CPP and OAS 2026: What Changed (and What Didn’t) Payroll Costs, Take-Home Pay, and February Timing

By Robert Skinner | WBN News | February 16, 2026
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In recent weeks, many Canadians have heard that “federal pension changes are coming in February.” The reality is a bit different but still important for workers, employers, and retirees.

Most of the 2026 pension changes actually took effect January 1, but they’re being noticed now because of February pay cheques and the upcoming pension deposit date.

Here’s what’s real — and what it means for you.

CPP contributions are higher in 2026

The Canada Pension Plan (CPP) itself didn’t get redesigned, but the maximum pensionable earnings threshold increased for 2026.

The YMPE (Year’s Maximum Pensionable Earnings) rose to $74,600, which means higher CPP deductions for people earning near the top end of the scale. While the base contribution rate remains 5.95%, the higher ceiling pushes up the maximum annual contribution.

For employees, that means slightly lower take-home pay if they earn at or near the maximum threshold. Employers see the same increase because CPP is matched dollar-for-dollar.

For small businesses, this translates into a modest but real payroll cost increase — especially across larger teams with higher average wages.

CPP2 continues rolling forward

A big part of the confusion comes from the ongoing CPP enhancement program, often referred to as “CPP2.”

This applies to earnings above the standard CPP ceiling. In 2026, the second earnings ceiling rises to about $85,000, with additional contributions applying between the two thresholds.

This primarily affects:

• Higher-income employees
• Employers in professional or skilled labour sectors
• Self-employed individuals who pay both sides

The key takeaway: if payroll deductions feel heavier than a few years ago, that’s by design. CPP is being gradually expanded to provide larger retirement benefits in the future. OAS saw a small quarterly increase

Old Age Security (OAS) works differently from CPP. It’s not contribution-based and is instead funded through general tax revenue.

OAS is indexed quarterly based on inflation. For the January–March 2026 quarter, payments saw a modest increase.

As of early 2026:

• Seniors aged 65–74 receive up to roughly $742/month
• Seniors aged 75+ receive up to roughly $816/month

These aren’t dramatic jumps, but they reflect ongoing inflation adjustments that retirees watch closely.

What this means for business owners

For employers and independent operators, the 2026 pension adjustments are incremental but worth noting.

Three practical considerations:

• Payroll budgeting: Slightly higher statutory costs at the upper wage tiers
• Employee communication: Expect questions when deductions increase
• Long-term planning: Expanded CPP benefits may reduce future reliance on employer retirement programs

For entrepreneurs, the message is straightforward: these aren’t disruptive changes, but they are part of a steady upward trend in mandatory contributions.

The bigger picture

Canada’s pension system is evolving gradually, not dramatically. The federal government has been implementing changes in small steps over multiple years rather than through sudden overhauls.

For now, the 2026 updates fall into that same category — incremental adjustments that quietly reshape payroll math and long-term retirement income.

If you’re running a business, reviewing personal finances, or advising clients, the takeaway is simple:
No surprise overhaul — just steady increases that are now showing up in real numbers.

Robert Skinner - Robert is an experienced 'AI Assisted' business systems developer and coach. Give him a call at +1 604-220-4750 or connect on LinkedIn: https://www.linkedin.com/in/rlskinner/

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Tags: #WBN News #Robert Skinner Editor #Canada Pension Plan #CPP Changes #OAS Canada #Canadian Economy #Small Business Canada #Retirement Planning #Payroll Canada