Canada Pension Plan (CPP) Updates for 2025: Key Numbers and Changes
The Canada Revenue Agency (CRA) recently announced important updates to the Canada Pension Plan (CPP) for 2025. These changes, including adjustments to the YMPE, are crucial for employers, employees, and self-employed individuals in Canada, impacting contributions, pensionable earnings, and retirement planning.
Jump to summary table of new rates and limits or check out Penad’s Rates Resource
New Maximum Pensionable Earnings Limits for 2025
For 2025, the year’s Maximum Pensionable Earnings (YMPE) under CPP is set at $71,300, an increase from $68,500 in 2024. Additionally, the second earnings ceiling, known as the year’s Additional Maximum Pensionable Earnings (YAMPE), rises to $81,200, up from $73,200 in 2024. The YAMPE represents the earnings level above which Canadians pay additional CPP contributions, also referred to as CPP2.
Contribution Rates for Employers, Employees, and the Self-Employed
Employee and employer CPP contribution rates remain steady at 5.95%. However, the maximum contribution increases slightly to $4,034.10 for both employees and employers, up from $3,867.50 in 2024.
Self-employed Canadians, who are required to cover both employee and employer contributions, continue to contribute at a combined rate of 11.9%, with a new maximum of $8,068.20, up from $7,735.00 in 2024.
Understanding CPP2 Contributions
Introduced in 2019 as part of CPP’s enhancement strategy, CPP2 contributions cover earnings between the YMPE and YAMPE. For 2025, employee and employer CPP2 contribution rates remain unchanged at 4%. The maximum CPP2 contribution for each is set at $396.00, significantly higher than the 2024 amount of $188.00.
Self-employed individuals’ CPP2 contributions remain at 8%, with a maximum contribution of $792.00 in 2025, compared to $376.00 in 2024.
RRSP and TFSA Limits for 2025
Alongside CPP adjustments, the CRA has also updated contribution limits for other retirement savings vehicles. The Registered Retirement Savings Plan (RRSP) limit will rise to $32,490 in 2025, up from $31,560 in 2024, and the limit for 2026 will further increase to $33,810.
The Tax-Free Savings Account (TFSA) limit for 2025 is expected to remain at $7,000. This consistency provides clarity for Canadians aiming to maximize their tax-free savings opportunities.
Implications for Canadian Workers and Businesses
These updated figures underline the continued effort by the CRA to keep pension contributions aligned with average wage increases. Employers, employees, and the self-employed should review their financial planning and budgeting strategies accordingly.
Staying informed about these updates is critical for effective retirement and tax planning. For personalized advice, Canadians should consult financial professionals to navigate these changes efficiently.
Summary Table of New Rates and Limits
| Item | 2025 | 2024 |
|---|---|---|
| Year’s Maximum Pensionable Earnings (YMPE) | $71,300 | $68,500 |
| Additional Maximum Pensionable Earnings (YAMPE) | $81,200 | $73,200 |
| CPP Contribution Rate (Employer/Employee) | 5.95% | 5.95% |
| Maximum CPP Contribution (Employer/Employee) | $4,034.10 | $3,867.50 |
| CPP Contribution Rate (Self-employed) | 11.9% | 11.9% |
| Maximum CPP Contribution (Self-employed) | $8,068.20 | $7,735.00 |
| CPP2 Contribution Rate (Employer/Employee) | 4% | 4% |
| Maximum CPP2 Contribution (Employer/Employee) | $396.00 | $188.00 |
| CPP2 Contribution Rate (Self-employed) | 8% | 8% |
| Maximum CPP2 Contribution (Self-employed) | $792.00 | $376.00 |
| RRSP Limit | $32,490 | $31,560 |
| TFSA Limit | $7,000 | $7,000 |