CPP on side hustle income in Canada is the Canada Pension Plan contribution you owe on net self-employment profit when you file your return, and for 2026 it is 11.9% of net earnings between the $3,500 basic exemption and $74,600, because you pay both the employee and employer shares (CRA). It surprises many first-year side hustlers because no platform or client withholds it. This guide covers every Canadian outside Quebec; Quebec residents pay QPP instead (see below). Figures are from CRA, ESDC and Retraite Québec pages checked November 3, 2026.
CPP sits next to income tax in every take-home calculation on this site. Start with how much tax to set aside, then how to report side hustle income to the CRA and CRA tax instalments.
| 2026 CPP figure | Amount | Source |
|---|---|---|
| Basic exemption | $3,500 | CRA |
| Year’s maximum pensionable earnings (YMPE) | $74,600 | CRA |
| Employee and employer rate (each) | 5.95% | CRA |
| Self-employed rate (both halves) | 11.9% | 2 × 5.95% |
| Maximum self-employed CPP | $8,460.90 | CRA |
| Year’s additional maximum pensionable earnings (YAMPE) | $85,000 | CRA CPP2 |
| CPP2 rate, self-employed | 8% (4% + 4%) | CRA CPP2 |
| Maximum self-employed CPP2 | $832 | CRA CPP2 |
Do you pay CPP on side hustle income in Canada?
Yes, if you are 18 or older, live outside Quebec, and your net self-employment earnings (plus any employment earnings) are above the $3,500 basic exemption. You calculate it on Schedule 8 when you file, and it is added to your balance owing (CRA).
“Net” matters. CPP is charged on the profit from Form T2125, after business expenses, not on gross sales or app payouts. Every legitimate deduction you claim (see side hustle expense deductions) lowers both your income tax and your CPP.
Self-employed people do not pay EI premiums unless they opt in to EI special benefits (CRA).
How much CPP do you pay on side hustle income in 2026?
If side hustle profit is your only earned income, it is 11.9% of net profit above $3,500, up to $74,600, then 8% CPP2 on the slice up to $85,000. The formula:
CPP (self-employed only, 2026) =
11.9% × (net profit − $3,500), for net profit up to $74,600
+ 8% × (net profit − $74,600), for the part between $74,600 and $85,000| Net self-employment profit (2026, no job) | CPP (11.9%) | CPP2 (8%) | Total |
|---|---|---|---|
| $3,000 | $0.00 | $0.00 | $0.00 |
| $5,000 | $178.50 | $0.00 | $178.50 |
| $10,000 | $773.50 | $0.00 | $773.50 |
| $20,000 | $1,963.50 | $0.00 | $1,963.50 |
| $30,000 | $3,153.50 | $0.00 | $3,153.50 |
| $50,000 | $5,533.50 | $0.00 | $5,533.50 |
| $74,600 | $8,460.90 | $0.00 | $8,460.90 |
| $85,000 or more | $8,460.90 | $832.00 | $9,292.90 |
Every row is the formula above applied to the CRA’s 2026 figures.
How does a T4 job change CPP on your side hustle?
Your employment earnings come first. They use up the $3,500 basic exemption and count toward the $74,600 and $85,000 ceilings, and your employer has already paid its half on them. Schedule 8 then charges the self-employed rate on the side income that falls into whatever room is left (Schedule 8). Your T4 boxes 16, 16A, 17 and 17A show what you already contributed (CRA line 22200).
Illustrative example: four people, same $10,000 side profit
Assumed salaries; the side profit is $10,000 net in each case. Simplified to the rates above (Schedule 8 is the final word).
| Situation (2026) | How the $10,000 falls | CPP on the side profit |
|---|---|---|
| No job | $3,500 exempt, $6,500 at 11.9% | $773.50 |
| $40,000 salary | All $10,000 below the YMPE, exemption already used, 11.9% | $1,190.00 |
| $70,000 salary | $4,600 at 11.9% (to $74,600) + $5,400 at 8% (to $80,000) | $979.40 |
| $80,000 salary | All $5,000 between $80,000 and $85,000 at 8%; the rest is above the ceiling | $400.00 |
| $90,000 salary | Already above $85,000 | $0.00 |
Two things stand out. Someone with a mid-range salary pays more CPP on the same side profit than someone with no job, because their exemption is already used. And once salary plus side profit passes $85,000, extra side profit carries no CPP at all.
How much of each side hustle dollar do you keep after CPP?
Below the $74,600 ceiling, each extra $1,000 of net profit costs $119 in CPP before any income tax. Between $74,600 and $85,000 it costs $80. Above $85,000 of combined earnings, $0.
Illustrative example: a $12,000 side hustle with no other job. Assume $15,000 of gross sales and $3,000 of expenses.
| Line | Amount |
|---|---|
| Gross sales (assumed) | $15,000.00 |
| Business expenses (assumed) | −$3,000.00 |
| Net profit (T2125) | $12,000.00 |
| CPP: 11.9% × ($12,000 − $3,500) | −$1,011.50 |
| Income tax set-aside: an assumed 15% of net | −$1,800.00 |
| Kept | $9,188.50 |
The income-tax line depends on your province and other income; how much tax to set aside shows how to size it. CPP is the part people forget, and at 11.9% it is often as large as the federal income tax on a small side hustle.
Do you get any of your CPP contributions back?
Partly, as tax relief, and fully as future pension. On Schedule 8, half of your base contribution (9.9% of the 11.9%) becomes a non-refundable credit on line 31000, and the other half of base, plus all of the first additional (2%) and CPP2 (8%) contributions, is deducted from income on line 22200 (Schedule 8).
Worked example ($10,000 net profit, no job):
Base CPP: 9.9% × $6,500 = $643.50
First additional: 2.0% × $6,500 = $130.00
Total CPP payable: $773.50
Line 31000 credit base: 50% × $643.50 = $321.75
Line 22200 deduction: $321.75 + $130.00 = $451.75The deduction is worth your marginal tax rate times $451.75, and the credit is worth the lowest federal rate (plus the provincial equivalent) times $321.75. So the real after-tax cost of CPP is lower than the 11.9% headline, but not by much on a small side hustle.
The contributions also count toward your CPP retirement pension, the way contributions through a job do. ESDC publishes the year’s pensionable earnings figures and maximum benefits (ESDC).
How does QPP work on side hustle income in Quebec?
Quebec residents pay QPP instead of CPP. For 2026, a self-employed worker pays 12.6% (10.6% base plus 2% additional) on earnings between $3,500 and $74,600, then 8% on earnings from $74,600 to $85,000 (Retraite Québec; Revenu Québec). Retraite Québec’s table lists $819 on $10,000 and $3,339 on $30,000 of self-employment income. Quebec self-employed workers also pay QPIP premiums, calculated on the Quebec return.
How do you plan cash for CPP on a side hustle?
Treat CPP as a second set-aside, separate from income tax, and move it out of your spending account every time you are paid.
Step 1: Estimate this year’s net profit
Use last year’s T2125 or your year-to-date bookkeeping. A simple record-keeping system makes this a five-minute job.
Step 2: Check your job’s T4 earnings
If your salary is above $85,000, your side CPP is $0. Between $74,600 and $85,000, use 8%. Below $74,600 (and above $3,500), use 11.9%.
Step 3: Set your CPP percentage
My CPP set-aside rule (2026)
- Salary this year: $______
- If salary ≥ $85,000 → CPP set-aside: 0%
- If $74,600 ≤ salary < $85,000 → 8% of each side payment
- If salary < $74,600 → 11.9% of each side payment
- No job? 11.9% of profit above $3,500Step 4: Move it with every deposit
A separate savings account for tax and CPP keeps the money out of reach. Our business bank account guide compares no-fee options such as EQ Bank.
Step 5: Check whether you need instalments
CPP owing counts toward the net tax owing that can trigger CRA quarterly instalment reminders. Read CRA tax instalments for side hustlers.
What mistakes do side hustlers make with CPP in Canada?
- Forgetting it exists. No platform withholds CPP; it all lands on your return.
- Using gross income. CPP is charged on net profit after expenses.
- Assuming a job covers it. It only does if your salary is above the $85,000 ceiling.
- Mixing it with the tax set-aside. Two percentages, two lines on the return.
- Missing the deduction. Good tax software fills Schedule 8 and line 22200 for you; compare Wealthsimple Tax, TurboTax and H&R Block.
What should you keep in mind about these CPP numbers?
All rates and ceilings are the CRA’s 2026 figures, checked November 3, 2026; they change every January. The salary examples simplify Schedule 8, which also handles part-year situations (turning 18 or 70, CPP disability, death) and people aged 60 to 70 who are receiving CPP and may elect to stop contributing. Income-tax set-asides are placeholders. This is not tax, legal, or insurance advice.
Which guides sit next to CPP on side hustle income?
How much tax to set aside, report side hustle income to the CRA, side hustle tax FAQ, and how side hustle income affects the Canada child benefit. If your side income comes from an app, see DoorDash or Amazon Flex for full take-home models.
What are the common questions?
What is the CPP rate on self-employment income in 2026?
Self-employed Canadians outside Quebec pay 11.9% of net self-employment earnings between $3,500 and $74,600 in 2026, plus 8% CPP2 on earnings between $74,600 and $85,000. The maximum is $8,460.90 plus $832.
Do I pay CPP on side hustle income if I already have a job?
Usually yes. Your T4 earnings use up the $3,500 exemption and count toward the ceilings first, and Schedule 8 charges the self-employed rate on side profit in the room left. If your salary is above $85,000, you pay no CPP on side income.
Is CPP charged on gross or net side hustle income?
On net self-employment income, the profit from Form T2125 after business expenses. Claiming legitimate expenses lowers both CPP and income tax.
Can I deduct CPP contributions on self-employment income?
Partly. Half of the base contribution is a non-refundable credit on line 31000, and the other half plus all enhanced and CPP2 contributions are deducted on line 22200.
How much CPP do I owe on $10,000 of side hustle profit?
With no other job, 11.9% of $6,500, which is $773.50 for 2026. With a salary under $74,600, the exemption is already used, so it is 11.9% of the full $10,000, or $1,190.
Which sources support this guide?
The rules, rates, and platform requirements in this guide are checked against these primary sources. Retail price ranges are labelled as ranges to verify locally, and they are not quotes.
- CPP contribution rates, maximums and exemptions — Canada Revenue Agency
- Second additional CPP (CPP2) contribution rates and maximums — Canada Revenue Agency
- Line 22200 - Deduction for CPP or QPP contributions on self-employment income and other earnings — Canada Revenue Agency
- Schedule 8, Canada Pension Plan Contributions and Overpayment (large print) — Canada Revenue Agency
- Responsibilities, benefits and entitlements for employees and self-employed workers — Canada Revenue Agency
- Maximum Benefit Amounts and Related Figures - Canada Pension Plan (2026) — Employment and Social Development Canada
- Work and contributions (Québec Pension Plan) — Retraite Québec
- QPP Contribution Payable by a Self-Employed Person or a Member of a Partnership — Revenu Québec
- Form T2125, Statement of Business or Professional Activities — Canada Revenue Agency