There is no single percentage of side hustle income to set aside in Canada. The amount has to cover federal income tax at your marginal rate, provincial or territorial income tax, and Canada Pension Plan contributions on self-employment if you have not already reached the ceiling through a job. For 2026, the CRA’s federal brackets start at 14% on taxable income up to $58,523. A self-employed person pays both the employee and employer CPP shares. In 2026 the self-employed maximum for the base and first additional contribution is $8,460.90, on the CRA CPP rates table.
This is general information, not tax advice. The sketches below are labelled illustrative. They are not your bill and not a recommended set-aside rate. Talk to an accountant. Confirm every bracket, ceiling, and basic amount on canada.ca for the year you are earning, because indexation changes them.
How the income gets onto the return is how to report side hustle income. GST/HST you collect is a separate pile, explained in GST/HST registration. Do not mix that remittance into the income-tax set-aside and then spend either one.
Is there a percentage of side hustle income to set aside in Canada?
No CRA page publishes a percentage of side hustle income that Canadians should set aside. A forum’s “save 30%” is not a rule. Your set-aside is an estimate of tax and CPP that will not be withheld at source, built from your other income, your province, and how much CPP room you have left.
A job usually withholds tax and CPP. A side hustle usually pays the gross amount. For the 2025 return, any balance is due April 30, 2026, even if you file on the June 15 date on the CRA filing due dates page. Quebec residents pay provincial tax to Revenu Québec and contribute to the QPP, not through federal line 42100.
| Piece of the bill | What changes it | Where to confirm for 2026 |
|---|---|---|
| Federal income tax | Taxable income and the bracket | CRA current-year brackets |
| Provincial or territorial tax | Where you live on December 31 | The same CRA rates pages, provincial section |
| CPP (outside Quebec) | Net self-employment, age, and CPP already paid at a job | CRA CPP maximums table |
| QPP (Quebec) | Net self-employment on the Quebec return | Revenu Québec |
| GST/HST collected | Whether you are registered | Not income tax; remit it separately |
How do 2026 federal marginal rates work on side hustle income?
A marginal rate in Canada is the rate on the next dollar of taxable income, not the rate on every dollar you earned. The CRA’s 2026 federal table taxes each portion at its own rate. Provincial tax sits on top. The basic personal amount reduces tax through a credit. It is not a bracket.
The federal portions for 2026, from the CRA current-year page, are:
| Taxable income from | Up to | Federal rate |
|---|---|---|
| $0 | $58,523 | 14% |
| $58,523.01 | $117,045 | 20.5% |
| $117,045.01 | $181,440 | 26% |
| $181,440.01 | $258,482 | 29% |
| $258,482.01 | Unlimited | 33% |
The 2026 TD1 says every resident can enter a basic personal amount of $16,452. If net income will be greater than $181,440, the amount can be lower. Payroll formulas put the minimum at $14,829 once income reaches $258,482. The credit is not a cheque for $16,452.
Side hustle income stacks on your other income. If a day job already fills the 14% band, the next dollar is taxed at the next federal rate, plus provincial tax. If the hustle is your only income and it sits under the basic personal amount, federal income tax can be small and CPP can still be owing, because the CPP basic exemption is $3,500. This guide does not print provincial brackets. Open the CRA rates page for your province.
How do CPP contributions work on self-employment income in Canada?
If you are self-employed outside Quebec, you pay both shares of the Canada Pension Plan on pensionable net business income. The government contributions page says the 2026 earnings ceiling is $74,600 and the contribution rate on those pensionable earnings is 11.9%, which is the employee and employer rates combined. The maximum self-employed contribution at that rate is $8,460.90. The basic exemption is $3,500. You do not contribute on investment income. You contribute on net business income after expenses, and contributions you already made as an employee reduce what is left to pay.
There is a second layer, CPP2, on earnings between the ceiling and a higher ceiling. The CRA’s CPP2 table for 2026 lists an additional maximum pensionable earnings amount of $85,000, an employee and employer rate of 4%, and a maximum self-employed CPP2 contribution of $832. Employment and Social Development Canada’s 2026 figures match that: 11.90% and $8,460.90 for the base plus first additional amount, and 8% and $832 for the self-employed second additional amount. If your pensionable earnings stay under $74,600, CPP2 is not part of the bill.
Residents outside Quebec enter the CPP payable on line 42100, using Schedule 8. Part of the contribution is a deduction on line 22200. The base employee-equivalent portion is a non-refundable credit on line 31000. Use the schedule rather than splitting 11.9% by hand. Quebec residents do not use line 42100. Contributors under 18 and some people 60 to 70 have elections on the line 42100 page. This sketch assumes someone who has to contribute.
When do tax instalments apply to a side hustle in Canada?
You may have to pay income tax instalments in Canada if your net tax owing is more than $3,000 in the year, or more than $1,800 if you live in Quebec, and it was also over that threshold in either of the two previous years. The CRA’s instalment page states that test for 2026 against 2025 or 2024. The due dates for most people are March 15, June 15, September 15, and December 15. Farmers and fishers whose main source of income is farming or fishing have one date, December 31.
The CRA sends reminders. A missing reminder does not erase the test, and instalment interest can apply if you pay everything only the following April. The due dates page gives the next business day when a date falls on a weekend or holiday. You can use the no-calculation amount on the reminder, a prior-year option, or a current-year option. The current-year option fits a hustle that will not repeat last year. If the estimate is low, interest can still apply. Read who has to pay before you skip a reminder.
What do two illustrative tax sketches show for a Canadian side hustle?
These sketches use 2026 federal figures and assumed incomes. They leave out provincial tax, credits other than a mention of the basic personal amount, and the precise Schedule 8 split between the deduction and the credit. They are not a filing position.
Illustrative example A, side hustle only. Suppose you live outside Quebec, you are the age that must contribute, you have no employment income, and your net self-employment income in 2026 is $12,000. Pensionable earnings in the sketch are $12,000 − $3,500 = $8,500. CPP at 11.9% is $8,500 × 0.119 = $1,011.50. You are under the $74,600 ceiling, so the sketch includes no CPP2. Federal taxable income before the line 22200 deduction is in the 14% bracket and under the $16,452 basic personal amount, so federal income tax in this sketch can be zero after that credit, before any provincial tax. The cash you still need is the CPP, about $1,011.50 in the sketch, even though friends said “you won’t owe tax.” Provincial tax might not be zero. Run it.
Illustrative example B, day job already over the CPP ceilings. Suppose employment income in 2026 is already over $85,000, so both the $74,600 ceiling and the $85,000 CPP2 ceiling are met at the job, and suppose an extra $5,000 of net self-employment falls inside the federal bracket from $58,523.01 to $117,045. The federal rate on that portion is 20.5%. Federal tax on $5,000 in the sketch is 0.205 × $5,000 = $1,025, before the provincial rate and before any remaining deduction. CPP on the side income in this sketch is $0 only because the assumption is that both ceilings are already maxed. If the job stopped at $70,000, CPP room would remain and the side income could still attract contributions. Do not use sketch B unless that ceiling assumption is true for you.
| Sketch | Assumption | Federal income tax in the sketch | CPP in the sketch |
|---|---|---|---|
| A | $12,000 net, no job, outside Quebec | Often covered by the $16,452 basic amount | $1,011.50 |
| B | $5,000 net, job already over $85,000, income in the 20.5% federal band | $1,025 | $0 under that ceiling assumption |
| Neither | Your province | Extra | Use Schedule 8 |
GST/HST collected is not in either column. A 13% HST add-on in Ontario is remitted, not saved as income tax.
The set-aside fails when it stays in the spending account. KOHO TODO-AFFILIATE is one Canadian account that can hold a transfer after each payout until April or until an instalment date. The account does not know your bracket.
At filing time, Wealthsimple Tax TODO-AFFILIATE and TurboTax Canada TODO-AFFILIATE can calculate the return from the numbers you enter, including Schedule 8 if the software supports your situation. Compare the current price. They are not a ruling on whether you owe instalments during the year.
A running total of invoices makes the estimate less fictional. FreshBooks TODO-AFFILIATE is one place to see net income before you guess a percentage. It does not withhold tax.
What do people get wrong about a side hustle tax set-aside?
They set aside a percentage of gross deposits and ignore expenses, or they set aside nothing because a coworker said the basic personal amount wipes the bill out. Sketch A is the answer to that coworker: CPP starts after $3,500 of pensionable earnings, not after $16,452.
They forget the province. They treat June 15 as the payment date. They spend GST/HST. They assume a job’s CPP withholding covers a large side hustle when the job did not reach the ceiling. They skip instalments because no one withheld tax and the reminder went to an old address.
They also copy a combined marginal rate from a table for a different year. The 2026 first federal rate is 14%, not the 15% that applied in earlier years. The CRA page is the check. Next year’s indexed brackets will move again.
Which guides explain the rest of the bill?
Reporting the income is the T2125. Expenses change the net that CPP uses. GST/HST is the other balance. Rideshare and food delivery are payouts with no employer withholding. Freelance writing is the same shape with invoices instead of an app. Keep the slips for six years, which is record keeping.
What are the common questions?
Should I set aside 30% of side hustle income in Canada?
There is no CRA rule that says 30%. Federal tax depends on your bracket, province adds its own tax, and CPP on self-employment can be 11.9% of pensionable earnings up to the 2026 ceiling even when income tax is small. Build an estimate from those pieces or ask an accountant. This is not tax advice.
Do I pay both halves of CPP on a side hustle in Canada?
Yes, if you are self-employed outside Quebec and you still have CPP room. The 2026 self-employed rate on pensionable earnings up to $74,600 is 11.9%, maximum $8,460.90, after the $3,500 basic exemption and after employee contributions you already paid. CPP2 can add up to $832 more between $74,600 and $85,000. Quebec uses the QPP.
What is the 2026 federal tax rate on the first dollars of taxable income?
The CRA's 2026 table taxes taxable income from $0 to $58,523 at 14%. That rate applies to the portion in the bracket, after deductions, and a basic personal amount of $16,452 can offset tax for residents under the income level where the amount starts to fall. Provincial tax is extra.
When are side hustle tax instalments due in Canada?
If you have to pay instalments for 2026, the CRA lists March 15, June 15, September 15, and December 15. The usual test is net tax owing over $3,000, or $1,800 in Quebec, in 2026 and in either 2025 or 2024. Farmers and fishers can have a December 31 date. Confirm the reminder rules before you skip a payment.
If my side hustle is under the basic personal amount, is the set-aside zero?
Not necessarily. CPP can still be payable on net self-employment over the $3,500 basic exemption. Provincial tax and benefits clawbacks are separate questions. GST/HST you collected is also still due if you charged it. This is not tax advice.
Does June 15 give me extra time to pay?
For the 2025 return, the CRA says self-employed people generally file by June 15, 2026, and pay any balance by April 30, 2026. Interest can apply after the payment date. Confirm the year you are filing.
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.
- Current year tax rates and income brackets (2026) — Canada Revenue Agency
- 2026 Personal Tax Credits Return (TD1) — Canada Revenue Agency
- CPP contribution rates, maximums and exemptions — Canada Revenue Agency
- Contributions to the Canada Pension Plan — Government of Canada
- Second additional CPP (CPP2) contribution rates and maximums — Canada Revenue Agency
- Maximum Benefit Amounts and Related Figures, CPP 2026 — Employment and Social Development Canada
- Required tax instalments for individuals — Canada Revenue Agency
- Who has to pay tax instalments — Canada Revenue Agency
- Instalment payment due dates — Canada Revenue Agency
- Line 42100 – CPP contributions payable on self-employment — Canada Revenue Agency
- Line 22200 – Deduction for CPP or QPP contributions on self-employment — Canada Revenue Agency
- Line 31000 – Base CPP or QPP contributions on self-employment — Canada Revenue Agency
- Filing due dates for the 2025 tax return — Canada Revenue Agency