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Say you run your own business in Ontario and net $80,000 after expenses. Income tax and CPP take $22,126.47 of it, or 27.7%, and you keep $57,873.53. Nobody withholds any of that along the way, so setting the money aside is your job.
What does the CRA actually tax?
Your net business income, which is revenue minus the expenses that belong to running the business. Other income, like interest or a part-time wage, gets added on top. The total lands on the same federal and provincial brackets an employee uses, and the self-employed tax calculator takes your net figure, your province and any deductions, then gives you tax and contributions together.
Expenses matter because every dollar you can legitimately deduct removes a dollar of taxable income.
Keep receipts for everything you claim, and claim only costs tied to earning business income. Which costs qualify, and how much of a mixed personal and business cost you can claim, depends on CRA rules we don’t list here.
Why do you pay both halves of CPP?
Because you’re the employer too. An employee pays 5.95% of earnings between $3,500 and $74,600 in 2026 and the employer covers an equal amount, so when you work for yourself you pay 11.9% on that range, which tops out at $8,460.90. Above $74,600 a second tier, CPP2, takes 8% up to $85,000, with a $832 maximum. The CRA’s CPP contribution rates and maximums page lists the same 2026 figures.
Some of it comes back. The employer half and the enhanced portion are deducted from income, and the base employee half earns a credit. The calculator applies both steps before it works out tax.
| Net business income (Ontario) | Income tax | CPP, both halves | Total | Share of income |
|---|---|---|---|---|
| $30,000 | $2,455.03 | $3,153.50 | $5,608.53 | 18.7% |
| $60,000 | $7,879.42 | $6,723.50 | $14,602.92 | 24.3% |
| $80,000 | $13,233.57 | $8,892.90 | $22,126.47 | 27.7% |
| $120,000 | $25,481.56 | $9,292.90 | $34,774.46 | 29.0% |
How much tax comes off $80,000 net in Ontario?
Federal tax is $8,698.44 and Ontario tax is $4,535.12, which makes $13,233.57 of income tax. CPP on both halves adds $8,892.90. That’s $22,126.47 in total, and $57,873.53 is left.
Compare an employee on the same $80,000 in Ontario. They pay $14,127.85 of income tax plus $5,569.52 of CPP and EI, and they keep $60,302.63, so the employee comes out $2,429.10 ahead, mostly because the employer covers the second CPP half. One wrinkle: the employee figure includes EI, and the self-employed estimate leaves it out, because EI is optional for you.
An RRSP deduction softens the blow. Deduct $6,000 and tax on the same income drops from $13,233.57 to $11,304.57, a saving of $1,929.00. The RRSP calculator shows what that money grows to.
How much should you set aside from each payment?
A simple habit beats a clever plan. On the $80,000 example, the total of $22,126.47 works out to roughly $1,844 a month, or about 28 cents of every dollar you net. Round it up to 30 cents and park it in a separate savings account the day each client pays. Whatever’s left at filing time is a nice surprise, and a paycheque you didn’t have to give back.
That 28 cents is about the net figure, not the invoice. If you billed $100,000 and spent $20,000 on the business, the percentage applies to the $80,000 that’s left.
When do you file, and when do instalments start?
For the 2025 tax year, a self-employed person had until June 15, 2026 to file, but any balance was due on April 30, 2026. The data we checked doesn’t print the dates for the 2026 return, so confirm them when you file. A weekend or holiday deadline moves to the next business day.
You pay tax in instalments when your net tax owing tops $3,000 for the current year and topped it in at least one of the last two. Quebec residents face a $1,800 test for the provincial part. The four due dates are March 15, June 15, September 15 and December 15, while farmers and fishers have one date, December 31.
The tax instalments calculator splits your expected balance into four equal payments. On the $80,000 example that would be about $5,532 a quarter. Treat it as an estimate, since the CRA also offers other payment methods based on reminders or last year’s figures. Late or short instalments carry interest.
What trips people up?
- Spending the whole deposit. Tax is due later, so move part of each payment into a separate account.
- Forgetting CPP, which is billed on the return like income tax.
- Skipping receipts. A claim you can’t document can be refused.
- Ignoring GST/HST. The estimate leaves it out, and it’s a separate matter from income tax.
- Treating the estimate as final. It covers business income only, with no provincial credits beyond the basics.
To see how extra income moves your bracket, run the numbers in the income tax calculator.
The sources behind this page
Rates, brackets and CPP limits are the 2026 figures published on canada.ca by the Canada Revenue Agency, and the Ontario health premium tiers come from ontario.ca. The CPP2 maximum of $832 is twice the confirmed employee amount of $416. The monthly and quarterly splits are our own arithmetic. This is an independent guide, separate from any government body.
Frequently asked questions
What is the tax bill on $80,000 of net business income in Ontario?
Income tax comes to $13,233.57 and CPP on both halves to $8,892.90. That's $22,126.47 in all, or 27.7% of income.
Do I pay both halves of CPP when self-employed?
Yes. The rate is 11.9% on earnings between $3,500 and $74,600 in 2026, up to $8,460.90, plus 8% CPP2 up to $85,000.
When is the tax due for the self-employed?
For the 2025 year, filing was due June 15, 2026 and payment April 30, 2026. Check the dates for the 2026 return when you file.
When do I need to pay instalments?
When your net tax owing tops $3,000 this year and topped it in at least one of the last two. Quebec uses $1,800 for the provincial part.
Can I deduct business expenses?
Yes, costs tied to earning business income reduce your taxable income. Keep receipts and check CRA rules for each type of cost.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST