Self-employed people pay both the employee and the employer share of CPP contributions on their net business income (11.90% above the basic exemption up to the first earnings ceiling, plus 8% CPP2 between the first and second ceilings), worked out on Schedule 8 and paid with the income tax return. A non-refundable tax credit is claimed on half of the base contributions, and the other half, the first additional contributions and all CPP2 contributions are deducted from income. This page covers how much that is, how it is calculated and reported, and how it is taxed; this year’s rates for everyone are on the CPP contribution rates page, and all CPP guides are in the Canada Pension Plan hub.
CPP and the Self-Employed: The Key Difference
When you’re employed, your employer pays half of your CPP contributions — you pay 5.95% and they chip in 5.95%. As a self-employed person, you are both employee and employer. You pay both halves out of your own pocket. Use the self-employed tax calculator to estimate your combined income tax and CPP obligation.
For 2026:
| Component | Employee Rate | Employer Rate | Self-Employed Rate |
|---|---|---|---|
| CPP1 (on earnings $3,500–$74,600) | 5.95% | 5.95% | 11.90% |
| CPP2 (on earnings $74,600–$85,000) | 4.00% | 4.00% | 8.00% |
Maximum CPP Contributions for the Self-Employed This Year
| Tier | Earnings Band | Rate | Max Contribution |
|---|---|---|---|
| CPP1 | $3,500–$74,600 | 11.90% | $8,460.90 |
| CPP2 | $74,600–$85,000 | 8.00% | $832.00 |
| Total (CPP1 + CPP2) | $9,292.90 |
This is a significant cost. For a self-employed person earning $74,600+ in net business income, CPP alone costs $8,460.90/year before income tax is considered.
How Self-Employed CPP Is Calculated
CPP for self-employed individuals is calculated on net self-employment income — that is, after business expenses but before income tax.
Step-by-Step Calculation
- Start with your net self-employment income from Line 13500, 13700, or 13900 on your T1
- Subtract the basic exemption: $3,500
- This is your net earnings subject to CPP
- Multiply by 11.90% (CPP1 rate) for earnings up to $74,600 − $3,500 = $71,100 max contributory earnings
- Multiply by 8.00% (CPP2 rate) for earnings between $74,600 and $85,000
Example: Consultant Earning $85,000 Net
| Step | Amount |
|---|---|
| Net self-employment income | $85,000 |
| Less basic exemption | −$3,500 |
| CPP1 contributory earnings (capped at $71,100) | $71,100 |
| CPP1 contribution (× 11.90%) | $8,460.90 |
| CPP2 contributory earnings ($85,000 − $74,600) | $10,400 |
| CPP2 contribution (× 8.00%) | $832.00 |
| Total CPP contribution | $9,292.90 |
How Self-Employed CPP Is Reported
Complete Schedule 8 (Canada Pension Plan Contributions and Overpayment) with your T1 return. The schedule calculates your CPP1 and CPP2 contributions automatically based on your net self-employment income entered on the T1.
The amounts from Schedule 8 flow to:
- Line 22200: deduction for the employer-equivalent half of your base CPP contribution, plus both halves of the first-additional (Phase 1 enhancement) and CPP2 contributions (reduces net income)
- Line 31000: non-refundable credit for the employee-equivalent half of your base CPP contribution only (reduces federal tax, at 14% for 2026)
Tax Treatment of Self-Employed CPP Contributions
| Component | Tax Treatment | Benefit |
|---|---|---|
| Base CPP, employer-equivalent half (4.95%) | Deducted from net income on Line 22200 | Reduces taxable income at your marginal rate |
| Base CPP, employee-equivalent half (4.95%) | Non-refundable federal credit on Line 31000, at 14% for 2026 | Reduces federal tax by 14% of that half |
| First-additional CPP (1.00%, both halves) | Deducted from net income on Line 22200 | Reduces taxable income at your marginal rate |
| CPP2 (4.00%, both halves) | Deducted from net income on Line 22200 | Reduces taxable income at your marginal rate |
Net tax cost example (Ontario, marginal rate 43.41%, CPP1 only):
- Base CPP total contribution (4.95% × 2 of $71,100): $7,038.90, split into two $3,519.45 halves
- First-additional total contribution (1.00% × 2 of $71,100): $1,422.00
- CPP1 total contribution (base + first-additional): $8,460.90
- Employer-equivalent base deduction: $3,519.45 × 43.41% = $1,527.79 tax savings
- First-additional deduction (both halves): $1,422.00 × 43.41% = $617.29 tax savings
- Employee-equivalent base credit, federal: $3,519.45 × 14% = $492.72 tax savings
- Employee-equivalent base credit, Ontario: $3,519.45 × 5.05% = $177.73 tax savings
- Total tax savings from CPP1 contributions: ~$2,815.54
- Net after-tax CPP1 cost: $8,460.90 − $2,815.54 = ~$5,645.36
CPP Benefits Earned on Self-Employment Income
CPP contributions on self-employment income earn exactly the same retirement, disability, and survivor benefits as employment income contributions. There is no distinction.
| Benefit | Self-Employed Eligible? |
|---|---|
| CPP retirement pension | Yes |
| CPP disability benefit | Yes |
| CPP survivor’s pension | Yes (for your spouse) |
| CPP death benefit | Yes |
| CPP Post-Retirement Benefit | Yes (if continuing to work after starting CPP) |
| CPP2 benefit | Yes (contributions from 2024) |
Incorporated Business Owners: A Different Question
If you operate through a corporation and pay yourself dividends instead of salary:
- No CPP is paid
- No CPP benefit is earned
- More take-home cash in the short run
- No indexed lifetime pension from CPP
- You lose CPP disability and survivor coverage
Some owners pay themselves a salary, which earns CPP (and RRSP room), and take the rest as dividends.
See Salary vs Dividend from Corporation Canada for the full analysis.
From 65 to 70, if you receive a CPP or QPP retirement pension, you can elect on Schedule 8 to stop contributing on your self-employment earnings; contributions end at 70 in any case.
CPP2 for the Self-Employed
CPP2 applies to self-employed individuals starting in the 2024 tax year — the same year as employees (CRA).
- 2026 CPP2 rate: 8.00% on earnings $74,600–$85,000
- 2026 maximum CPP2 self-employed: $832.00
- Both halves (the full 8.00%, up to $832.00) are deducted on Line 22200
- Reported via Schedule 8
Related Articles
Sources
The figures and rules on this page come from these sources, last checked against them between September 5, 2026 and October 1, 2026. How we check facts.
- Canada Revenue Agency: CPP contribution rates, maximums and exemptions
- Canada Revenue Agency: Second additional CPP (CPP2) contribution rates and maximums
- Canada Revenue Agency: Current year tax rates and income brackets (2026) - Personal income tax
- Canada Revenue Agency: Indexation adjustment for personal income tax and benefit amounts
- Canada Revenue Agency: The Canada Pension Plan enhancement
- Government of Canada: CPP: When to start your retirement pension