How to Calculate CPP/QPP Contributions If You Are Self Employed
As an employee, your employer is responsible for sending certain payroll deductions to the government. These amounts are taken directly from your gross salary, and what you actually receive i.e. your net salary is what’s left after income tax and payroll deductions.
Included in these deductions are contributions to the Canada Pension Plan (CPP), or in Quebec, the Quebec Pension Plan (QPP). In addition to the amount deducted from your paycheque, your employer must also contribute an equal amount of CPP or QPP. This employer portion is one of the costs of having employees.
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What is CPP/QPP?
The Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) are mandatory retirement pension plans for Canadian workers who earn employment or self-employment income.
Each year, you are required to contribute a percentage of your salary or other “active” income at a fixed rate, up to an annual maximum. These contributions determine the CPP/QPP retirement benefits you will receive in proportion to how much you’ve contributed over your working life.
You can begin receiving CPP retirement benefits as early as age 60. The standard age to start is 65, though you can delay payments until age 70 to receive a higher monthly pension.
How CPP Benefits Are Calculated (CRA Guidelines)
The amount of your Canada Pension Plan retirement pension depends on several factors:
The age you start receiving your pension
How much and how long you contributed to the CPP/QPP
Your average earnings throughout your career
To qualify, you only need to have made at least one contribution during your lifetime.
CPP Maximum Monthly Payment in 2025
The maximum CPP/QPP monthly benefit in 2025 is $1,433, assuming you contributed the maximum amount each year. The pension you receive will be higher or lower depending on whether you start before or after age 65.
Moving Between Provinces or Abroad
If you move from Quebec to another province, your contributions are automatically transferred, and you apply for CPP benefits.
If you move to Quebec from another part of Canada, you apply for QPP benefits.
If you move outside of Canada, you are still entitled to CPP/QPP retirement benefits as long as you have contributed to the plan, even if you no longer live in Canada.
How Do CPP/QPP Contributions Apply to the Self-Employed/Sole Proprietors?
If you’re an employee, you only contribute the employee portion of CPP/QPP, while your employer pays the other half.
But as a self-employed business owner (that reports your income on Schedule T2125 of the T1 personal tax return ), you’re both the employer and the employee. That means you must contribute both halves yourself, paying the full self-employed CPP/QPP rate.
These contributions are calculated each year based on your net taxable self-employment income.
Example of CPP Contributions for the Self-Employed
Let’s say your net self-employment income in 2025 is $50,000.
As an employee, your contribution would be about $2,767, with your employer paying the same amount.
As a self-employed person, you must pay both shares, or $5,534 total.
It should be noted that CPP contributions are significant portion of taxes payable for sole proprietors and often comes as a surprise since this is in addition to federal and provincial income taxes.
How CPP/QPP Is Paid
If you use tax software, your CPP/QPP contributions are calculated automatically and included in the taxes payable on your T1 return (federal) or TP1 return (Quebec). Consequently, you would remit the full amount of CPP or QPP when you file your taxes, along with your other income tax owing.
Keep in mind that 50% of your total contributions are deductible, similar to how an employer deducts their portion as a business expense.
2025 CPP and QPP Contribution Rates for the Self-Employed
CPP rate (self-employed): 11.9% on pensionable earnings
QPP rate (self-employed): 12.8% on pensionable earnings
Basic exemption: The first $3,500 of income is exempt
Maximum pensionable earnings: $71,300 in 2025
Tier 2 earnings (CPP/QPP enhancement): Income between $71,300 and $81,200 is subject to an additional 8% contribution for self-employed individuals
CPP Contribution Calculator
If you would like to estimate how much you will owe in CPP contributions, you can estimate them using the calculator below:
For self-employed unincorporated business owners in Canada, CPP and QPP contributions might represent more than 10% of your net business income.
That being said, these contributions are not a tax per se but an investment in a mandatory stream of income that you should (hopefully) receive once you retire.
Want to Simplify Your Taxes?
📝 Stay Organized
Get your free Small Business Tax Return Checklist to help you gather the key documents and information needed to prepare your return.
📘 Learn the Essentials
Check out my Small-Business-Tax-Resources for clear, practical guidance on Canadian small business taxes written specifically for self-employed individuals and small business owners in Canada.
🎥 Looking for Personalized Guidance?
Book a consultation to get your tax questions answered and receive advice customized to your unique situation.
