# Self-Employed Tax and CPP for Freelancers

> A sole proprietor pays income tax and both halves of CPP. Enter net business income to see the self employed total in any province

Earn $80,000 of net business income as a freelancer in Ontario and you owe $22,126 for 2026: $13,234 of income tax plus $8,893 of CPP. That's 27.7% of your income, and it comes before GST/HST and business costs.

## Why is the bill bigger than an employee's?

An employee splits CPP with the employer. A sole proprietor pays both halves, which is 11.9% of earnings between $3,500 and $74,600, up to $8,460.90, as the CRA's [CPP contribution rates, maximums and exemptions](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/canada-pension-plan-cpp/cpp-contribution-rates-maximums-exemptions.html) page lists. Above $74,600 a second, smaller CPP rate applies up to a higher ceiling: 8% on earnings from $74,600 to $85,000, worth up to $832 more. In Quebec, QPP and the QPIP premium replace CPP, and the tool switches to them when you pick that province.

Income tax works as it does for anyone else, on net income after expenses. The tool deducts part of your CPP from income and claims a credit on the rest.

## What do $40,000, $80,000 and $150,000 cost in Ontario?

| Net business income | Income tax | CPP, both halves | Total | Share of income |
| --- | --- | --- | --- | --- |
| $40,000 | $4,221 | $4,344 | $8,565 | 21.4% |
| $80,000 | $13,234 | $8,893 | $22,126 | 27.7% |
| $150,000 | $38,349 | $9,293 | $47,642 | 31.8% |

At $80,000 the federal tax is $8,698 and the Ontario tax is $4,535, which leaves $57,873 after both tax and CPP. CPP stops growing near $9,000 while income tax keeps climbing, so the share taken rises with income, just more slowly as you go.

Look at the first row again. At $40,000 the CPP bill of $4,344 is bigger than the income tax of $4,221. Lower and middle earners often feel the contribution more than the tax, because the basic personal amount shields much of the income from tax but not from CPP.

## What trips people up?

- Entering revenue instead of net income. Subtract business expenses first.

- Forgetting that the result leaves out GST/HST, EI and the expenses themselves.

- Skipping other income. Interest, rent or a part time job belongs in the other income box.

- Ignoring instalments. Once your net tax owing is regularly above the threshold, payments fall due during the year, and the [tax instalments calculator](https://tax-services.ca/calculators/income-tax/tax-installments) splits them across four dates.

- Mixing up the two deadlines. A self-employed person has until 15 June to file, but any balance is still due by 30 April.

## Do I have to pay instalments?

You do if your net tax owing for the year is more than $3,000 ($1,800 in Quebec) and it was above the same amount in either of the two years before. The CRA's page on [who has to pay instalments](https://www.canada.ca/en/revenue-agency/services/payments/payments-cra/individual-payments/income-tax-instalments/who-pays-instalments.html) spells out the test. The usual due dates are 15 March, 15 June, 15 September and 15 December.

That means a first year in business often has no instalments, and then a second or third year has a lot of catching up to do. Plan for it before the first reminder arrives in the mail.

## How do I plan for the April bill?

Set money aside as you invoice. Take a steady share of each payment, using the last column of the table, and April won't turn into a cash problem. Say Sam, a freelance designer in Hamilton, nets about $80,000 a year. On every $5,000 of profit that's roughly $1,385 into a separate savings account, and the other $3,615 is Sam's take-home with the taxman already covered. Rerun the tool after big invoices to refresh that share.

A large RRSP contribution lowers taxable income, and the [tax refund calculator](https://tax-services.ca/calculators/income-tax/tax-refund-calculator) shows how it changes what you owe. Hiring staff? The [payroll remittance calculator](https://tax-services.ca/calculators/business-tax/payroll-remittance) covers the employer side. For a full year that also includes other income, use the [income tax calculator](https://tax-services.ca/calculators/income-tax/income-tax-calculator).

## Where this information comes from

The CPP rate, the earnings range and the yearly maximum come from the 2026 contribution tables on Canada.ca, and tax steps come from the federal and provincial 2026 rates. We last checked them on 29 September 2026. The Quebec figures use the 2026 QPP and QPIP limits: pensionable earnings up to $74,600 and insurable earnings up to $103,000. We're an independent site, and no government body is behind it.

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Source: https://tax-services.ca/calculators/income-tax/self-employed-tax
Last updated: 2026-10-09
Independent information site. Not affiliated with the CRA. No services, no guarantee of accuracy. See https://tax-services.ca/disclaimer