2024 Canada Pension Plan and Employment Insurance rates
CPP and EI have increased a lot over the last few years, specifically starting in 2019 when the government announced the new “enhanced’ CPP rates.
2024 CPP rates for employers and employees in canada
Here’s a graph of the CPP maximums for the 8 years since the Liberal government has been in power:
| Year | Maximum annual pensionable earnings | Basic exemption amount | Maximum contributory earnings | Employee and employer contribution rate (%) | Maximum annual employee and employer contribution | Maximum annualself-employed contribution |
|---|---|---|---|---|---|---|
| 2024 | $68,500 | $3,500 | $65,000 | 5.95 | $3,867.50 | $7,735.00 |
| 2023 | $66,600 | $3,500 | $63,100 | 5.95 | $3,754.45 | $7,508.90 |
| 2022 | $64,900 | $3,500 | $61,400 | 5.70 | $3,499.80 | $6,999.60 |
| 2021 | $61,600 | $3,500 | $58,100 | 5.45 | $3,166.45 | $6,332.90 |
| 2020 | $58,700 | $3,500 | $55,200 | 5.25 | $2,898.00 | $5,796.00 |
| 2019 | $57,400 | $3,500 | $53,900 | 5.10 | $2,748.90 | $5,497.80 |
| 2018 | $55,900 | $3,500 | $52,400 | 4.95 | $2,593.80 | $5,187.60 |
| 2017 | $55,300 | $3,500 | $51,800 |
4.95
|
$2,564.10 | $5,128.20 |
| 2016 | $54,900 | $3,500 | $51,400 | 4.95 | $2,544.30 | $5,088.60 |
| 2015 | $53,600 | $3,500 | $50,100 | 4.95 | $2,479.95 | $4,959.90 |
As you can see, the employer + employee contribution amounts have gone from just under $5,000/year to nearly $8,000/year, with the largest jumps starting in 2019 and expected to continue until 2025.
That means that each employee with income of $65,000/year or higher is paying nearly $1,400 more, and employers are paying $1,400 per employee than in 2015. Nearly $1,000 of this $1,400 has happened in the last 4 years.
2024 Second “cpp2” contributions
But wait, there’s more! Starting on January 2024, employees who earn more than $68,500 are subject to an additional 4% “enhanced CPP” up to $73,200 in income (2024) and $79,400 in income (estimated – 2025).
Employers will have to match contributions, and proprietors (self-employed individuals) have to pay both the employee and employer contributions for a total of $376 (2024) and $776 (estimated – 2025) above and beyond the increases already noted.
| Year | Additional maximum annual pensionable earnings | Employee and employer contribution rate (%) | Maximum annual employee and employer contribution | Maximum annual self-employed contribution |
|---|---|---|---|---|
| 2025 | $79,400 estimated figure |
4% | $388 estimated figure |
$776 estimated figure |
| 2024 | $73,200 | 4% | $188 | $376 |
This means that the CPP for 2024 for individuals earning more than $73,200 will have increased by approximately $2,200 / year since 2015. For self employed individuals and company owners earning salaries, the increase is approximately $4,400, and more approximately $8,200 in total. In 2025 that increase will rise by at least another $400 (estimated).
rethinking salaries vs dividends
These increases will certainly cause many business owners to reconsider if paying salaries vs dividends is the correct strategy for them, and whether or not the CPP should be part of their retirement strategy. $8,200/year is a lot of money to contribute to the CPP, particularly when company owners have the option to pay dividends and invest that same $8,200 differently. Of course, taxes and CPP contibutons are only two of many factors when deciding whether or not to pay salaries or dividends.
Paying Yourself as a Business Owner: Salaries or Dividends? – AH CPAs (achenhenderson.ca)
alberta pension plan?
This is happening at a time when Alberta, who has contributed to the CPP disproportionately to its population levels, is considering splitting from the Canada Pension Plan in order to lower its contribution amounts (increasing paycheques) while increasing pensions benefits to pensioners.
Alberta taking half of CPP is a reasonable place to start | Financial Post
2024 EI rates for employers and employees in canada
EI premium rates and maximums – Calculate payroll deductions and contributions – Canada.ca
| Year | Maximum annual insurable earnings |
Rate (%) | Maximum annual employee premium |
Maximum annual employer premium |
|---|---|---|---|---|
| 2024 | $63,200 | 1.66 | $1,049.12 | $1,468.77 |
| 2023 | $61,500 | 1.63 | $1,002.45 | $1,403.43 |
| 2022 | $60,300 | 1.58 | $952.74 | $1,333.84 |
| 2021 | $56,300 | 1.58 | $889.54 | $1,245.36 |
| 2020 | $54,200 | 1.58 | $856.36 | $1,198.90 |
| 2019 | $53,100 | 1.62 | $860.22 | $1,204.31 |
| 2018 | $51,700 | 1.66 | $858.22 | $1,201.51 |
| 2017 | $51,300 | 1.63 | $836.19 | $1,170.67 |
| 2016 | $50,800 | 1.88 | $955.04 | $1,337.06 |
| 2015 | $49,500 | 1.88 | $930.60 | $1,302.8 |
While the rate appears to be going down, the government has steadily increase the amount of income that is “insurable”. Premiums in 2017 backed off however went back to 2015 levels in 2022, and have skyrocketed in both 2023 and 2024.
Reminder that if you own your own company, chances are you are exempt from EI and not eligible to collect it.
how does this impact my payroll system?
If you run payroll manually, you’ll need to make note of these changes. For those on one of our payroll systems like Wagepoint or Payment Evolution, the changes will take place automatically; you’ll simply notice less money being deposited to your bank (employees), or more money coming out of your bank (employers).
If you would like to speak to our team about cloud-based bookkeeping and payroll support, get in touch!
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