As of 2024, the Federal Canadian Government is collecting a second level of CPP contributions. This is allegedly going to boost seniors’ CPP payments and will help cope with rising costs and inflation. In 2024, CPP will be maxed out at $4,045.50, adding roughly $300 to what it was last year.
If you are paying yourself through your company or are self-employed as a sole proprietor, this means your CPP costs will go up by a little over $600, because you will be paying the employer and employee’s portion of the CPP.
The first CPP’s upper limit in 2024 is $68,500. The CPP on income of $68,500 will be $3,867.50. Income from $68,501 to $73,200 will be hit with the second CPP of $188, bringing the sum of the two to $4,045.50 on income of $73,200 and above.
The rate of the first CPP is 5.95% and the rate of the second CPP is 4%. The CPP equations are as follows:
First CPP
3,867.50/(68,500-3,500)=0.0595
Second CPP
188/4,700=0.04
If someone needed to calculate CPP on income of let’s say $50,000, they would subtract the first $3,500 and multiply by 0.0595 (rate for the first CPP).
(50,000-3,500)x0.0595
=$2,766.75
So for a wage of $50,000, the CPP for self employed individuals would be
$2,766.75x2
=$5,533.50
For Wages Above $68,500
For a wage in Canada above $68,500 in 2024, we would add the maximum CPP to the second CPP. Let’s take $70,000 as an example.
CPP on $70,000 in 2024:
3,867.50+((70,000-86,500)x0.04)=
3,867.50+(1,500x0.04)=
3,867.50+60=
$3,927.50
So the CPP total for income of $70,000 in 2024 would be $3,927.50.
If you are self-employed, you will pay double that, bringing the total CPP costs for 2024 to $7,855 on income of $70,000.
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