Contractor against employee calculator, Canada 2026
Put a contract rate next to a salary and see which one leaves more in hand after tax and contributions.
What you invoice, before expenses.
Deductible costs of doing the work.
Side by side
Difference in take home
$6,082.35
Contracting leaves $6,082.35 more. Figures are for Ontario.
| Contractor | Amount |
|---|---|
| Gross billings | $120,000.00 |
| Business expenses | $8,000.00 |
| Net profit | $112,000.00 |
| CPP, both halvesan employer would have paid half of this | $8,460.90 |
| CPP2, both halves | $832.00 |
| Federal tax | $15,176.44 |
| Ontario tax | $6,676.52 |
| Take home | $80,854.13 |
| Employee | Amount |
|---|---|
| Salary | $100,000.00 |
| Federal tax | $13,511.74 |
| Ontario tax | $5,946.96 |
| CPP, employee half | $4,646.45 |
| EI | $1,123.07 |
| Take home | $74,771.79 |
- Contractor average rate
- 27.8%
- Employee average tax rate
- 19.5%
- Contractor net profit
- $112,000.00
- Contractor take home per billed dollar
- 67.4%
Assumptions
- The contractor pays both halves of CPP and of CPP2. Half of the base contribution is deducted from income and the other half is credited.
- EI is left off, because a self employed worker pays it only after opting into the special benefits programme.
- Business expenses are treated as fully deductible against contract income.
- GST and HST registration, instalment payments and incorporation are out of scope. This compares a sole proprietor with an employee.
- The employee side carries no value for benefits, paid leave, or an employer pension match, which is usually where the gap closes.
Sources
- CPP contribution rates for self employed contributors, Canada Revenue Agency, checked 30 August 2026
- Federal income tax rates for the current year, Canada Revenue Agency, checked 30 August 2026
- Indexation of personal income tax amounts, Canada Revenue Agency, checked 30 August 2026
- CPP contribution rates, maximums and exemptions, Canada Revenue Agency, checked 30 August 2026
- Second additional CPP contribution rates and maximums, Canada Revenue Agency, checked 30 August 2026
- EI premium rates and maximums, Canada Revenue Agency, checked 30 August 2026
Where the difference comes from
The largest single difference between contracting and employment in Canada is CPP. An employee pays 5.95 percent on contributory earnings and the employer quietly matches it. A sole proprietor pays both halves, 11.9 percent, and the same doubling applies to the second additional contribution above the maximum pensionable earnings. Half of the base amount is deductible from income and the other half is a credit, which softens the blow without removing it.
EI runs the other way. A self employed worker pays no EI premiums unless they opt into the special benefits programme, so the deduction simply disappears, and with it the entitlement. That is the trade underneath the whole comparison: a contractor keeps more of certain deductions and loses the protections those deductions bought.
Business expenses are the other lever. A contractor deducts the costs of doing the work from income before any tax is calculated, which an employee generally cannot. The tool treats whatever you enter as fully deductible. What it leaves out is health coverage, paid vacation, sick leave, and an employer pension match, all of which sit on the employee side of the ledger and are usually worth more than the tax difference. Incorporating changes the arithmetic again and is not modelled here.
The employee figure is the same calculation as the take home pay pages, so you can open your province there for a full deduction list. For the United States version of this comparison, see the United States contractor page.