Pensionable earnings

What counts and who contributes

Pensionable earnings are an employee’s remuneration from pensionable employment, with certain exceptions. The CRA says CPP is generally deducted from salary and wages, commissions, bonuses, most taxable benefits, honorariums and certain tips and gratuities.

An employer deducts CPP when the employee is in pensionable employment, is not considered disabled under the CPP or QPP, and is between 18 and 69, even if they already receive a retirement pension. An employee aged 65 to 69 can stop contributing by giving the employer a completed Form CPT30.

How it differs from insurable earnings

The two measures sound alike but are not interchangeable. Pensionable earnings use the CPP age range, while EI has no age limit. CPP has a $3,500 basic exemption applied in the calculation, while EI starts at the first dollar. The ceilings also differ: the 2026 CPP ceiling is $74,600, and the EI maximum is $68,900. Most taxable benefits are pensionable, while insurable earnings generally require cash.

Both appear on the T4 slip, pensionable earnings in box 26 and insurable earnings in box 24. If CPP contributions are reported in box 16, the matching pensionable earnings must also be reported.

An illustrative example with proration

Proration applies when an employee turns 18 or 70 during the year, files a CPT30, becomes disabled under the CPP or dies. The CRA’s own example has an employee who turns 70 on February 24, 2026 and is pensionable for two months. The maximum contributory earnings of $71,100 (the $74,600 ceiling less the $3,500 exemption) are multiplied by 2 and divided by 12, giving $11,850. At 5.95%, the maximum contribution is $705.08, and no CPP is deducted after the end of February.

The figures come from the CRA example; your own employee’s dates and pay would change the result.

Exceptions and special cases

Employees whose province of employment is Quebec contribute to the QPP instead, so this entry applies to the rest of Canada. The employment income of a First Nations employee that is exempt from income tax is generally not subject to CPP, unless the employer or the employee elects coverage.

As with EI, the yearly ceiling applies to each job with a different employer, so an employee with two employers can contribute at both. The CRA reviews T4 slips each year, and a wrong exempt status or a missed age change are among the common errors it lists.

What to discuss with your accountant

Bring payroll registers, birth dates for employees close to 18 or 70, any CPT30 forms and last year’s T4 summary. Ask how bonuses, taxable benefits and second jobs affect the totals, and how to correct a deduction error before or after filing.