement, the CPP retirement pension was designed to replace 25% of the average earnings on which you contributed. For earnings from 2019 on, the enhancement raises that to 33.33%. It was paid for by raising the employee (and employer) contribution rate in steps:
| Year | Employee rate on earnings up to the YMPE |
|---|---|
| 2018 (before the enhancement) | 4.95% |
| 2019 | 5.10% |
| 2020 | 5.25% |
| 2021 | 5.45% |
| 2022 | 5.70% |
| 2023 onward | 5.95% |
Source: CRA, CPP contribution rates, maximums and exemptions.
The rate has stayed at 5.95% since. Of it, 4.95% is the original (base) contribution and 1.00% is the “first additional” contribution that pays for the enhancement.
Phase 2: CPP2 on earnings above the YMPE (from 2024)
CPP2 applies to earnings between the YMPE and a second ceiling, the Year’s Additional Maximum Pensionable Earnings (YAMPE):
| 2026 | |
|---|---|
| YMPE (first ceiling) | $74,600 |
| YAMPE (second ceiling) | $85,000 |
| Earnings covered by CPP2 | $10,400 |
| CPP2 rate | 4.00% employee and 4.00% employer; 8.00% self-employed |
| Maximum CPP2 contribution | $416.00 employee; $832.00 self-employed |
Source: CRA, CPP2 contribution rates and maximums.
With CPP1 and CPP2 together, an employee earning at least the YAMPE contributes $4,646.45 in 2026, and the employer the same. Employees see CPP2 in box 16A of the T4 slip (CPP1 is in box 16). Self-employed people pay CPP2 on their tax return, with CPP for the self-employed covering the details.
How the enhanced contributions are taxed
| Part of the employee contribution | 2026 rate | 2026 maximum | Tax treatment |
|---|---|---|---|
| Base CPP | 4.95% | $3,519.45 | Non-refundable tax credit (line 30800) |
| First additional (Phase 1) | 1.00% | $711.00 | Deduction (line 22215) |
| CPP2 (Phase 2) | 4.00% | $416.00 | Deduction (line 22215) |
A deduction lowers taxable income, so it saves tax at your marginal rate; the credit saves tax at the lowest federal rate. Self-employed people also deduct the employer half of their base contributions, and all of their enhanced and CPP2 contributions.
What the enhancement adds to your pension
The enhanced part of the pension builds up from the year you make enhanced contributions, so it grows slowly. Service Canada says that for someone who makes enhanced contributions for 40 years, the enhancement will increase the maximum CPP retirement pension by more than 50%. People retiring now have only a few years of enhanced contributions, so for them the addition is modest; it is part of why the maximum for a new pension rises a little every month. Someone who never earns above the YMPE gets the Phase 1 increase but no CPP2 benefit.
Source: Service Canada, CPP enhancement.
Quebec
Quebec workers contribute to the Quebec Pension Plan, which has its own enhancement and its own second additional contribution, with details from Retraite Québec and Revenu Québec rather than the CRA.
Sources
The figures and rules on this page come from these sources, last checked against them between September 5, 2026 and September 30, 2026. How we check facts.
- Canada Revenue Agency: The Canada Pension Plan enhancement
- Canada Revenue Agency: CPP contribution rates, maximums and exemptions
- Canada Revenue Agency: Second additional CPP (CPP2) contribution rates and maximums
- Government of Canada: Canada Pension Plan enhancement
- Government of Canada: CPP: How much you could receive