HR glossary · Pay and payroll

CPP2 (second additional CPP contributions)

CPP2 is a second layer of Canada Pension Plan contributions on earnings above the first ceiling. For 2026, employees and employers each pay up to $416.00.

Also called: second additional CPP contributions, CPP2 deductions, YAMPE, enhanced CPP

What CPP2 means

CPP2, or second additional CPP contributions, is the newest part of the Canada Pension Plan. It applies only to earnings above the first earnings ceiling, the year's maximum pensionable earnings (YMPE), up to a second, higher ceiling called the year's additional maximum pensionable earnings (YAMPE).

It was added as part of the CPP enhancement, which increases the retirement pension for future retirees. For a small employer, CPP2 only matters for staff who earn more than the YMPE, which was $74,600 in 2026. If nobody on your payroll earns that much, you will not deduct any CPP2.

Like base CPP, the employee pays a share, you match it, and you remit both to the Canada Revenue Agency (CRA).

How it works

For 2026, the CPP2 rate is 4.00% for employees and 4.00% for employers, on earnings between the YMPE ($74,600) and the YAMPE. The maximum is $416.00 for the employee and $416.00 for the employer. Self-employed people pay 8.00%, up to $832.00.

CPP2 starts once the employee's pensionable earnings for the year pass the YMPE, which usually happens partway through the year. Before that point you deduct base CPP; once the employee hits the base CPP maximum, base CPP stops and CPP2 starts.

For 2027, the CRA has published a YMPE of $76,700 and a YAMPE of $87,400, so CPP2 will apply to earnings between those two amounts. The CRA says contribution rates stay the same from 2026 onward.

Report CPP2 on the T4 slip along with base CPP. Payroll software and the CRA's payroll deductions tables handle the switch from base CPP to CPP2 automatically, but check that your setup is current each January when the ceilings change.

Is it the same in every province?

CPP2 is part of the federal Canada Pension Plan and works the same way in every province and territory except Quebec, where employees contribute to the Quebec Pension Plan (QPP), which has its own rules.

Example: A senior engineer passes the first ceiling

Hannah owns a 15-person engineering firm in Fredericton, New Brunswick. Her senior engineer, Raj, earns $80,000.00 in 2026.

Raj pays base CPP until his earnings reach $74,600, then stops. CPP2 applies to the next $5,400.00 of his earnings. At 4.00%, Raj contributes $216.00 in CPP2 for 2026, and Hannah's firm contributes another $216.00. Both are below the $416.00 maximum.

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Questions about CPP2

Who pays CPP2?

Employees whose pensionable earnings for the year are above the YMPE ($74,600 in 2026), and their employers. Each pays 4.00% on earnings between the YMPE and the YAMPE.

What is the CPP2 maximum for 2026?

$416.00 for the employee and $416.00 for the employer. Self-employed people pay up to $832.00.

Is CPP2 the same as the CPP enhancement?

CPP2 is one part of the CPP enhancement. The other part, the first additional contribution, is built into the 5.95% CPP rate.

Official sources

General information for Canadian employers, not legal advice. Rules differ by province and territory and change over time, so check with your provincial employment standards office (or the federal Labour Program if you are federally regulated) before you rely on it. See employment standards by province.

Checked against official sources on 4 November 2026.