The short answer: set aside 25-30% of every payment you receive.
If you’re just starting out and want a number to work with, that’s it. Transfer 25-30% to a separate account every time a client pays you, and don’t touch it until tax time.
If you want to understand why, and whether your number should be higher or lower, read on.
Why you owe more than you expect
When you’re employed, your employer handles a lot in the background: withholding income tax, remitting payroll deductions, paying half your CPP contributions. As a freelancer, none of that happens. You get the full payment, and you’re on the hook for everything.
There are three things you’re paying:
- Income tax (federal + provincial, based on your net income)
- CPP contributions (both the employee and employer share: 11.9% of net earnings above $3,500, plus 8% CPP2 on higher incomes)
- GST/HST (if you earn over $30,000, you collect this on behalf of the CRA and remit it separately)
CPP is the one that surprises people most. In a regular job, your employer covers roughly half. Self-employed, you cover both halves. For the 2025 tax year, that’s 11.9% of net earnings between the $3,500 basic exemption and $71,300 (up to $8,068.20), plus 8% CPP2 on earnings from $71,300 to $81,200 (up to $792). That adds up to a meaningful amount on its own. For 2026, the ceilings rise to $74,600 and $85,000. Verify the current-year CPP rate and maximum on the CRA site, since the rate, ceiling, and contribution cap change each year.
What the numbers actually look like
Rough estimates for a freelancer in Ontario (2025 tax year, before deductions). Your province, income mix, and expenses will all shift this.
| Gross Freelance Income | Approx. Income Tax | Approx. CPP | Total Owing | % to Set Aside |
|---|---|---|---|---|
| $30,000 | ~$2,700 | ~$3,154 | ~$5,854 | ~19% |
| $50,000 | ~$6,500 | ~$5,534 | ~$12,034 | ~24% |
| $70,000 | ~$10,300 | ~$7,914 | ~$18,214 | ~26% |
| $90,000 | ~$15,700 | ~$8,860 | ~$24,560 | ~27% |
At lower incomes, CPP is actually a bigger chunk than income tax. Base CPP stops growing at $71,300 of net earnings. CPP2 then adds 8% up to $81,200, and after that you’re maxed out. Income tax keeps climbing as you earn more. Federal and provincial rates stack on top of each other, which is why the percentages creep up at higher incomes.
If you have significant business expenses (home office, vehicle, software), your actual bill will be lower than this table shows.
GST/HST is not your money
GST/HST registration is generally mandatory when worldwide taxable supplies exceed $30,000 in one calendar quarter or across four consecutive calendar quarters. The effective date depends on which test you meet. See our GST/HST registration guide.
This money is not your income. It belongs to the CRA. The mistake people make is depositing it into their regular account and spending it, then getting hit with a remittance bill they can’t cover.
Open a dedicated account just for GST/HST. Every time you collect it, transfer it there immediately.
The upside: once you’re registered, you can claim Input Tax Credits (ITCs) to recover the GST/HST you paid on business expenses. That laptop, software subscription, or course you bought for work? You get the tax portion back.
A simple setup that works
You don’t need to be precise every week. The basics:
- Get paid, deposit to your main business account
- Transfer 25-30% to a savings account you label “Tax”
- Transfer any GST/HST collected to a separate account labelled “GST/HST”
- Leave both alone until payment is due
Most freelancers pay taxes once a year. Payment is due April 30, filing deadline is June 15. If your net tax owing is more than $3,000 ($1,800 in Quebec) this year and in either of the two previous years, you have to pay quarterly instalments, due March 15, June 15, September 15, and December 15.
Should you set aside more or less?
Set aside more (30%+) if:
- You’re earning over $60,000
- You live in a high-tax province (Ontario, BC, Quebec)
- You have few deductions
You might be fine with less (20-25%) if:
- You have significant deductible expenses that bring down your net income
- You’re in a lower tax bracket
- You’re tracking GST/HST separately already
Unsure? Over-save. A refund is a nice surprise. An unexpected bill in April is not.
What counts as a deductible expense
Common deductible expenses for freelancers:
- Home office (if it’s your main place of business, or used only for work and to meet clients)
- Phone and internet (business portion only)
- Equipment and software
- Professional development and courses
- Accounting and bookkeeping software (yes, Accountly counts)
- Vehicle use for business travel (you’ll need a mileage log)
- Client meals (50% of the cost)
Track these throughout the year. Every $1,000 in deductions saves you roughly $250-330 in taxes depending on your bracket.
Accountly lets you track income and expenses in one place, snap receipts as you go, and see where you stand without waiting until April to find out.
Frequently asked questions
How much should a freelancer in Canada set aside for taxes? Most Canadian freelancers should set aside 25-30% of gross income. Under $40,000 you may be fine with 20-25%. Over $70,000, lean toward 30-35%.
Do Canadian freelancers pay CPP? Yes. Self-employed Canadians pay both the employee and employer portions of CPP: 11.9% of net earnings above $3,500, up to $71,300 for 2025, plus 8% CPP2 up to $81,200. For 2026, those ceilings are $74,600 and $85,000. Verify the current-year CPP rate, ceiling, and maximum contribution on the CRA site, as they change yearly.
When do Canadian freelancers have to pay taxes? Tax payment is due April 30. The filing deadline is June 15 if you’re self-employed, but any balance owing accrues interest after April 30.
What happens if I don’t set aside enough? You’ll owe the balance in April. If you can’t pay, the CRA charges interest at the CRA’s prescribed rate, which changes quarterly, on amounts owing. Owe more than $3,000 this year and in either of the two previous years, and the CRA can put you on quarterly instalments.
Do I need to charge GST/HST as a freelancer? Registration is generally required after worldwide taxable supplies exceed $30,000 in one calendar quarter or over four consecutive calendar quarters. Below both tests, voluntary registration may still be useful for input tax credits.
How does Accountly help with this? Accountly reporting keeps the income and expenses you enter organized so you have current totals for tax planning. It does not determine the amount you should reserve or calculate a final tax return. Try it free.
The information in this guide is for general informational purposes only and is not intended as accounting, tax, business, or legal advice. Accountly does not provide professional services or act as your accountant, tax advisor, or lawyer. No client relationship is created by your use of this material. Always seek advice from qualified professionals who understand your particular circumstances before acting on any information contained herein.