Canada Pension Plan (CPP): How It Works, Amounts and When to Start

The Canada Pension Plan (CPP) retirement pension is a monthly, taxable benefit that replaces part of your income when you retire. You contribute to the CPP if you are over 18, work in Canada outside Quebec and earn more than $3,500 a year. Besides the retirement pension, the CPP pays a disability benefit, a survivor’s pension, a children’s benefit and a one-time death benefit. Quebec has its own plan, the Quebec Pension Plan (QPP). This page summarises how the CPP works and points to the guide on each part.

The CPP at a glance

Sources: ESDC, CPP maximum monthly amounts; Service Canada, CPP payment amounts; CRA, CPP contribution rates.

Because the CPP enhancement is still being phased in, the maximum for a new pension rises a little each month: $1,524.78 for a pension starting in December 2026. The maximum CPP payment page explains who gets the maximum and why most people don’t.

How your pension is worked out

Three things set your retirement pension: your earnings each year up to the maximum pensionable earnings (the YMPE, $74,600 in 2026), how many years you contributed between 18 and the start of your pension, and the age you start. Up to 8 of your lowest-earning years are dropped from the base part of the calculation, and periods spent caring for a child under 7 or receiving the CPP disability benefit are protected too. Why your CPP may be less than you expected goes through the calculation, and the CPP calculator estimates your own pension. Your record of earnings is on your Statement of Contributions.

When to start

You can start the CPP retirement pension any time from 60 to 70 (65 is the standard age): it is 0.6% lower for each month before 65 (up to 36% less at 60) and 0.7% higher for each month after (up to 42% more at 70), with no gain from waiting past 70; applying after 65, you can backdate the start up to 11 months, but not before the month after your 65th birthday. The trade-offs, breakeven ages and a comparison by start age are in CPP at 60 vs 65 vs 70; delaying CPP until 70 covers deferring past 65. If you keep working after your pension starts, contributions can earn a post-retirement benefit.

Contributions

Employees and employers each pay the same rate, and self-employed people pay both shares. Since 2024 a second tier, CPP2, applies to earnings between the first and second earnings ceilings. The details are in:

• CPP contribution rates: this year’s rates, ceilings and maximum contributions, with a calculator for your own pay
• CPP enhancement and CPP2: what the enhancement adds to contributions and to future pensions
• CPP for the self-employed: paying both halves, and what you can deduct
• Your CPP Statement of Contributions: how to get it and what to check

Other CPP benefits

• Disability. A monthly benefit if a severe and prolonged disability stops you from working regularly at any job. See the CPP disability benefit and working while on CPP disability.
• Survivors. A monthly pension for a surviving spouse or common-law partner, and a benefit for dependent children: CPP survivor benefits.
• Death benefit. A one-time payment to the estate: CPP death benefit.
• Sharing with a spouse. Couples who both receive CPP can share their pensions, which may lower the tax the household pays: CPP pension sharing.

CPP with your other income

The CPP pension is taxable income (is CPP taxable?). It is paid once a month on set dates (CPP payment dates), and the first payment can take time after you apply (how long the first payment takes). You can also get Old Age Security from 65; CPP vs OAS compares the two, and living on CPP, OAS and GIS shows what the public pensions add up to on their own.

Is CPP taxable?

Every CPP benefit is taxable income. This page covers how each one is reported, roughly how much tax a retiree pays on CPP, tax withheld from payments, and ways the tax on CPP can be lower. It is part of the Canada Pension Plan hub.

CPP Tax Treatment

How Much Tax on CPP

CPP Alone (No Other Income)

Maximum CPP retirement pension at age 65, starting in January 2026: approximately $1,507.65/month ($18,092/year)

At 65 or older, two credits shelter this income: the basic personal amount ($16,452 federal, $12,989 Ontario, 2026) and the age amount ($9,208 federal and $6,342 Ontario at net income up to $46,432 and $47,210). Ontario figures are before the Ontario Tax Reduction, which can lower Ontario tax further.

CPP + OAS (Common Scenario)

CPP + OAS + Other Income

With other income on top, CPP is taxed at your marginal rate. The bracket rates in Ontario for 2026, federal plus Ontario:

These are bracket rates. For someone 65 or older, the rate on the next dollar is often higher:

• The age amount shrinks. It is reduced by 15% of net income above $46,432 (federal) and $47,210 (Ontario), which adds about 2.9 percentage points while both are shrinking.
• The OAS recovery tax. Above $93,454 of net income (2025 income), 15% of the excess is taken back from OAS (OAS clawback).
• Ontario surtax and the Ontario Tax Reduction. The surtax raises the Ontario rate at higher incomes, and at low incomes the Ontario Tax Reduction phasing out raises it too.

The marginal tax rate calculator works out the combined rate for a given income.

Tax Withholding on CPP

Tax isn’t deducted from CPP payments unless you ask for it, so without deductions you may owe tax when you file. To have federal income tax deducted, or to change the amount, you can:

• sign in to My Service Canada Account and select “Change my tax deductions” in the Canada Pension Plan section,
• complete the Request for Voluntary Federal Income Tax Deductions CPP/OAS (ISP3520CPP) and mail it to Service Canada, or
• call Service Canada.

If you live outside Canada, non-resident tax is deducted automatically, at 25% or less depending on the country.

Source: Service Canada, taxes on public pensions.

CPP Pension Sharing (Income Splitting)

Couples who both receive CPP can share their retirement pensions, so part of the higher-income spouse’s CPP is paid to the other. The combined CPP doesn’t change, but when the two are taxed at different rates the household pays less tax. Who qualifies and how the shared amount is worked out are in CPP pension sharing; you apply to Service Canada on form ISP1002.

Strategies to Reduce Tax on CPP

CPP vs QPP

Quebec workers are covered by the Quebec Pension Plan instead of the CPP. QPP benefits are taxable in the same way and are reported on line 11400 of the federal return, as well as on the Quebec return.