Canada self-employed net income calculator (federal)
Your federal net income as a self-employed Canadian is business income minus CPP at the full 11.9% — both halves, not the 5.95% an employee pays — plus CPP2 on the second earnings band, and then federal income tax.
Worked example: with Annual net business income of 80,000, this model computes Net income / year 61,725.90. See the full breakdown.
⚠ Illustrative rates Updated for 2026 · sources checked 2026-08-22
How self-employed (federal) in Canada is calculated
The single biggest difference between a Canadian salary and Canadian self-employment is CPP. An employee pays 5.95% and the employer matches it; a self-employed person pays the whole 11.9% themselves on net income above the 3,500 CAD basic exemption, and then CPP2 at 8% on the band between the two earnings ceilings. Half of the total is deductible, which softens but does not remove the gap.
What this page cannot show you is the other half of the bill. Provincial income tax is a second complete schedule levied on top of the federal one, and in most provinces it roughly doubles the tax. Quebec runs its own pension plan and its own return entirely. Treat the figure here as the federal position only.
Worked example
| Annual net business income (CAD) | 80000 |
|---|---|
| CPP + CPP2 ✓ | 8892.9 |
| Taxable Income ✓ | 75553.55 |
| Federal income tax ✓ | 9381.2 |
| Net income / year (federal only) ✓ | 61725.9 |
Every row is computed by the engine from the inputs above. Rows marked ✓ are additionally pinned by a published self-test vector.
Frequently asked questions
How much CPP does a self-employed person pay?
The full 11.9% of net income between the 3,500 CAD basic exemption and the year’s maximum pensionable earnings, plus 8% CPP2 on the band above it — about 8,893 CAD on 80,000 CAD of income. Half of it is deductible.
Does this include provincial tax?
No. Only federal income tax is modelled. Provincial tax is a separate schedule that applies on top and typically adds a comparable amount again, so your real net income is meaningfully lower.
What is CPP2?
A second tier of CPP introduced above the first earnings ceiling, charged at 8% for the self-employed on the band up to the higher ceiling. It stops there — no CPP is due on income above it.
Sources
- Canada.ca — Contributions to the Canada Pension Plan · checked 2026-08-22
- Canada.ca — Current year tax rates and income brackets (2026) · checked 2026-08-22
Estimate. Not tax advice. The rates in this calculator are illustrative: they reproduce the shape of the charge through 3 self-test cases, but they are not the official schedule, so the amount shown will not match your bill. Use the official source above for that.
Check the arithmetic yourself: how this calculator is verified — the formula behind every derived value, the 3 test cases the engine reproduces, and what the badge does and does not claim. Also available as machine-readable JSON.
Related calculators
USA self-employed (federal) · United Kingdom sole trader · Australia sole trader · Brazil mei · Chile boletas de honorarios
Also for Canada: Canada take-home pay · Canada registration
All Canada calculators · All calculators
Fork this model in the Valem sandbox →
Built with Valem — a live, verifiable calculator you can fork and embed.