The enhanced CPP contributions for 2024 and 2025 bring higher payroll costs for business owners and the self-employed. This raises a key question: Should you still be paying yourself wages and bonuses, or is it time to explore other compensation strategies? In my latest video, I break down what the enhanced CPP contributions are, and whether rethinking your approach to CPP contributions could be the smarter move.
Video Transcript: Enhanced CPP contributions: Should you rethink your pay?
For 2024, there is an enhanced CPP requiring employees and employers to pay an additional 4% on roughly $5,000 of earnings. This was not previously required.
I think there’s a legitimate debate as to whether this is an enhancement or not.
For 2025, this differential is going to be on approximately $10,000. In other words, if you’re self-employed, it’s 8% on the $10,000 or just short of that amount.
This change means business owners and the self-employed should reconsider how they pay themselves. If you’re currently paying yourself wages or bonuses, it may be time to review whether CPP contributions still make sense for you. There are pros and cons to opting out, and your tax strategy should reflect what’s best for your financial goals.
I’m not saying you should avoid it entirely, but I do think it’s worth a second look.
I’m George Dube, saving the world from tax, one bow tie at a time®.
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Resources
For additional resources related to the 2025 tax deadline extension, see:
- Tax calendar deadlines
- 2025 tax season tips: How to save more this year
- Canada Pension Plan and the CPP Enhancement
More questions?
Still have questions? I want to help you Do wonderful things®, so please contact me today.
Remember – circumstances are unique! This information is summary in nature. Seek out advice from your tax advisor about your specific situation.
