# Self-employed tax calculator for Canada: 2026 income tax and CPP

Source: https://canadataxdesk.com/self-employed/self-employed-tax-calculator
Publisher: Canada Tax Desk (canadataxdesk.com), independent editorial site
Topic: Self-Employed
Last updated: 2026-10-22

> This self-employed tax calculator for Canada estimates your 2026 federal and provincial income tax plus CPP and CPP2 on net business income. For an Ontario resident with no other income, the total comes to about $8,565 on $40,000 of profit, $18,298 on $70,000 and $28,338 on $100,000, using 2026 CRA rates.

## Key facts

- Tax year covered: 2026 (returns filed in 2027)
- CPP included: 11.9% from $3,500 to $74,600 plus 8% CPP2 to $85,000
- Federal rates used: 14% to 33%, 2026 brackets
- Ontario example, $70,000 profit: $18,298 total, 26.1% of profit
- 2027 rates: Not yet announced as of October 22, 2026 (expected in November)

## How does the self-employed tax calculator work?

The calculator takes your net self-employment income, which is the profit from Form T2125 after expenses, and works out three amounts: CPP on that profit, federal income tax and provincial income tax. It uses the CRA's 2026 rates, brackets and basic personal amounts, so the result is an estimate of what you will owe on your 2026 return filed in 2027.

Because no tax is withheld from self-employment income, the total is roughly the balance you will need to pay by April 30, 2027, less any instalments you already sent. If you also have a job, the calculator subtracts the tax and CPP your employer already deducted.

## What inputs do you need?

- **Province or territory** where you lived on December 31, 2026. It sets the provincial rates.
- **Net self-employment income:** gross business income minus deductible expenses, CCA and business-use-of-home. If you have not totalled your costs, the [business expenses list](https://canadataxdesk.com/self-employed/business-expenses-canada) shows what to include.
- **Employment income** from T4 box 14, if any.
- **CPP already deducted** by an employer, from T4 box 16.
- **Other income**, such as interest or rental profit.
- **Deductions** such as RRSP or FHSA contributions.
- **Income tax already paid**, including T4 box 22 and any 2026 instalments.

## How tax and CPP are calculated

1. **CPP:** 11.9% of net self-employment earnings between $3,500 and $74,600 (maximum $8,460.90), reduced by any employee CPP already paid, plus 8% CPP2 on earnings from $74,600 to $85,000 (maximum $832).
2. **CPP deduction:** half of the 9.9% base contribution, the 2% enhanced contribution and all CPP2 are subtracted from income.
3. **Taxable income:** total income minus the CPP deduction and your other deductions.
4. **Federal tax:** 14% on the first $58,523, 20.5% to $117,045, 26% to $181,440, 29% to $258,482 and 33% above.
5. **Federal credits:** 14% of the $16,452 basic personal amount and of the other half of base CPP.
6. **Provincial tax:** your province's 2026 brackets, minus its basic personal amount and CPP credit at the lowest provincial rate, plus Ontario's surtax and health premium where they apply.

Step 2 is why self-employed CPP costs less than its headline rate: the deducted portion saves tax at your marginal rate, and the credit portion saves at least 14% federally. The split is explained in [CPP for self-employed people](https://canadataxdesk.com/self-employed/cpp-self-employed).

## Example results: self-employment tax in Ontario

The table applies the calculator's method by hand to an Ontario resident whose only income is self-employment profit and who claims only the basic personal amount and CPP, using the CRA's 2026 rates. Ontario tax includes the Ontario Health Premium. Figures are rounded to the dollar.

| Net profit | Taxable income | Federal tax | Ontario tax and health premium | CPP and CPP2 | Total | Share of profit |
| --- | --- | --- | --- | --- | --- | --- |
| $40,000 | $37,463 | $2,689 | $1,533 | $4,344 | $8,565 | 21.4% |
| $70,000 | $65,378 | $6,834 | $3,550 | $7,914 | $18,298 | 26.1% |
| $100,000 | $94,227 | $12,716 | $6,329 | $9,293 | $28,338 | 28.3% |

2026 self-employment tax estimates, Ontario, no other income

In the $70,000 case, CPP is 11.9% of $66,500, or $7,913.50. The deductible part, $4,621.75, brings taxable income down to $65,378. Federal tax before credits is $9,599, and credits of 14% on $16,452 plus $3,291.75 of base CPP reduce it to $6,834. The province adds $2,950 of Ontario tax and a $600 health premium.

## How much should I save for taxes when self-employed?

Use the share-of-profit figure from your own result as your savings rate, then add a margin of 2 to 3 percentage points for income you did not expect. Apply it to profit, not to gross receipts: if expenses run at 30% of sales, saving 26% of profit is about 18% of each payment received.

If the total is over $3,000 and last year's was too, you will need quarterly instalments rather than one April payment; see [CRA tax instalments](https://canadataxdesk.com/self-employed/tax-instalments-cra). GST/HST collected is not included in the estimate and should be saved separately in full.

## How accurate is the estimate?

For someone with only business income and standard credits, the estimate should be within a small margin of the final assessment. It will be further off if you claim credits it does not ask about, such as tuition, medical expenses, donations or the disability amount, or if you are eligible for refundable benefits like the Canada Workers Benefit.

- **Quebec:** residents pay QPP and file a separate Revenu Quebec return, and federal tax is reduced by the Quebec abatement, so treat the result as a rough guide only.
- **Business losses or large CCA claims** change net income; enter the final T2125 figure.
- **2027 income:** the 2027 brackets, basic personal amount and CPP limits are not yet announced; the CRA usually publishes them in November.
- **Provinces not loaded yet:** when the calculator does not have every 2026 figure a province needs, it shows a notice instead of an estimate rather than guess at the missing rates.
- **No business income this year:** use the general [income tax calculator](https://canadataxdesk.com/tax-rates/income-tax-calculator-canada) instead.

The wider picture of filing as a sole proprietor, including deadlines, is in [self-employed taxes in Canada](https://canadataxdesk.com/self-employed).

## Common questions

### How much tax do I pay on $50,000 self-employed income in Canada?

It depends on the province. For an Ontario resident with no other income, 2026 income tax plus CPP on $50,000 of net profit comes to roughly $11,500, or about 23% of profit, based on the calculator's method.

### Does the self-employed calculator include CPP?

Yes. It adds 11.9% CPP on net earnings between $3,500 and $74,600 and 8% CPP2 up to $85,000, and it applies the deduction and credit for those contributions when calculating income tax.

### Should I enter gross income or net income?

Enter net income: gross business income minus expenses, CCA and business-use-of-home. Entering gross sales overstates both tax and CPP.

### Can I use the calculator for 2027 income?

Only as a rough guide. The 2027 federal brackets, basic personal amount and CPP maximums are not yet announced, so the tool uses 2026 figures until the CRA publishes the new ones, usually in November.

### Is there a self-employment tax in Canada?

Not as a separate tax. Self-employed people in Canada pay ordinary federal and provincial income tax on net business income, plus both the employee and employer shares of CPP: 11.9% on earnings from $3,500 to $74,600 and 8% CPP2 up to $85,000 for 2026. EI premiums are optional for the self-employed, so the calculator does not add them.

### Can independent contractors and sole proprietors use this calculator?

Yes. An independent contractor paid by invoice or on a T4A slip and a sole proprietor both report the business on Form T2125, so enter the net income from line 9946 of that form. If the business is incorporated, the calculator does not apply, because the corporation files its own T2 return.

## Sources

- [Tax rates and brackets, current year](https://www.canada.ca/en/revenue-agency/services/tax/individuals/tax-rates-brackets/current-year.html)
- [T4127 Payroll Deductions Formulas, January 2026](https://www.canada.ca/en/revenue-agency/services/forms-publications/payroll/t4127-payroll-deductions-formulas/t4127-jan/t4127-jan-payroll-deductions-formulas-computer-programs.html)
- [The Canada Pension Plan enhancement: what it means for you](https://www.canada.ca/en/revenue-agency/news/2023/05/the-canada-pension-plan-enhancement--businesses-individuals-and-self-employed-what-it-means-for-you.html)