Self Employment Taxes
U.S. 
SECA and Canadian CPP Rates

Published January 2014 | Updated November 1, 2025

WHAT'S IN THIS ARTICLE

• What is the 2026 SECA tax rate for the self employed individual in the U.S.?
• What is the 2026 CPP contribution rate for a sole proprietor in Canada?
• Doing Backwork? - Historical SECA Rates

Self employment taxes need to be on your radar if you are a small business owner in Canada or the U.S.

Turn off your phone, just for a few minutes, before we begin our chat ...

The best way to pay yourself when you are not an incorporated owner/manager/employee is to take a draw. 

A best business practice if you want to ensure business success is to make sure you put enough money aside to pay these pesky taxes.

I recommend automatically transferring a minimum of 15% of your net income each month to a separate bank account at a completely different bank with no debit card privileges to take away the temptation to spend the money. If you aren't strong enough to avoid that temptation, then remit the amount each month to CRA (or IRS) as a tax installment. Your total tax bill may not be covered, but it will certainly soften the blow.

The CPP contribution rate / maximum pensionable earnings are released in November every year for the upcoming year.

The CRA news release stated, "In 2024, a second earnings ceiling was introduced, the Year’s Additional Maximum Pensionable Earnings (YAMPE). The YAMPE is used to determine second additional Canada Pension Plan contributions (CPP2). In 2024, the YAMPE is approximately 7% above the Year’s Maximum Pensionable Earnings (YMPE). In 2025 and every year after, the YAMPE will be approximately 14% above the YMPE."

Be aware that there is a basic CPP exemption of $3,500 of your annual earnings. However, thresholds and maximum contributions increase each year as average weekly salaries increase.

Year	Self Employed Contribution Rate	Self Employed Maximum Contribution	Self Employed Maximum Monthly Contribution	Self Employed YMPE for CPP1	Self Employed YAMPE for CPP2	Self Employed CPP2 Rate	Self Employed CPP2 Max Contribution
2026	11.9%	$8,460.90	$705.08	$74,600	$85,000	8%	$832
2025	11.9%	$8,068.20	$672.35	$71,300	$81,200	8%	$792
2024	11.9%	$7,735.00	$644.58	$68,500	$73,200	8%	$376
2023	11.9%	$7,508.90	$625.74	$66,600
2022	11.4%	$6,999.60	$583.30	$64,900
2021	10.9%	$6,332.90	$527.74	$61,600
2020	10.5%	$5,796.00	$483.00	$58,700
2019	10.2%	$5,497.80	$458.15	$57,400

If you are a sole proprietor in Canada, you do NOT need to complete a T4 slip for yourself ... that's because you are taxed on your net profits.

When you file your annual tax return, you will have to pay income tax and CPP premiums (both the employer and employee portions) on your self employment income reported on form T2125.

The CPP contributions owing are calculated when you file your tax return on Schedule 8 CPP Contributions on Self-Employment or Other Earnings. You will receive a tax credit on your income tax return for one half of the CPP contributions.

As of November 2009, a sole proprietor has the option (it is voluntary not mandatory) to pay into employment insurance (EI) to receive special benefits ... not regular EI benefits. Premiums are calculated through the tax return after registration.

At some point, you will be making enough income that CRA will send you a notice informing you that you will have to begin paying tax installments. (They calculate the amount owing for you so you don't have to.)

This requirement kicks in when you expect to owe more than $3,000 in net tax owing in the current year and owed over $3,000 in net tax owing in either of the past 2 years.

Remember to check with your provincial workers' compensation board to see if you must also pay premiums.

2026 SECA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$184,500	$22,878
Medicare	2.9%	no limit	no limit
Additional Medicare Tax	0.9%	Over filing-status thresholds	no limit

If you are self‑employed, you report your business income and expenses on Schedule C (Form 1040). Your self‑employment (SE) tax is calculated on Schedule SE and is separate from any payroll taxes you may owe if you have employees.

SE tax consists of:

• 12.4% Social Security on net SE earnings up to the annual Social Security wage base for the year, and
• 2.9% Medicare on all net SE earnings (no wage base limit).
• An additional 0.9% Medicare tax may apply to combined wages and net SE earnings above the filing‑status thresholds ($200,000 Single/Head of Household, $250,000 Married Filing Jointly, $125,000 Married Filing Separately). This is calculated on Form 8959 and is not part of the deductible half of SE tax.

SE tax is applied to 92.35% of your net self‑employment income because the IRS lets you exclude 7.65% of your self-employment income to account for the typical employer portion of Social Security and Medicare. If your net earnings from self‑employment are $400 or more, you generally owe SE tax. If they are under $400, you typically do not owe SE tax, though you may elect an optional method in limited cases to earn Social Security credits (see the Schedule SE instructions).

You can deduct one‑half of your SE tax as an adjustment to income on Schedule 1 (Form 1040).

Year	OASDI Rate	Wage Base Limit	Maximum Tax	Total SE Rate
2025	12.4%	$176,100	$21,836.40	15.3%
2024	12.4%	$168,600	$20,906.40	15.3%
2023	12.4%	$160,200	$19,864.80	15.3%
2022	12.4%	$147,000	$18,228.00	15.3%
2021	12.4%	$142,800	$17,707.20	15.3%
2020	12.4%	$137,700	$17,074.80	15.3%
2019	12.4%	$132,900	$16,479.60	15.3%

Exception years

• 2011–2012: Temporary OASDI reduction for self‑employed to 10.4% (total up to base = 13.3%).
• 2013: Additional Medicare Tax of 0.9% begins for high earners; separate from SE tax and not capped.

Check the SSA historical pages for:

• Historical Social Security and Medicare Tax Rates
  Shows employee, employer, and self‑employed rates for OASDI and Medicare by year.
  
• Contribution and Benefit Base (historical wage base)
  Shows the annual Social Security taxable wage base (maximum taxable earnings) by year.
  

How to use them together:

• OASDI rate (from the Tax Rates page) + OASDI wage base (from the C&B Base page) = max OASDI tax for the year.
• Medicare rate for self‑employed is 2.9% with no wage base cap (also on the Tax Rates page).

Note: The 0.9% Additional Medicare Tax is an IRS surtax (not on the SSA pages). If you need it, see IRS “Questions and Answers for the Additional Medicare Tax”.

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