Why self-employed people pay double CPP
An employee and their employer each contribute half of CPP (or QPP in Quebec). When you work for yourself you are both parties, so you pay both halves on the same pensionable earnings. That is the single biggest surprise on a first self-employment tax bill: the contribution rate is exactly twice the rate on a T4 slip, and it is due with your return rather than being taken off each paycheque.
The contribution applies to net business income above the basic exemption, up to the year's maximum pensionable earnings, with the second CPP tier (CPP2) applying between the first and second maximums. This calculator reads all of those thresholds from our published 2026 rate table rather than assuming them.
EI is optional, so we do not charge it
Employment Insurance is not deducted from self-employment income. Self-employed people may opt in voluntarily through the EI special benefits program, which covers maternity, parental, sickness, compassionate care and family caregiver benefits, but not regular unemployment benefits. Opting in is a deliberate registration with the Canada Employment Insurance Commission, there is a waiting period before you can claim, and once you have claimed you generally must keep contributing. Because it is a choice and not a default, this calculator charges no EI. If you have opted in, add your premiums separately.
What this estimate leaves out
Two CPP-related tax breaks are not modelled here, so your real tax bill will be somewhat lower than the figure above:
- Half is a deduction. The employer half of your CPP/QPP contribution is deductible from income, which lowers your taxable income.
- Half is a credit. The employee half gives you a non-refundable tax credit instead.
We show the arithmetic we actually performed rather than folding in an estimate of those breaks. Also excluded: the GST/HST you may have to register for and remit, instalment payments, home-office and vehicle expenses, capital cost allowance, provincial credits beyond the basic personal amount, and Quebec's separate QPIP contribution for self-employed workers. Treat the result as a planning estimate, not a filing figure.
FAQ
Should I set money aside during the year?
Yes. Nothing is withheld from self-employment income, so the full amount above comes due at once. Many self-employed people set aside a share of every payment received into a separate account. The CRA may also require quarterly instalments once your balance owing passes their threshold.
When is my return due?
If you or your spouse had self-employment income, the filing deadline is June 15, but any balance owing is still due April 30. Interest runs from May 1 on anything unpaid.
What if I also have a regular job?
Enter that T4 income in the optional field. It pushes your self-employment income into higher brackets, and the CPP/QPP you already contributed through payroll reduces the room left on your self-employment earnings, so the calculator does not charge you twice on the same band.
Is this the same as incorporating?
No. This models a sole proprietor or partner reporting business income on a personal return. A corporation is taxed separately and the arithmetic is completely different.