Self-employed Canadians pay a heavier tax burden than employees because they owe both the employee and employer halves of CPP, a combined 11.9% on earnings between $3,500 and $71,300 in 2025. The CPP2 enhancement adds another 8% on earnings between YMPE ($71,300) and YAMPE ($81,200).
Key differences from employment income
- Double CPP (both halves): 11.9% × pensionable earnings
- CPP2 also both halves: 8% between YMPE and YAMPE
- Half of total CPP contributions are deductible from income tax
- No EI unless you opt in (Canada Employment Insurance Commission Special Benefits for Self-Employed)