2025 CPP & EI Rates, Maximums & Paycheque Impact

Canada Pension Plan (CPP) and Employment Insurance (EI) contributions are deducted from virtually every paycheque in Canada. For 2025, the Canada Revenue Agency has set new rates and maximum earnings levels. Here is everything employees, employers, and the self-employed need to know. (For the latest figures, see the updated 2026 CPP and EI rates and maximums.)

CPP1 — The Base Canada Pension Plan

The first tier of CPP applies to employment earnings between the basic exemption and the Year’s Maximum Pensionable Earnings (YMPE).

Formula for employees:

CPP1 = (min(employment income, $71,300) − $3,500) × 5.95%

The maximum employee contribution of $4,034.10 is reached when earnings hit $71,300. Above that threshold, no further CPP1 is deducted — but CPP2 begins.

CPP2 — The Enhanced Second Tier

The CPP2 enhancement was introduced in 2024 and applies to earnings between the YMPE and the Year’s Additional Maximum Pensionable Earnings (YAMPE).

Formula for employees:

CPP2 = (min(employment income, $81,200) − $71,300) × 4.00%

CPP2 applies only on earnings between $71,300 and $81,200 — a band of $9,900. The maximum CPP2 contribution is $396.00. Unlike CPP1, there is no basic exemption for the CPP2 calculation — it begins immediately at the YMPE.

Combined CPP Maximum (2025)

Self-employed Canadians pay both the employee and employer share of CPP, and most — but not exactly half — of that is deductible on their T1. See Self-Employed Considerations below for the actual split.

Employment Insurance (EI) — 2025

EI premiums are calculated as a percentage of insurable earnings up to the Maximum Insurable Earnings (MIE).

Formula for employees:

EI = min(employment income, $65,700) × 1.64%

Employers pay 1.4 times the employee rate because the Employment Insurance Act says so: section 68 requires an employer to “pay a premium equal to 1.4 times the employees’ premiums”. It is not a parental-leave surcharge — the same multiple applies in Quebec, where parental benefits are paid by QPIP rather than EI (1.31% × 1.4 = 1.834%, the Quebec employer rate in the table below).

Quebec: QPIP and Reduced EI Rate

Quebec has its own parental insurance program — the Quebec Parental Insurance Plan (QPIP) — which replaces the parental benefits component of federal EI. Because of this, Quebec employees and employers pay a lower federal EI rate.

Quebec workers also pay QPIP premiums separately. The QPIP employee rate for 2025 is 0.494% on insurable earnings up to $98,000, for a maximum QPIP employee premium of approximately $484.12.

How CPP2 Benefits You in Retirement

CPP2 contributions generate a separate, additional pension on top of your base CPP retirement benefit. The CPP2 benefit is calculated at a 33.33% replacement rate on the enhanced earnings band — the same target the first tier now carries. The rate increase from 4.95% to 5.95% phased in between 2019 and 2023 lifted CPP from replacing one quarter (25%) of covered earnings to one third (33.33%); 25% is the pre-2019 design, not CPP1 as it stands today. What CPP2 adds is not a higher replacement rate but a wider band of earnings that gets it. Full CPP2 benefits will phase in over time as Canadians accumulate years of CPP2 contributions.

Impact on Your Net Pay

For a Canadian employee in 2025 earning more than $81,200, the maximum combined payroll deductions are:

This is in addition to income tax withholdings. Employees who stop working partway through the year may have over-contributed to CPP or EI if they change employers; any excess is refunded when you file your T1.

Self-Employed Considerations

Self-employed individuals pay both the employee and employer share of CPP (no EI unless they voluntarily opt in). For 2025:

• Total CPP1 + CPP2 self-employed maximum (line 42100): $8,860.20
• Deductible on line 22200: $5,504.10
• Claimed as a non-refundable credit on line 31000: $3,356.10

The split is not employee-half / employer-half. CRA Schedule 8 divides self-employed contributions into base and enhanced: line 10 charges 9.9% on contributory earnings (maximum $6,712.20), line 11 charges 2% for the first additional contribution (maximum $1,356.00), and line 12 charges 8% on the CPP2 band (maximum $792.00). Only half of the base contribution goes to the credit; the entire enhanced portion — the first additional contribution and all of CPP2 — goes to the deduction.

At the 2025 maximums that works out to $6,712.20 × 50% = $3,356.10 for the credit, and $3,356.10 + $1,356.00 + $792.00 = $5,504.10 for the deduction. “The employer-equivalent half” is the pre-2019 framing and stopped being accurate when the CPP enhancement began in 2019 — the deduction is now worth more than half the total.

Because a deduction reduces taxable income at your marginal rate while a credit is worth only the lowest federal rate, this split matters: the larger share is the more valuable one.

Sources

• CRA — CPP contribution rates, maximums and exemptions
• CRA — EI premium rates and maximums
• Revenu Québec — QPIP contribution rates