Updated on January 3, 2024
Delve into the comprehensive details surrounding the CPP Maximum Pensionable Earnings, which are set to rise up to $68,500 in the year 2024 – a confirmation from reliable sources highlighted in this article. Within the contents, you will find a wealth of information covering various aspects, including the confirmed sources validating the increase in CPP Maximum Pensionable Earnings to $68,500 in the year 2024, along with other pertinent details.
CPP Maximum Pensionable Earnings
The CPP maximum professional earnings indicate the highest income level at which an individual can contribute to the Canada Pension Plan. This limit undergoes annual revisions by the Canada Revenue Agency (CRA) in light of the CPP Enhancement.
Contributions are based on the employee’s annual earnings. While the upper limit of the CPP Contribution Amount has changed for the upcoming year, the lower limit remains unchanged at $3,500.
In 2024, CPP Maximum Pensionable Earnings Set to Reach $68,500
The Canada Revenue Agency has officially announced a rise in the CPP Maximum Pensionable Earnings, with the new limit set at $68,500. This adjustment is slated to take effect in the year 2024.
Alongside the existing earning ceiling for CPP, a second earning ceiling, CPP2, is set to be introduced. This will be utilized in the computation of CPP2 contributions. In essence, pensionable income falling between $68,500 and $73,200 will be subject to CPP2 contributions.
In 2024, the CRA has opted to maintain the basic exemption limit, which serves as the minimum contribution limit for the year. For additional details on CPP Maximum Pensionable Earnings and related information, refer to the official CRA website.
It’s important to highlight that the CPP is not applicable in Quebec, where the province operates its own program called QPP. While distinct, the benefits and pensions provided under the QPP are comparable to those of the CPP.
With the recent increase, the maximum earnings have now reached $68,500. This implies that individuals will have the opportunity to contribute more, leading to higher benefits during retirement. The contribution rate plays a crucial role in calculating the maximum yearly contribution amount for individuals.
The contribution rate will stay consistent at 5.95% for both employers and employees. This translates to individuals being able to contribute a maximum of $3,867.50 per year. It’s important to highlight that this contribution limit remains uniform for both employers and employees, with each permitted to contribute up to $3,867.50 annually.
In the previous year (2023), the maximum annual contributions were established at $3,754. This marked an increase from $3,499 per year in 2022. Prior to the enhancement, the contribution limit was $2,594.
The rate for self-employed individuals will also remain unaltered at 11.9%. Consequently, self-employed individuals can contribute a maximum of up to $7,735 per year. This limit was set at $7,508 in the previous year (2023).
It’s important to highlight that the maximum contribution amount for self-employed individuals is notably higher than for employed individuals. This discrepancy arises because self-employed individuals do not have an employer to share their contributions with. To compensate for this difference, they are permitted to contribute more.
The rates for these two categories differ significantly, with self-employed rates nearly double the contribution rates of employees/employers. Following the implementation of the CPP Enhancement, the CPP contribution rates for employees/employers increased by 1% (from 4.95% to 5.95%), while the CPP contribution rates for the self-employed saw a 2% increase (from 9.9% to 11.9%).
CPP Contribution Rates
Starting in 2024, the CPP 2 Contribution rate for employees/employers will be 4%. This allows each of them to contribute up to $188 for CPP2. As noted, the self-employed contribution rate is typically double that of employees/employers. Consequently, the CPP2 contribution rate for self-employed individuals will be 8%.
| Year | Employer/Employee | Self-Employed | YMPE | Yearly Maximum Contribution (Employer/Employee) | Yearly Maximum Contribution (Self-Employed) |
| 2024 | 5.95% | 11.9% | 68,500 dollars | 3,867.50 dollars | 7,735 dollars |
| 2023 | 5.95% | 11.9% | 66,600 dollars | 3,754 dollars | 7,508.90 dollars |
| 2022 | 5.7% | 11.4% | 64,900 dollars | 3,499 dollars | 6,999 dollars |
| 2021 | 5.45% | 10.9% | 61,600 dollars | 3,166 dollars | 6,333 dollars |
| 2020 | 5.25% | 10.5% | 58,700 dollars | 2,898 dollars | 5,796 dollars |
| 2019 | 5.1% | 10.2% | 57,400 dollars | 2,749 dollars | 5,498 dollars |
CPP Enhancement
The enhancement of the Canada Pension Plan has been an ongoing process since 2019. Initially, the employee/employer contribution rate stood at 5.1%, and it has gradually increased to the current rate of 5.95%. Likewise, the self-employed contribution rate began at 9.9% and has now reached 11.9%.
The enhancement exclusively impacts those who work and contribute after 2019. The initial additional component in the CPP was introduced during the period 2019-2023, and the second one is slated for introduction in 2024-2025. This enhancement aims to offer augmented benefits, encompassing Disability Pension, Retirement Pension, and more.