How much should a freelancer in Ontario save for taxes?

Why freelancers get caught off guard

Nobody withholds tax from your invoices. As a freelancer, you owe personal income tax on your profit and you pay both the employer and employee halves of Canada Pension Plan (CPP) contributions — employees only pay half. That surprise is why the most common advice for Canadian freelancers is to move a fixed percentage of every payment into a separate account the moment it arrives.

How are Ontario freelancers taxed, exactly?

You pay two layers of income tax on your net self-employment income: federal tax and Ontario tax. Both use progressive brackets, meaning each rate applies only to the income inside that bracket, never to your whole income.

For the 2025 tax year (the return you file in 2026), the CRA's published brackets are:

• Federal: 14.5% to $57,375; 20.5% to $114,750; 26% to $177,882; 29% to $253,414; 33% above. (The lowest rate was cut mid-2025, so 2025 uses a blended 14.5% rate for the first bracket.)
• Ontario: 5.05% to $52,886; 9.15% to $105,775; 11.16% to $150,000; 12.16% to $220,000; 13.16% above.

For 2026, the brackets are indexed: federal 14% to $58,523 and Ontario 5.05% to $53,891, with the higher brackets rising correspondingly. Credits such as the basic personal amount reduce the actual tax you pay, so your real bill is lower than the gross calculation below.

What does the math look like at $50,000?

Take $50,000 of net freelance income in Ontario for 2025, calculated before credits:

• Federal income tax: $50,000 × 14.5% = $7,250
• Ontario income tax: $50,000 × 5.05% = $2,525
• Combined income tax: $9,775 (about 19.6% of income)
• CPP: ($50,000 − $3,500 exemption) × 11.9% = $5,533.50
• Total before credits: $15,308.50 (about 30.6% of income)

Non-refundable credits bring the income-tax portion down, so most freelancers at this level end up with a total effective rate in the low-to-mid twenties. That is why 25–30% is the safe set-aside range: it covers the gross calculation with room to spare.

How much CPP does a freelancer pay?

Self-employed Canadians pay both halves of CPP: 11.9% of net self-employment earnings between the $3,500 basic exemption and the year's maximum pensionable earnings. For 2025, that maximum is $71,300, capping the self-employed contribution at $8,068.20. For 2026, the maximum rises to $74,600, capping the contribution at $8,460.90.

There is also a second tier, CPP2. Earnings between the regular maximum and the additional maximum ($81,200 in 2025; $85,000 in 2026) are subject to an extra 8% for self-employed contributors, up to $792 in 2025 and $832 in 2026. Below roughly $70,000 of net income, most freelancers never touch CPP2.

What's a safe savings rate at different income levels?

Use these as practical guidelines, based on combined income tax plus CPP before credits:

• Under $30,000 net: set aside 20–25%. You sit in the lowest federal and Ontario brackets, but CPP still takes 11.9% of earnings over $3,500.
• $30,000–$60,000: set aside 25%. This is the typical full-time freelancer range in Ontario.
• $60,000–$100,000: set aside 25–30%. More income lands in the 20.5% federal bracket, and CPP is near or at its maximum.
• Over $100,000: set aside 30% or more. You face the 26% federal bracket and the 11.16% Ontario bracket, plus CPP2 on income above the regular maximum.

How should I actually set the money aside?

Open a separate savings account labelled for taxes and transfer your chosen percentage within a day or two of each client payment. Treating it as a non-negotiable expense — like rent — is what makes the system work. Revisit your percentage each quarter: if your income is climbing faster than expected, nudge the rate up before April arrives.

RRSP contributions are one legitimate way to lower the bill: contributions you make in the first 60 days of the following year (by March 2, 2026, for the 2025 tax year) are deductible against that year's income.

When is the tax actually due?

Any balance you owe is due April 30, even though self-employed filers have until June 15 to file the return itself. Interest starts accruing on unpaid balances after April 30, so paying early — or paying in instalments through the year — protects you from an expensive surprise.