Take a self-employed person in Ontario with $95,000 of income and $15,000 of expenses. Net business income is $80,000. Tax and CPP come to about $22,126, or 27.7% of that net figure, so about $57,874 stays with you. An employee on the same pay would keep roughly $2,200 more.
How self-employed tax works
Income tax is charged on net business income, meaning what you earn minus the expenses the CRA allows. There is no employer, so you cover both halves of the Canada Pension Plan yourself. Nothing is withheld along the way. Saving the money is your job.
CPP on both halves
For 2026, an employee pays 5.95% on earnings between $3,500 and $74,600. You pay 11.9% on that same range, which tops out at $8,460.90. Above $74,600 a second layer, CPP2, charges 8% up to $85,000. The calculator handles each step.
Deductible CPP
Some of what you pay in CPP comes back through the tax system. The employer half and the enhanced part are deductible, and a credit covers the base employee portion. The calculator applies all of this before it works out tax, which takes some of the sting out.
Federal and Ontario tax
Both governments use graduated brackets. Ontario also adds a surtax and a health premium at higher incomes, and the result blends them all. For middle incomes the tax on the next dollar often sits near 30%. Every extra expense is therefore worth chasing.
Setting money aside
A workable habit is to move 25% to 30% of each payment into its own account. The result shows the exact figure for your income. Income can swing from month to month, so keep a cash buffer apart from the tax account. In a strong year, an RRSP contribution can cut the bill. In a weak year, less needs setting aside, and instalments can fall too.
Expenses that lower the bill
Business expenses shrink net income, which cuts both tax and CPP. Supplies, software, insurance, a home office share and business vehicle costs are typical examples. Hold on to receipts, and claim only what is reasonable.
HST and other points
Once sales pass $30,000 over four quarters, GST and HST registration is required. That money belongs to the government and is not part of your income. The GST and HST calculator can check the amounts. The EI option for the self-employed is not included here.
Freelancing in Toronto
Plenty of Toronto freelancers work in tech, media and the trades, and many switch between employee and contract work. Ontario’s rates and surtax apply to all of them in the same way. Working from home may make a share of rent, utilities and internet claimable. Keep the calculations on file.
Paying instalments
If you owed more than $3,000 in each of the last two years, the CRA may ask for quarterly instalments, due March 15, June 15, September 15 and December 15. Late payments carry interest. The amount to set aside is your tax plus CPP, and the calculator shows a quarter of it. Adjust after a strong or weak quarter.
Where to go next
Compare with a salary in the income tax calculator. Check your future pension in the CPP calculator. When you price your work, the profit margin calculator helps.
Frequently asked questions
How much tax will I pay as self-employed in Ontario?
With $80,000 of net income, about $13,234 in income tax plus $8,893 in CPP.
Do self-employed people pay both halves of CPP?
Yes, 11.9% on earnings up to $74,600 in 2026.
Can I deduct CPP?
The employer half and the enhanced part are deductible, and the base part gives a credit.
How much should I set aside?
Often 25% to 30% of net income. The calculator shows your figure.
When must I register for HST?
When your sales pass $30,000 over four quarters.
Do I pay EI?
Not unless you opt in for special benefits.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.