When Do Your EI and CPP Contributions Max Out?

Employment Insurance (EI) and the Canada Pension Plan (CPP) are fundamental government programs in Canada, requiring contributions from both employees and employers. These programs provide financial support during specific life events, such as unemployment, retirement, disability, or survivorship. While contributions to these systems are mandatory, they are not infinite; they are subject to annual maximums.

Calculating Employment Insurance Maximums

Employment Insurance contributions are determined by an individual’s insurable earnings up to a specific annual ceiling. This ceiling is known as the Maximum Insurable Earnings (MIE), which for 2025 is set at $65,700. This figure represents the maximum amount of earnings on which EI premiums are calculated, meaning any income earned above this threshold in a year is not subject to further EI deductions.

The employee contribution rate for EI in 2025 is 1.64% of insurable earnings. Employers contribute a higher amount, at a rate of 2.296%, which is 1.4 times the employee rate. These contributions are typically deducted directly from an employee’s paycheque throughout the year.

For 2025, this calculation is $65,700 (MIE) multiplied by 1.64% (employee rate), resulting in a maximum annual employee contribution of $1,077.48. Once an employee’s cumulative gross earnings for the year reach the MIE, their EI contributions for that year cease. This cessation marks the point at which an individual has “maxed out” their EI contributions.

Calculating Canada Pension Plan Maximums

Canada Pension Plan contributions are calculated based on an individual’s pensionable earnings, but with a specific exemption and an annual ceiling. The Year’s Maximum Pensionable Earnings (YMPE) for 2025 is $71,300. Before contributions begin, a Year’s Basic Exemption (YBE) of $3,500 is applied.

The employee and employer CPP contribution rate for 2025 is 5.95% each on pensionable earnings between the YBE and YMPE. For 2025, this calculation is ($71,300 – $3,500) multiplied by 5.95%, leading to a maximum annual employee contribution of $4,034.10.

Beginning in 2024, the CPP also includes a second earnings ceiling, the Year’s Additional Maximum Pensionable Earnings (YAMPE), which for 2025 is $81,200. Earnings between the YMPE ($71,300) and the YAMPE ($81,200) are subject to a second additional CPP contribution (CPP2) at a rate of 4.00% for both employees and employers. This results in a maximum additional employee contribution of $396.00 for 2025. Self-employed individuals are responsible for paying both the employee and employer portions of CPP and CPP2 contributions.

What Happens After Contributions Max Out

Reaching the annual maximum for EI and/or CPP contributions has an impact on an individual’s take-home pay. Once these thresholds are met, deductions for these specific programs cease for the remainder of the calendar year. This means that for subsequent pay periods within that year, the net pay will increase because the employer is no longer required to withhold these amounts.

This cessation of contributions is a temporary measure, and the process resets at the beginning of each new calendar year. On January 1st, contributions for both EI and CPP resume from the first dollar earned, continuing until the new annual maximums are reached again. The contributions made, up to the maximums, are what fund eligibility for benefits.

While further contributions are not required once the maximums are reached, an individual’s eligibility for EI benefits or the calculation of future CPP benefits is not negatively affected. The benefits are based on the insurable earnings and pensionable earnings accrued up to the respective maximums for the year, regardless of whether contributions continued throughout the entire year. The system is designed to ensure that those who contribute up to the maximums receive the full credit for that year’s participation.

Annual Adjustments to Contribution Maximums

The Canadian government regularly reviews and updates the maximum insurable earnings (MIE) for Employment Insurance, and the Year’s Maximum Pensionable Earnings (YMPE) and Year’s Basic Exemption (YBE) for the Canada Pension Plan. These figures, along with the associated contribution rates, are adjusted annually to reflect economic conditions and ensure the sustainability of these programs. This ensures that the programs remain relevant and adequately funded over time.

Factors influencing these yearly adjustments include changes in the average weekly earnings in Canada, inflation rates, and broader economic indicators. For example, the MIE for EI is typically indexed to the average weekly earnings of Canadians. Similarly, the YMPE for CPP is also adjusted based on wage growth, while the YBE has remained constant for many years.

Individuals can find the most current figures for EI and CPP maximums and rates on official government websites, such as those maintained by the Canada Revenue Agency (CRA) or Employment and Social Development Canada. Staying informed about these annual changes is important for financial planning. Awareness of these adjustments helps individuals anticipate when their contributions might max out and understand the corresponding impact on their take-home pay for the year.