How Much Tax Do You Pay When Self-Employed in Canada?

When you're self-employed in Canada, no one withholds tax for you — so the bill at filing time can be a shock. Here's how much tax you actually pay as a sole proprietor or freelancer in 2025, and how much to set aside.

The Three Parts of Your Self-Employment Tax

• Income tax — federal plus provincial, on your net business income (revenue minus expenses)
• CPP — as both employee and employer, you pay the full 11.9% on net earnings above $3,500 (up to the $71,300 ceiling for 2025)
• GST/HST — once you pass $30,000 in revenue you must register, charge, and remit

The CPP piece surprises most people: an employee pays 5.95% and their employer pays the other half, but a self-employed person pays both halves themselves.

2025 Federal Tax Brackets

Alberta adds 10% on the first ~$151,000 and rising from there. See full tables on our Calgary & Alberta tax rates page, and estimate your taxable income with our taxable income calculator.

How Much Should I Set Aside?

A good rule of thumb for an Alberta sole proprietor is to set aside 25–30% of net income for income tax plus CPP — more once you're into higher brackets. Open a separate savings account and move it every time you get paid.

Watch for Instalments

If your net tax owing tops $3,000, the CRA will require quarterly instalments the following year — see our tax deadlines guide. Our Calgary personal tax team helps self-employed clients plan for this. Get help.

Frequently Asked Questions

How much tax do you pay when self-employed in Canada?

You pay federal and provincial income tax on your net business income, plus CPP at the full 11.9% on net earnings above $3,500 (2025), and GST/HST once revenue exceeds $30,000. Most Alberta sole proprietors should set aside roughly 25–30% of net income.

Do self-employed people pay more CPP?

Yes. A self-employed person pays both the employee and employer halves of CPP — 11.9% for 2025 — on net earnings between $3,500 and the $71,300 ceiling, whereas an employee pays only 5.95% with the employer covering the rest.

How much should I set aside for taxes when self-employed?

A practical rule for an Alberta sole proprietor is 25–30% of net income to cover income tax and CPP, rising as you move into higher tax brackets. Setting it aside in a separate account each time you're paid avoids a filing-time shock.

When do I have to register for GST as a self-employed person?

You must register for GST/HST once your taxable revenue exceeds $30,000 over four consecutive calendar quarters. After that you charge GST on sales and remit it, though you can also claim input tax credits or elect the Quick Method.

Have questions about personal tax? Swift Accounting Ltd. helps Calgary business owners get it right. Contact us for a free consultation.