Employee vs Contractor Comparison Calculator
Compare 2026 take-home pay as a T4 employee, sole proprietor and incorporated contractor side by side, including CPP2, benefits value and PSB risk.
T4 employee, sole proprietor or incorporated: comparing all three paths side by side
Choosing between staying a T4 employee, going sole proprietor or incorporating is rarely as simple as comparing two after-tax numbers — each path has a different CPP burden, a different relationship with GST/HST, and, for incorporation, a real risk of being reassessed as a Personal Services Business if you look too much like an employee in substance.
This calculator runs all three paths side by side for 2026 in Ontario: T4 employee, sole proprietor and incorporated contractor, using the real combined federal and Ontario tax brackets, both-sides CPP and CPP2 for the self-employed paths, and a PSB risk warning where relevant, so you're comparing genuine net outcomes rather than headline rates.
What this comparison includes
- Federal and Ontario income tax on each path using the real 2026 bracket schedule, not a flat approximation
- CPP and CPP2 calculated correctly for each status: a 5.95%/4% split with an employer as a T4 employee, versus 11.9%/8% covered entirely yourself if self-employed
- A PSB risk indicator for the incorporated path, since that status carries a materially higher corporate tax rate if reassessed
- The value of employer-paid benefits and CPP matching that a T4 role provides but self-employment doesn't
