The #1 question every new freelancer asks: "How much of my income goes to taxes?"
The short answer: roughly 20–35% of your net income, depending on your province and how much you earn. That's significantly more than most people expect — and more than employees pay on the same gross income.
This guide breaks down exactly where that money goes, with real calculations at every income level from $30,000 to $150,000.
Your Effective Tax Rate at Every Income Level
There is no single freelancer tax rate — you pay regular income tax plus both halves of CPP on your net (after-expense) income. Here is the effective total rate for an Ontario freelancer, 2026 tax year, computed with our verified CRA engine (full line-by-line breakdowns further down):
| Net Income | Total Tax (incl. CPP) | Effective Rate |
|---|---|---|
| $40,000 | $8,565 | 21.4% |
| $60,000 | $14,603 | 24.3% |
| $80,000 | $22,126 | 27.7% |
| $100,000 | $28,338 | 28.3% |
| $150,000 | $47,642 | 31.8% |
Your province changes these numbers. Get your exact amount in 30 seconds with the free self-employed tax calculator — no signup, runs in your browser.
The Three Taxes Freelancers Pay
Unlike employees who see one deduction on their paycheque, freelancers pay three separate taxes:
Federal Income Tax
Provincial Income Tax
CPP (Both Halves)
HST/GST (If Registered)
2026 Federal Tax Brackets (Filed in 2027)
| Taxable Income (2026 tax year) | Federal Rate | Tax on Bracket |
|---|---|---|
| $0 – $58,523 | 14% | Up to $8,193 |
| $58,523 – $117,045 | 20.5% | Up to $11,997 |
| $117,045 – $181,440 | 26% | Up to $16,743 |
| $181,440 – $258,482 | 29% | Up to $22,342 |
| Over $258,482 | 33% | — |
The basic personal amount for 2026 is $16,452 — your first $16,452 of income is effectively tax-free (14% credit = $2,303 off your federal 2026 tax; the Bill C-4 cut is at its full-year 14% rate from 2026 on). The amount phases down to $14,829 for net income above $181,440.
Provincial Tax Rates (Selected Provinces)
| Province | Lowest Rate | Highest Rate | Basic Personal Amount (2026) |
|---|---|---|---|
| Ontario | 5.05% | 13.16% | $12,989 |
| British Columbia | 5.6% | 20.5% | $13,216 |
| Alberta | 8% | 15% | $22,769 |
| Manitoba | 10.8% | 17.4% | $15,780 |
| Saskatchewan | 10.5% | 14.5% | $20,381 |
| Nova Scotia | 8.79% | 21% | $11,932 |
| New Brunswick | 9.4% | 19.5% | $13,664 |
| Quebec runs its own income tax system through Revenu Québec (2026 rates 14%–25.75%). | |||
Real Tax Calculations: Ontario Freelancer
Here's exactly what a freelancer in Ontario pays at different net income levels for the 2026 tax year (after business deductions; the CPP deduction and credit and the basic personal amounts are already applied — computed with our verified CRA engine):
$40,000 Net Income
| Federal income tax | $2,689 |
| Ontario income tax (incl. surtax) | $1,145 |
| Ontario Health Premium | $388 |
| CPP + CPP2 (both halves) | $4,344 |
| Total tax | $8,565 |
| Effective rate | 21.4% |
| Take-home | $31,435 |
$60,000 Net Income
| Federal income tax | $5,155 |
| Ontario income tax (incl. surtax) | $2,124 |
| Ontario Health Premium | $600 |
| CPP + CPP2 (both halves) | $6,724 |
| Total tax | $14,603 |
| Effective rate | 24.3% |
| Take-home | $45,397 |
$80,000 Net Income
| Federal income tax | $8,698 |
| Ontario income tax (incl. surtax) | $3,785 |
| Ontario Health Premium | $750 |
| CPP + CPP2 (both halves) | $8,893 |
| Total tax | $22,126 |
| Effective rate | 27.7% |
| Take-home | $57,874 |
$100,000 Net Income
| Federal income tax | $12,716 |
| Ontario income tax (incl. surtax) | $5,579 |
| Ontario Health Premium | $750 |
| CPP + CPP2 (both halves) | $9,293 |
| Total tax | $28,338 |
| Effective rate | 28.3% |
| Take-home | $71,662 |
$150,000 Net Income
| Federal income tax | $24,461 |
| Ontario income tax (incl. surtax) | $13,138 |
| Ontario Health Premium | $750 |
| CPP + CPP2 (both halves) | $9,293 |
| Total tax | $47,642 |
| Effective rate | 31.8% |
| Take-home | $102,358 |
Freelancer vs Employee: Side-by-Side Comparison
Here's why freelancers feel the tax pinch more — at $75,000 gross income in Ontario, 2026 tax year:
| Employee ($75K salary) | Freelancer ($75K net) | |
|---|---|---|
| Federal tax | $8,259 | $7,755 |
| Provincial tax (incl. OHP) | $4,446 | $3,964 |
| CPP (incl. CPP2) | $4,246 | $8,493 |
| EI premiums | $1,123 | $0 (not eligible) |
| Total deductions | $18,074 | $20,213 |
| Difference | Freelancer pays ~$2,100 more (the employer CPP half, softened by the CPP deduction — engine-computed, 2026) | |
The Deduction Effect: How Expenses Lower Your Tax
This is the most important concept for freelancers to understand. You're taxed on net income (revenue minus expenses), not gross revenue.
Example: $80,000 Gross Revenue
| Gross revenue | $80,000 |
| Home office (rent, utilities, internet) | −$6,000 |
| Vehicle expenses | −$3,500 |
| Software & subscriptions | −$2,400 |
| Professional development | −$1,500 |
| Supplies, meals, phone | −$1,600 |
| RRSP contribution | −$5,000 |
| Taxable income | $60,000 |
Tax savings from $20K in deductions: approximately $6,500–$8,000 depending on your marginal rate.
This is why tracking every business expense matters. Our free Expense Categorizer auto-sorts your bank transactions into T2125 categories so you don't miss anything.
7 Strategies to Reduce Your Freelancer Tax Bill
1. Claim Every Eligible Deduction
The average freelancer misses $3,000–$5,000 in deductions. Use our complete deduction checklist and categorizer tool.
2. Maximize RRSP Contributions
Every dollar contributed to your RRSP reduces taxable income dollar-for-dollar. At a 30% marginal rate, a $10,000 RRSP contribution saves $3,000 in tax. RRSP guide for freelancers →
3. Use the HST Quick Method
If you collect HST, the Quick Method lets you remit a lower percentage (typically 8.8% in Ontario) and keep the difference. On $100K revenue, that's $3,356 of the HST you collect kept vs. the regular method with no ITCs (engine-computed; your real gain is lower by the ITCs you give up). HST guide →
4. Claim Home Office Properly
Dedicated workspace? You can deduct rent/mortgage interest, utilities, property tax, insurance, and maintenance proportional to your workspace size. Home office guide →
5. Track Vehicle Expenses
Keep a mileage log and claim gas, insurance, repairs, lease payments, or CCA on a purchased vehicle — proportional to business use. Vehicle deduction guide →
6. Pay Quarterly Instalments
CRA charges interest if you owe more than $3,000 and don't make instalments. Pay quarterly to avoid surprises and interest charges. Not sure if that's you? The free Instalment Checker gives you a verified verdict and your per-deadline amounts in 30 seconds. Instalment guide →
7. Consider Incorporation (At Higher Income)
Once you're consistently earning $120K+, incorporation can save significant tax through the small business deduction (12.2% combined rate in Ontario vs. 29%+ personal). Incorporation guide →
The "Set Aside" Rule
💰 How Much to Save From Each Payment
| Your Expected Net Income | Set Aside This % |
|---|---|
| Under $50,000 | 25% |
| $50,000 – $100,000 | 30% |
| $100,000 – $150,000 | 33% |
| Over $150,000 | 35–40% |
Open a separate high-interest savings account (EQ Bank, Tangerine, etc.) and transfer this percentage from every client payment. When April 30 arrives, the money is already there.
If you also collect HST, set aside an additional 5–13% (depending on your province and whether you use the Quick Method) for HST remittance.
Don't Forget These Dates
| Deadline | Kind | What |
|---|---|---|
| April 30 | Same date every year | Payment due for the tax year that just ended — interest starts May 1 |
| June 15 | Same date every year | Filing deadline for self-employed (the payment was still due April 30) |
| RRSP deadline | CRA names one date per tax year | For the 2025 tax year it was March 2, 2026. CRA has not published the 2026-tax-year date yet, so we do not print one. |
Full calendar: Every Tax Deadline for Self-Employed Canadians
Stop Guessing. Get Organized.
Our Expense Tracker, HST Calculator, and Year-End Kit handle the math so you know exactly what you owe — before April 30.
Get the FreelancerTax Bundle — $99Related Guides
- How to File Taxes as a Freelancer: Step-by-Step
- 70+ Tax Deductions for Canadian Freelancers
- CPP for Self-Employed Canadians
- Bookkeeping 101 for Freelancers
- 10 CRA Audit Red Flags
Last updated: September 20, 2026. Tax calculations are estimates based on 2026 federal and Ontario rates, computed with our verified CRA engine (federal, Ontario and CPP figures verified 2026-07-01; the EI premium and employee-side CPP maxima verified 2026-07-10 against CRA's published rate pages). Actual amounts vary by province, credits, and individual circumstances. This guide is for informational purposes only — consult a qualified tax professional for advice specific to your situation.
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