CPP when you're your own boss

An employee splits CPP with their employer. When you work for yourself, you’re both, so you pay both shares, on your net self-employment income, when you file your tax return. Part of what you pay is deducted from your income and part earns a tax credit, which softens the cost.

Who has to contribute

If you’re self-employed outside Quebec, you contribute to the CPP on your net business income: what’s left after your business expenses. You don’t contribute on other kinds of income, such as investment earnings. With very few exceptions, everyone over 18 who works in Canada outside Quebec and earns more than $3,500 a year contributes.

You contribute until you turn 70. If you’re 65 or older and already receiving a CPP or QPP retirement pension, you can choose to stop. If you’re self-employed only, you make that election on Schedule 8 with your return rather than on the form employees use.

If you live in Quebec, your self-employment income is covered by the Quebec Pension Plan instead, and you claim the QPP contributions you owe on your Revenu Québec return, not your federal one. The rates differ; see our CPP, QPP, EI and QPIP table.

How much you pay

Contributions are figured on two bands of earnings. For 2025:

• From $3,500 up to $71,300 (the year’s maximum pensionable earnings, the first ceiling), an employee pays 5.95% and the employer matches it. Self-employed, you pay both, so twice that rate.
• From $71,300 up to $81,200 (the second ceiling), the second additional contribution, or CPP2, is 4% for each side. You pay both, so twice that rate on this band.

Nothing is owed on earnings above the second ceiling. For 2026, the ceilings rise to $74,600 and $85,000, with the same rates.

If you also have a job, the CPP your employer deducted counts. What you owe on your self-employment income depends on how much you’ve already contributed as an employee, as shown on your T4 slips. A self-employment loss can’t be used to reduce the CPP you owe on employment earnings.

How you pay it

An employer deducts an employee’s CPP from each paycheque. When you’re self-employed, there’s no paycheque deduction: you pay the full amount when you file your return. Your contributions are worked out on Schedule 8 (tax software does this for you) and added to what you owe for the year.

That makes CPP part of the balance you owe in the spring. If you regularly owe a large balance, check paying tax by instalments to see whether you need to pay during the year.

The tax break on what you pay

Your contributions are split into parts that get different tax treatment:

• Tax credit: the “employee” half of the base contributions, the part at 4.95%, gets a non-refundable tax credit. Federal non-refundable credits are worked out at the lowest federal rate, 14.5% for 2025.
• Deduction: everything else is deducted from your income. That’s the “employer” half of the base contributions, the first additional contributions on both halves, and all of your CPP2 contributions.

A deduction cuts your taxable income, so how much it saves depends on your tax bracket. A credit cuts your tax directly. Tax software, or Schedule 8 if you file on paper, does the split for you.

What you get for it

The CPP replaces a basic level of earnings for you and your family when you retire, become disabled or die. The enhanced part of the plan, which began in 2019, increases retirement, survivor and disability pensions, but it adds to your benefits only if you worked and contributed in 2019 or later. For timing, see when to start CPP and OAS.

EI is optional

Employment Insurance works differently. As a self-employed person, you can enter into an agreement with the Canada Employment Insurance Commission to qualify for EI special benefits for self-employed people. As part of the agreement, you pay premiums through your tax return each year for as long as you remain self-employed, and the agreement has to be active for at least 12 months before you can receive any special benefits.

In short

• You pay both halves of CPP on net self-employment income above $3,500, up to the second ceiling.
• You pay it with your return, so set money aside during the year.
• Most of it is deductible; the employee half of the base contributions earns a credit instead.
• To estimate your CPP and tax together, enter your net self-employment income in the income tax calculator.