Employee vs self-employed: which actually pays more?
Thinking of leaving the T4 job to go out on your own? The honest answer surprises people: at the same income, employment keeps more, because the self-employed pay both halves of CPP and get no EI. In Ontario, a $75,000 salary nets about $56,716 — and you'd need roughly $78,211 self-employed just to match it. Here's the full picture, and where self-employment wins it back.
At $85,000 net, self-employment puts
$4,394
more in your pocket than the salary
To simply match the $75,000 job's take-home, you'd need about $78,211 in net self-employment income — the gap is the second CPP half you now carry, with no EI in return.
See exactly where every dollar goes
You have the number. The 2026 Tax-Year Pass shows the working behind it:
- Your printable 2026 Contractor Tax Report — every calculator in one accountant-ready PDF
- Line-by-line breakdown with the CRA rule cited for each amount
- The incorporation break-even tool — should you incorporate, and what it saves
- Your numbers saved on this site through the whole filing season
$5 · one time · covers the entire 2026 tax year
Get the 2026 Pass →Already paid? Restore your pass →Checking for an existing pass…
What this assumes (read before you rely on it)
- Both sides use the same sourced 2026 federal and provincial tax engine. The employee pays one CPP half (5.95%) plus EI (1.63% to $68,900); the self-employed pay both CPP halves (11.9%) and no EI.
- The T4 salary is treated as already including vacation pay; the employer's CPP/EI share is the employer's cost, not yours.
- Ignores the small Canada Employment Amount credit (employees only) and any employer benefits or pension match, which tilt further toward employment.
- Self-employed net income is after business expenses — the write-offs are what you make of them.
- A planning estimate, not tax or career advice.
The self-employed CPP penalty, in one number
This is the number nobody tells you when you go solo. As an employee you pay half of CPP — about 5.95% — and your boss quietly matches it. The day you're self-employed you pay both halves, 11.9%, because you're now the employer too. On the same income that's close to double the CPP, and it's exactly why matching a salary requires more self-employment income, not the same. See the 11.9% CPP surprise for the full mechanics.
Where self-employment wins it back
The comparison above is the tax math alone — and on tax math alone, the salary usually wins. Self-employment closes and beats the gap through three levers a salaried job can't offer:
- Write-offsEvery legitimate expense lowers the net income you're taxed on — the salaried can't deduct their commute.
- Your rateYou set the price. Charging correctly beats a fixed wage — work out the rate that nets a living.
- Incorporation, laterOnce your income is high enough, incorporating defers tax a salary never can.
The trade, honestly
Going self-employed you give up EI, any employer pension match and benefits, paid vacation and sick days, and a predictable cheque. You gain write-offs, control of your rate, and room to incorporate. The tax math is only one column of that ledger — but it's the column people guess wrong most often, which is what this tool fixes.
Common questions
Do you take home more as an employee or self-employed?
At the same headline income, an employee keeps more, because they pay only one half of CPP (5.95%) while the self-employed pay both (11.9%) and get no EI in return. In Ontario for 2026, a $75,000 T4 salary nets about $56,716. To match that take-home self-employed you'd need roughly $78,211 in net income — the difference is that second CPP half. Self-employment only pulls ahead through write-offs, a higher rate, or incorporating.
Why do the self-employed pay more CPP?
As an employee, you pay one half of CPP and your employer pays the matching half. Self-employed, you're both employer and employee, so you pay the full 11.9% yourself. On earnings up to the 2026 maximum that's roughly double the CPP an employee pays — the single biggest reason a self-employed dollar is worth less than a salaried dollar before write-offs.
How much self-employment income equals a $75,000 salary?
About $78,211 of net self-employment income in Ontario gives the same take-home as a $75,000 T4 salary in 2026 — roughly $3,211 more, to cover the extra CPP half you now carry. Change the province and salary in the calculator for your own break-even.
Do self-employed people pay EI?
No. Employees pay EI premiums — 1.63% on earnings up to $68,900 in 2026, a maximum of about $1,123. The self-employed don't pay EI, but they also don't get regular EI benefits — no job-loss coverage, and maternity/parental or sickness benefits only if you opt in separately.
So is it worth going self-employed?
On the raw tax math, employment usually keeps more per dollar. Self-employment wins when you use its levers: legitimate write-offs that shrink your taxable net income, control over your rate (you can charge more than a fixed wage), and the option to incorporate and defer tax once you're earning well. The trade is real benefits and security for control and upside.
Made the jump? Blue Crane captures the receipts behind those write-offs and builds the invoices at your new rate — so the self-employed side of this comparison actually pays off at filing time.