On November 1, 2023, the Government of Canada announced changes to contributions for both Canada Pension Plan (CPP) and Employment Insurance (EI) for the 2024 calendar year.
The changes in how CPP is treated on a personal tax return (which began in 2019) mean that of the $3,867.50 of normal max contribution, $631.00 will be deductible on the T1 (rather than being a tax credit). This amount reflects the annual increase that began in 2019 – so the 4.95% rate that was in place in 2018 is still applicable as a credit, and the excess is deductible.
Additionally, as of 2024, there is a “CPP2” rate of 4% applied on the amount of earnings above the max earnings and below the CPP2 max earnings – effectively another 4% on that $6,600 gap. The CPP2 contributions by an employee are deductible, rather than being a credit – so someone with over $73,200 of earnings will contribute $4,055.50, of which a total of $838.00 will be deductible.
2024 CPP Contributions:
- 2024 CPP1 max earnings – $68,500
- 2024 CPP2 max earnings – $73,200
- Exemption – $3,500
- Max contribution – $3,867.50 CPP1, $4,055.50 CPP2 included
- CPP Rate – 5.95% on CPP1; 4.00% on CPP2; employer’s portion matches dollar for dollar
2024 EI Contributions:
- Max earnings – $63,200
- Max contribution – $1,049.12
- EI Rate – 1.66%
- Employer’s portion – 1.4 times employee portion
