CPP is taxable income – which means you’ll pay income tax every year on your payments, based on your total income for the year. Taxes aren’t automatically deducted from your monthly CPP payments, but you can choose to set it up that way if you want to spread it out a bit more.
Canada Pension Plan is a monthly benefit that retirees receive from the Government of Canada, funded by contributions made by both employees and their employers. Its purpose is to supplement your income once you're retired.
So if you're curious about whether you can avoid being taxed on these monthly benefits for retirees, keep reading.
Key Takeaways
- CPP counts as taxable income and the amount you pay depends on your tax bracket.
- Other CPP benefits, like CPP disability and the death benefit, are also taxable.
- You can request automatic CPP tax deductions on the government of Canada website.
What is CPP?
The Canada Pension Plan (CPP) is a taxable benefit paid out monthly by the federal government to retirees. You can withdraw your CPP early at age 60 or delay your CPP until age 70 for a greater benefit.
CPP also includes benefits like:
- CPP disability
- Children's benefits
- Post-retirement benefits (including other benefits for those with a disability)
- Survivor benefit
- CPP death benefit
Is CPP taxable income?
CPP is considered as income, so yes, it is taxable. Other than the standard CPP, the other CPP benefits are also taxable. These include all of the CPP benefits listed in the section above.
Here are a few specific examples.
Is CPP disability income taxable?
CPP disability is taxable, but the CPP disability benefits tax may be reduced due to related tax credits for disabilities, including the disability tax credits. You can also get some tax sheltering by putting money into a Registered Disability Savings Plan (RDSP). Much like an RRSP, your investments can grow tax-free until withdrawn, in which case, they'll likely be taxed at a lower rate.
Is the CPP death benefit taxable?
The person who receives a CPP death benefit typically has to pay taxes on it. But there may be some exceptions – mainly if the recipient dealt with the estate at arm's length and met the following 4 conditions:
- The recipient paid the funeral expenses for the deceased
- The amount does not exceed the funeral expenses
- The deceased has no heirs
- There is no other property in the estate
What rate is CPP taxed at?
The CPP tax you pay is based on the tax bracket you fall into and your payment amounts. Here's a table for quick reference, showing the federal tax brackets for 2025:
| Tax bracket | Maximum amount taxable in this bracket | Tax rate |
|---|---|---|
| Up to $57,375 | $57,375 | 15% |
| $57,376 – $114,750 | $57,375 | 20.5% |
| $114,751 – $177,882 | $63,132 | 26% |
| $177,883 – $253,414 | $75,532 | 29% |
| $253,415 and up | No maximum | 33% |
You’ll receive a T4A(P) slip each year with the total amount of CPP payments you received. When you file your taxes, you’ll need to include this slip with your tax return.
For more information, see: Tax brackets and rates.
If you’re looking for a convenient (and free) way to file your taxes, take a look at Wealthsimple Tax:
Wealthsimple Tax (formerly SimpleTax) is free Canadian tax software that aims to make filing your taxes easy. There’s no downloading necessary – you can go through the process right in your internet browser with step-by-step instructions and auto-fill features. And with maximum refund and accuracy guarantees in place – it’s worth giving it a shot. You’ll even be able to transfer prior year data, an option only available on a handful of other tax software.
- It's free to use
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- Support for all provinces – even Quebec
- Covers simple tax situations, plus some complex ones
- Ability to import prior year data
- Support is through email only
- There is no app
- Limit of 20 returns per account
- Canadian citizen
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- RRSP calculator
- Auto-fill available
- Always
How to request automatic CPP tax deductions
While CPP is indeed a form of taxable income, the taxes aren’t automatically deducted before being sent to you – but the good news is that it’s possible to make that happen.
All you need to do is contact Service Canada and request automatic deductions. You can do this through your CRA My Account or by downloading, filling out, and mailing or dropping off the Request for Voluntary Federal Income Tax Deductions form to a Service Canada office.
And, of course, if you prefer not to make this request, you may owe the CRA when income tax season hits.
FAQ
Is CPP taxable income?
Yes, CPP counts towards your overall annual income and therefore is taxed as any other form of income. However, taxes aren’t set up to be automatically deducted, so you may want to contact the CRA to change this.
How much tax will I pay on CPP disability?
CPP disability payments are taxed in the same manner as average CPP payments. The amount you’ll pay depends on how much you receive and what your annual income is at tax time.
Is the CPP Survivor Benefit taxable?
Yes, the CPP Survivor Benefit is taxable. Just as average CPP payments count towards an individual’s annual income, so does the CPP Survivor Benefit. Therefore, you’ll be taxed according to your level of income, as defined by the government’s tax brackets.
Is OAS taxable?
Yes, your Old Age Pensions, or OAS, counts as taxable income since it’s a pension amount that adds to your net annual income.
Are Guaranteed Income Supplement (GIS) payments taxable?
No, GIS benefits are not considered taxable income. You’ll still want to include your GIS earnings come tax time, though, as it’s used to gauge your eligibility for other government benefits.
Are RRSPs and RRIFs taxable?
An RRSP acts as a tax-deferred retirement savings plan, which means any investments you add won’t be taxed until you withdraw funds at a later date. Many people convert their RRSPs to RRIFs after a certain point, and the same guidelines apply here too – you won’t be taxed on anything within the account, but will be taxed when you make withdrawals.
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