Based on 2026 federal/provincial tax brackets, CRA CPP contribution rules, and CRA self-employment guidance. Rates verified June 2026. Currently live for Ontario and British Columbia.
Follow the steps in order, or jump to the calculator that matches your question.
Business income
Gross self-employment revenue minus deductible business expenses equals net business income. Tax is assessed on net income, not gross revenue.
Income tax
Net business income is added to other taxable income and taxed using federal and provincial brackets. Higher income may move into higher brackets.
Self-employed CPP
Self-employed people may owe CPP contributions on eligible net business income, subject to 2026 annual CPP limits and the basic exemption.
T4 salary, pension, or other taxable income. Enter 0 if fully self-employed.
Total freelance, consulting, gig, or sole proprietor revenue before expenses and tax.
Legitimate deductible business expenses. Expanding the section below will auto-calculate this total.
✓ Total calculated from expense breakdown below.
Break down expenses by category (optional)
If a T4 employer deducted CPP from your pay, enter that amount (Box 16 on your T4). Helps avoid overstating self-employed CPP near the annual limit. Enter 0 if unsure.
Optional. Income tax withheld at source or instalment payments made. Used to estimate remaining balance. Leave 0 for a full set-aside estimate.
This calculator assumes
- You are a sole proprietor or self-employed individual — not an incorporated business
- Self-employment income is business/professional income reported on a T2125
- Business expenses entered are legitimate, deductible expenses under CRA guidelines
- Federal and provincial Basic Personal Amounts are applied at 2026 standard rates
- CPP is calculated using 2026 rates and limits, with adjustment for T4 CPP contributions entered
- The CPP adjustment is an approximation — enter 0 if you are unsure about T4 CPP paid
- EI premiums are not included
- GST/HST is not included
- RRSP deductions, childcare, tuition credits, provincial surtaxes, and health premiums are not included
- Ontario and British Columbia are currently supported; other provinces are coming soon
What this estimate does not include
- GST/HST collected or remitted
- Employment Insurance (EI) for self-employed individuals
- Incorporated business income, salary/dividend planning, or retained earnings
- RRSP deductions, capital gains, rental income, or investment income
- Employment deductions from T4 income
- Childcare expenses, tuition credits, disability credits, and other personal credits
- Provincial surtaxes or health premiums not built into the bracket model
- Exact CRA instalment calculations or instalment interest
- Penalties or arrears interest
Not sure how to estimate deductible expenses? Use the Self-Employed Expense Calculator to break down common expense categories before calculating your tax set-aside. For GST/HST planning, use the GST/HST Quick Method Calculator.
How self-employed tax works in Canada
Self-employed Canadians — freelancers, consultants, contractors, sole proprietors, and gig workers — report business income and expenses on their annual tax return using Form T2125. Unlike employees whose tax is withheld by their employer, self-employed individuals are responsible for setting aside and remitting their own taxes.
Net income, not gross revenue
Tax is assessed on net business income: gross revenue minus legitimate, deductible business expenses. Expenses must be incurred for the purpose of earning income and must be reasonable. Common deductible expenses include vehicle costs for business use, a portion of phone and internet, software, supplies, home-office expenses, and professional fees. Personal expenses are not deductible.
Stacking on other income
If you also have a T4 salary or other taxable income, your self-employment income is added on top. This means your self-employment income may be taxed at a higher marginal rate than if you had only self-employment income. The calculator accounts for this by computing the incremental tax on your combined income versus your other income alone.
Tax is not withheld automatically
Because no employer withholds tax on self-employment income, many self-employed Canadians set aside a portion of each payment received throughout the year. This avoids a large, unexpected tax balance at filing time. Once your annual tax owing reaches a certain threshold, the CRA may also require quarterly instalment payments in future years.
Income tax and self-employed CPP
Income tax
Self-employed income is subject to federal and provincial income tax using the same progressive bracket system that applies to all Canadian residents. Federal rates range from 15% to 33% depending on income level; provincial rates vary by province. The Basic Personal Amount and other credits reduce tax owing.
Self-employed CPP contributions
Self-employed individuals who earn more than the basic exemption ($3,500 in 2026) generally owe CPP contributions on eligible net business income. Unlike employees who split the CPP contribution 50/50 with their employer, self-employed people pay both portions — approximately 11.9% of CPP-eligible net earnings between the basic exemption and the Year’s Maximum Pensionable Earnings (YMPE of $74,600 in 2026). An enhanced CPP2 rate applies on earnings between the YMPE and the Year’s Additional Maximum Pensionable Earnings (YAMPE of $85,000 in 2026).
CPP is not purely a cost
CPP contributions build future CPP retirement benefit entitlement. Half of self-employed CPP contributions is deductible from income, and half generates a non-refundable tax credit. These treatments partially offset the gross CPP cost, though the cash-flow impact remains significant.
Why setting aside money monthly matters
Self-employed tax is not deducted at source. At tax filing, self-employed Canadians pay any balance owing for the prior year. For someone with significant self-employment income, this balance can be substantial — particularly in the first year when the full amount may not have been anticipated.
A practical approach is to transfer a fixed percentage of each payment received to a dedicated savings account earmarked for taxes. This calculator provides monthly and quarterly set-aside figures based on your estimated annual obligation. Some individuals use a separate high-interest savings account to hold these funds and earn interest while the money is set aside.
If your tax owing exceeds the CRA’s instalment threshold two years in a row, the CRA will begin sending instalment reminders requesting quarterly payments in advance. Maintaining a consistent set-aside discipline generally makes instalment management straightforward.
GST/HST is separate from income tax
GST/HST is a consumption tax charged on taxable supplies. It is entirely separate from income tax and CPP. If your total gross self-employment revenue from taxable supplies exceeds $30,000 in any four consecutive calendar quarters, you are generally required to register for a GST/HST account and begin charging GST/HST on your invoices.
Amounts collected as GST/HST belong to the CRA and should not be treated as part of your income. Registered businesses remit net GST/HST (collected minus ITCs on eligible business inputs) to the CRA on a regular reporting schedule. The Quick Method of accounting is an optional simplified remittance approach that some small businesses may use.
This calculator does not estimate GST/HST owing or ITCs. For GST/HST planning, use the GST/HST Quick Method Calculator.
Side income vs. full-time self-employment
This calculator is designed to work for both scenarios. If self-employment is your only source of income, enter 0 for “other taxable income” and enter your full self-employment revenue and expenses. The calculator will estimate income tax and CPP on your self-employment income alone.
If you also have a T4 salary, pension, or other taxable income, enter that amount under “other taxable income.” The calculator computes incremental income tax — the additional tax owed on your self-employment income given that your other income has already consumed your lower tax brackets.
If your primary situation is side income on top of a full-time job and you want a simpler calculation focused on that scenario, the Side Hustle Tax Calculator may be more straightforward for your needs.
Frequently asked questions
Is this calculator for full-time self-employed people or side hustlers?
Both. Enter 0 for other taxable income if you are fully self-employed and have no other income sources. Enter your salary, pension, or other taxable income if self-employment is in addition to other income. The calculator adjusts the tax estimate accordingly.
Am I taxed on revenue or profit?
Generally, self-employed Canadians are taxed on net business income: gross revenue minus deductible business expenses. The calculator uses your gross revenue minus the expenses you enter to arrive at net business income before computing tax.
Does this include CPP?
Yes. The calculator estimates self-employed CPP contributions using 2026 CPP rates and limits. If you have already contributed CPP through T4 employment during the year, enter that amount to avoid overstating the self-employed CPP estimate. CPP is shown separately from income tax in the results.
Does this include GST/HST?
No. GST/HST is a separate obligation from income tax and CPP. If your gross self-employment revenue is at or approaching $30,000, consider using the GST/HST Quick Method Calculator to estimate your GST/HST remittance separately.
Can I use this if I am incorporated?
No. This calculator is designed for sole proprietors and self-employed individuals reporting business income on a T2125. Incorporated businesses are subject to corporate income tax, and income extraction involves salary and dividend planning with different rules. This calculator does not apply to incorporated business income.
Why is my set-aside rate relatively high?
Self-employed income may be subject to both income tax and CPP contributions, and income tax is not withheld at source. If you also have a T4 salary, your self-employment income is added on top and taxed at your marginal rate, which is higher than the average rate on your total income. The combination of income tax at the marginal rate plus self-employed CPP often results in a set-aside rate of 25–40% or more depending on total income and province.
Is this tax advice?
No. This calculator provides educational estimates for planning purposes only. Tax situations vary significantly based on individual circumstances. For filing, deduction decisions, and accurate tax planning, confirm with the CRA or a qualified Canadian tax professional.
GST/HST Registration Threshold Checker
Once your gross self-employment revenue approaches $30,000, most Canadians must register for GST/HST. Check whether that applies to your situation.