The first year you work for yourself, tax season can bring a surprise. You’ve set money aside for income tax, then you discover there’s another amount on the bill: your Canada Pension Plan contributions. When you were employed, they came off every paycheque quietly. Now they’re yours to pay, and there’s more of them than you might expect.
Here’s how it works, what it costs in 2026, and how to plan for it so it never catches you off guard.
Why you pay both halves
When you’re an employee, you pay half of your CPP contributions and your employer pays the other half. When you’re self-employed, you’re both the employee and the employer, so you pay both halves yourself. That’s why the amount feels so much bigger than the deductions you used to see on a pay stub.
The good news is that every dollar goes towards your own CPP retirement pension, and the more you contribute over your working life, the larger that pension will be.
What you’ll pay in 2026
Your contributions are based on your net self-employment income, meaning your revenue minus your business expenses. The 2026 figures from CRA are:
- Basic exemption: the first $3,500 of earnings is exempt.
- Base CPP: 11.9% (both halves combined) on earnings from $3,500 up to $74,600. The most you’ll pay is $8,460.90.
- Second additional CPP (CPP2): 8% (both halves combined) on earnings between $74,600 and $85,000. The most you’ll pay is $832.
So a freelancer with $60,000 of net income would pay about $6,723.50 in CPP for 2026. At $85,000 or more, the total tops out at $9,292.90. You can check the current figures on CRA’s pages for CPP rates and maximums and CPP2.
If you also have a job, the CPP taken off your employment income counts towards the same yearly maximums, so you won’t pay more than the maximum overall.
If you live in Quebec, you contribute to the Quebec Pension Plan instead, which has its own rates.
It isn’t all lost to tax
Paying both halves stings a little less once you know that part of what you pay comes back. A portion of your contributions is deducted from your income, and the rest earns you a tax credit. Your tax software or accountant works this out on Schedule 8 when you file, so there’s nothing extra to track during the year.
When it’s due
CPP on self-employment income is calculated on your personal tax return, not paid as you go. As a self-employed person you have until June 15 to file, but any balance owing, CPP included, is due by April 30.
Because CPP is part of your balance owing, it also counts when CRA decides whether you need to pay tax by instalments. If your balance owing climbs past CRA’s threshold, you may start receiving instalment reminders, which spread the cost across the year.
How to plan for it
The simplest approach is to treat CPP as a fixed cost of running your business:
- Set money aside with every payment you receive. Many freelancers move a set percentage of each payment into a separate savings account for tax and CPP together.
- Check in a few times a year. Look at your net income so far, multiply out the CPP, and top up your savings if you’re behind.
- Keep your expenses well recorded. CPP is based on net income, so every legitimate business expense you claim reduces it too. Our guide to what records the CRA expects you to keep covers what to hold on to.
As always, this is general information rather than tax advice, and an accountant can tell you exactly where you stand.
How Ledger helps
Ledger’s dashboard shows your revenue for the year at a glance, along with what’s still outstanding, so it’s easy to see where your income is heading and set money aside as you go. With costs and margins tracked on every invoice, you’ll have a much clearer picture of your real profit long before April arrives. Take a look at Ledger and make tax season a little calmer this year.