Self-Employed Tax Calculator for Canada, Worked by Hand (2026)

Short answer: For the 2026 tax year, a self-employed person in Ontario with no other income pays about $8,565 in federal and Ontario income tax, the Ontario Health Premium and CPP on $40,000 of net business income (21%), about $18,298 on $70,000 (26%) and about $28,338 on $100,000 (28%). In Alberta the totals are about $8,063, $17,977 and $28,105. CPP alone is 11.9% of profit above $3,500, which is why the self-employed bill looks heavier than an employee’s. A safe habit is to set aside 25% to 30% of every payment, plus all the GST/HST you collect.

There is no interactive calculator on this page. Instead, it does the calculation by hand, step by step, using the Canada Revenue Agency’s (CRA) figures for the 2026 tax year, so you can follow it with your own numbers. The brackets come from Canada tax brackets for 2026 and the CPP figures from CPP for the self-employed. It assumes you live outside Quebec, have no employment income, and claim only the basic personal amount and the CPP credit and deduction.

How do you calculate self-employed tax in Canada?

Start from your net business income, work out CPP, deduct part of it, apply the federal and provincial brackets, subtract the basic credits, and add CPP back on.

1. Net self-employment income. Your gross sales minus business expenses, the bottom line of Form T2125. Tax is never charged on gross sales.
2. CPP. 11.9% of net income between $3,500 and $74,600, plus CPP2 at 8% between $74,600 and $85,000, per the CRA’s CPP rates and maximums.
3. Taxable income. Subtract the deductible part of CPP (everything except the 4.95% “employee” half of the base contribution) on line 22200.
4. Federal tax. Apply the federal brackets (14% up to $58,523, 20.5% up to $117,045), then subtract 14% of your credits: the 2026 federal basic personal amount of $16,452 and the 4.95% CPP credit amount. Both figures are in the CRA’s 2026 payroll deductions formulas, and the 14% credit rate is confirmed by the Department of Finance.
5. Provincial tax. Apply your province’s brackets and subtract its credits at its lowest rate. For 2026 the basic personal amount is $12,989 in Ontario and $22,769 in Alberta, from the same CRA formulas.
6. Add it up. Federal tax + provincial tax (plus Ontario’s surtax and health premium where they apply) + CPP.

How much tax do you pay on $40,000, $70,000 and $100,000 in Ontario?

On $70,000 of net self-employment income in Ontario, the 2026 total is $18,298.32, or 26.1% of profit.

Net self-employment income	$40,000	$70,000	$100,000
CPP and CPP2	$4,343.50	$7,913.50	$9,292.90
CPP deduction (line 22200)	$2,536.75	$4,621.75	$5,773.45
Taxable income	$37,463.25	$65,378.25	$94,226.55
Federal tax after credits	$2,688.63	$6,834.42	$12,716.45
Ontario tax after credits	$1,144.70	$2,950.40	$5,578.52
Ontario Health Premium	$387.80	$600.00	$750.00
Total tax and CPP	$8,564.63	$18,298.32	$28,337.87
Share of net income	21.4%	26.1%	28.3%
Set aside per month	about $714	about $1,525	about $2,361

Here is the $70,000 column worked through:

• CPP: ($70,000 − $3,500) × 11.9% = $7,913.50. The credit part is 4.95% × $66,500 = $3,291.75; the other $4,621.75 is deducted.
• Taxable income: $70,000 − $4,621.75 = $65,378.25.
• Federal tax: $58,523 × 14% = $8,193.22, plus ($65,378.25 − $58,523) × 20.5% = $1,405.33, gives $9,598.55. Credits: ($16,452 + $3,291.75) × 14% = $2,764.13. Federal tax: $6,834.42.
• Ontario tax: $53,891 × 5.05% = $2,721.50, plus ($65,378.25 − $53,891) × 9.15% = $1,051.08, gives $3,772.58. Credits: ($12,989 + $3,291.75) × 5.05% = $822.18. Ontario tax: $2,950.40. The Ontario surtax only starts when this figure passes $5,818, per the CRA’s July 2026 payroll formulas, so none applies, even at $100,000.
• Ontario Health Premium: taxable income between $48,000 and $72,000 pays the lesser of $600 and $450 plus 25% of the excess over $48,000, per Ontario’s health premium rules. Here that is $600.

The Ontario tax reduction, which cuts tax for people with small Ontario tax bills, does not reach any of these three examples.

How much tax do you pay on the same income in Alberta?

In Alberta, the 2026 total on $70,000 of net self-employment income is $17,976.89, or 25.7%, slightly less than in Ontario.

Net self-employment income	$40,000	$70,000	$100,000
CPP and CPP2	$4,343.50	$7,913.50	$9,292.90
Federal tax after credits	$2,688.63	$6,834.42	$12,716.45
Alberta tax after credits	$1,031.00	$3,228.97	$6,095.58
Total tax and CPP	$8,063.13	$17,976.89	$28,104.93
Share of net income	20.2%	25.7%	28.1%
Set aside per month	about $672	about $1,498	about $2,342

CPP, taxable income and federal tax are identical to Ontario, because they do not depend on the province. Alberta taxes the first $61,200 at 8% and the next slice at 10%, and has no health premium. Its basic personal amount of $22,769 is much larger than Ontario’s, but it is credited at 8%, because Alberta values non-refundable credits at its lowest rate (a 2% supplemental credit only helps people whose credits pass $60,000). At $70,000, for example: $61,200 × 8% + ($65,378.25 − $61,200) × 10% = $5,313.83, minus ($22,769 + $3,291.75) × 8% = $2,084.86, leaves $3,228.97.

What does your next $1,000 of profit cost?

Your next $1,000 of profit costs between about $297 and $392 in these examples, because CPP stops above $85,000 but runs at 11.9% below the first ceiling.

Net self-employment income	Ontario	Alberta
$40,000	$342.66 (34.3%)	$312.82 (31.3%)
$70,000	$385.46 (38.5%)	$391.91 (39.2%)
$100,000	$296.50 (29.7%)	$305.00 (30.5%)

This is the number to use when you decide whether to take an extra job or buy something for the business: a $1,000 deductible expense at $70,000 saves about $385 in Ontario. At $40,000 in Ontario, the health premium is still rising (6% of income above $36,000, until it reaches $450), which is why that marginal rate is higher than the 14% and 5.05% brackets suggest. At $100,000 you have passed both CPP ceilings, so only income tax applies to the next dollar.

How much of each invoice should you set aside for tax?

Set aside your expected average rate from every payment, rounded up, and keep all GST/HST you collect separately.

Example. A Toronto consultant who expects about $70,000 of profit invoices a client $2,000 plus $260 of 13% HST, for $2,260 in total. When it is paid:

• $260 to the GST/HST account. None of it is yours; it goes on your next GST/HST return.
• $520 to the tax account (26% of the $2,000 fee). Applying the rate to the fee rather than to profit leaves a cushion, because your expenses will lower the profit the rate actually applies to.
• $1,480 is yours to spend or to cover expenses.

Do it on the day the money arrives, not at year-end. On these numbers, every example owes more than $3,000 of income tax for the year, which is the point where the CRA starts asking for quarterly payments, covered in CRA tax instalments. The balance for 2026 is due April 30, 2027, even though you have until June 15, 2027 to file, as the self-employed tax deadline guide sets out.

What does this calculation leave out?

It covers a single person with only business income; anything else on your return changes the answer.

• Other income. A part-time job or investment income uses up the lower brackets first, and employer CPP counts toward your CPP maximum.
• Other deductions and credits. RRSP contributions, childcare, tuition, medical expenses and the spouse amount all lower the bill. Credits that depend on employment income do not apply to business income.
• Benefits. Refundable credits such as the GST/HST credit are paid separately and are not netted off here.
• Quebec. Quebec residents file a separate provincial return with Revenu Québec, contribute to the QPP instead of CPP and get a federal abatement, so the federal and provincial lines above do not carry over.
• Next year. The 2027 brackets and CPP ceilings have not been announced as of October 2026, so do not reuse these totals for 2027.

If your profit is well above what you live on, the comparison in sole proprietor vs corporation is worth reading. Every other Canadian guide is on the Canada guides hub.

…and where does Keel fit?

Keel does not calculate your tax, apply provincial brackets or file anything with the CRA, and it is not a tax calculator. Keel: Invoice Maker & Receipts is an iPhone app that keeps the numbers this calculation starts from: estimates, PDF invoices, receipts, expenses and business mileage, each kept under its job, with a “who owes you” view and reminder drafts you review and send yourself. Records stay on your iPhone with no account, no bank connection and no cloud sync, and the App Store privacy label reads “Data Not Collected.”

It is free with no invoice limit, and free invoices carry a small “Made with Keel” footer. Keel Lifetime, a one-time purchase ($249.99 USD; the App Store shows your local price), adds custom branding, a signature, premium templates and accountant-ready exports and advanced reports. Keel: Invoice Maker & Receipts on the App Store.

Frequently asked questions

What percentage should I set aside for taxes if I’m self-employed in Ontario? For 2026, about 21% of profit at $40,000, 26% at $70,000 and 28% at $100,000 covers federal tax, Ontario tax, the health premium and CPP, if you have no other income. Rounding up to 25% to 30% of each payment leaves a cushion. GST/HST you collect is extra and should go in a separate account.

Do self-employed people pay tax on gross or net income? On net income. Your business expenses come off gross sales on Form T2125, and both income tax and CPP are calculated on what is left. That is why every legitimate expense lowers both, and why receipts matter as much as invoices.

How do I calculate self-employed tax in BC or another province? Use the same steps with your province’s brackets and its own basic personal amount, credited at its lowest rate. CPP and federal tax are the same everywhere outside Quebec. The provincial brackets for 2026 are in Canada tax brackets for 2026, and each province’s basic personal amount is in the CRA’s payroll deductions formulas.

Why is my self-employed tax higher than when I was an employee? Mostly because of CPP. An employee pays 5.95% and the employer pays the other 5.95%; self-employed, you pay the full 11.9%, plus 8% CPP2 between $74,600 and $85,000. Part of it comes back as a deduction and a credit, but it still adds up to several thousand dollars at middle incomes.

Does GST/HST count as income when I calculate my tax? No. GST/HST you collect belongs to the government and is taken out of your gross income on the T2125. It is reported and paid on your GST/HST return instead, so keep it out of the tax set-aside percentage and in its own account.

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This article is general information, not tax advice. Consult a qualified accountant or tax professional.