How Much Tax to Set Aside When Self-Employed in Canada (2026)

The #1 anxiety for Canadian freelancers

"How much do I actually owe in taxes?" It's the question every self-employed Canadian asks, and no bookkeeping app properly answers.

The recommended range of "set aside 25-40% of gross income" is so vague it's almost useless. Your actual tax obligation depends on your province, your income level, your deductions, and whether you're registered for GST/HST.

This guide gives you the exact formula — and shows you how to automate it.

The four taxes self-employed Canadians pay

When you're self-employed in Canada, you're responsible for four separate tax obligations:

1. Federal income tax (15-33%)

Canada uses progressive tax brackets. For 2024/2025:

Taxable Income	Federal Rate
First $55,867	15%
$55,867 – $111,733	20.5%
$111,733 – $154,906	26%
$154,906 – $220,000	29%
Over $220,000	33%

Most freelancers earning $50K-$80K net will pay an effective federal rate around 15-18%.

2. Provincial income tax (4-14%)

Each province has its own brackets. Alberta has a 10% flat rate. Ontario starts at 5.05%. Quebec is the highest, starting at 14%. Your province significantly impacts your total tax burden.

3. CPP contributions — both halves (11.9%)

This is the one that catches people. As an employee, you pay half of CPP and your employer pays the other half. When you're self-employed, you pay both halves — a combined rate of 11.9% on pensionable earnings between $3,500 and $68,500.

On $60,000 net income: ($60,000 - $3,500) x 11.9% = $6,723.50 in CPP.

4. GST/HST collected (5-15%)

If you're registered for GST/HST (mandatory once you pass $30K in rolling 12-month revenue), you collect tax from clients and remit it to the CRA. This isn't your money — it's a pass-through. But you need to have it set aside.

The formula: what to actually set aside

Here's the calculation:

Tax Set-Aside = Federal Income Tax (brackets)
              + Provincial Income Tax (your province's rate)
              + CPP (11.9% of pensionable earnings)
              + GST/HST Collected (not yet remitted)

Example: A freelancer in Ontario earning $70,000 net with $4,200 HST collected:

• Federal tax: ~$10,700
• Ontario tax: ~$3,535
• CPP: ~$7,914
• HST collected: $4,200
• Total to set aside: ~$26,349 (37.6% of net income + HST)

That's significantly more than the "set aside 25%" advice you see everywhere.

Stop guessing. Automate it.

VRITTI calculates this automatically. The Tax Jar on your dashboard shows your year-to-date estimated obligation, broken down by federal tax, provincial tax, CPP, and HST. It uses your actual income, your actual province, and the actual tax brackets.

The "Pay Yourself" number goes one step further: Cash Balance - Tax Jar - Next 30 Days Recurring Expenses = what's safe to withdraw.

These two numbers — Tax Jar and Pay Yourself — answer the questions every freelancer actually has. Not "what's my revenue?" but "how much do I owe?" and "how much can I safely take?"

Try VRITTI free for 14 days →