How self-employed tax works in Canada
- CPP: you pay both shares — 11.9% of earnings between $3,500 and $74,600 (YMPE), plus 8% CPP2 on earnings between $74,600 and $85,000.
- Federal income tax: charged on net business income after deducting the employer half of CPP. The 2026 basic personal amount ($16,452) and the employee share of base CPP give non-refundable credits at 14%.
- Provincial tax: varies by province. Enter a flat estimate of your provincial rate; this calculator does not model provincial brackets and credits.
Worked example
A freelancer with $85,000 of revenue and $7,000 of business expenses has a profit of $78,000 and assumes an 8% provincial income tax rate.
| Tax | Amount |
|---|---|
| Federal income tax | $8,495 |
| CPP contributions (both shares) | $8,733 |
| Provincial income tax | $5,891 |
| Total | $23,118 |
That is an effective rate of 29.6% of profit, leaving $54,882 to take home. Each extra $100 of profit costs about $35 in tax at this level, so setting aside around 30% of every payment is a safe habit.
2026 federal tax brackets
| Taxable income | Rate |
|---|---|
| Up to $58,523 | 14% |
| $58,523 – $117,045 | 20.5% |
| $117,045 – $181,440 | 26% |
| $181,440 – $258,482 | 29% |
| Over $258,482 | 33% |
What this estimate leaves out
Quebec residents pay QPP instead of CPP and file a separate provincial return. RRSP contributions, GST/HST (a separate sales tax, not income tax), EI special benefits, spousal amounts and other credits are not included. Provincial tax is a flat approximation.