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

Published January 2014 | Edited November 7, 2024

WHAT'S IN THIS ARTICLE

• What is the 2025 FICA tax rate for the self employed individual in the U.S.?
• What is the 2025 CPP contribution rate for a sole proprietor in Canada?
• Doing Backwork? - Historical FICA Rates 2010-2024

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.

2025 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$176,100	$21,836.40
Medicare Tier 1	2.9%	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

If you are self employed, your self employment income is subject to tax on your net income calculated and reported on Schedule C of Form 1040.

The self employment tax is calculated on Schedule SE on Form 1040. This tax is in addition to employment taxes if you have employees.


Beginning in 2014, if your self employment net income is $400 or more, your self employment tax rate (SICA) is 15.3%. 12.4% excluding Medicare on your wage base limit which is $160,200 of net income in 2023 ... and 2.9%** on the remainder, up to thresholds.

You deduct half of your self employment tax on page 1 of your Form 1040.

If your net earnings are less than $400, you have an optional method of reporting your self employment income.

Find historical FICA rates for 2010 - 2024 here.

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."

Year	Self Employed Contribution Rate	Self Employed Maximum Contribution	Self Employed Maximum Monthly Contribution	Self Employed YMPE for CCP1	Self Employed YAMPE for CCP2	Self Employed CPP2 Rate	Self Employed CPP2 Max Contribution
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
2018	9.90%	$5,187.60	$432.30	$55,900

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 to pay into employment insurance (EI) to receive special benefits ... not regular EI benefits.

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 have paid 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.

2023 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$168,600	$20,906.40
Medicare Tier 1	2.9%	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

2023 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$160,200	$19,864.80
Medicare Tier 1	2.9%	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

2022 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$147,000	$18,228.00
Medicare Tier 1	2.9%	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

2021 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$142,800	$17,707.20
Medicare Tier 1	2.9%	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

2020 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$137,700	$17,074.80
Medicare Tier 1	2.9%	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

2019 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$132,900	$16,479.60
Medicare Tier 1	2.9%	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

2018 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$128,400	$15,921.60
Medicare Tier 1	2.9%	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

2017 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$127,200	$15,772.80
Medicare Tier 1	2.9%	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

2015 & 2016 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$118,500	$14,694.00
Medicare Tier 1	2.9%	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

2014 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$117,000	$14,508.00
Medicare Tier 1	2.9%	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

Remember to take note of the following for 2013:

*The U.S. Senate allowed the payroll tax cut to lapse when it passed legislation to avoid the fiscal cliff on January 1, 2013. The bill now goes to Congress. Remember to adjust your 2013 estimated tax payments to account for the 2% increase.

**The taxes were increased to 3.8% in 2013 and expanded to cover wage income and investment income for high income individuals ... defined as $200,000 for single filers and $250,000 for joint filers. Employers are responsible for withholding the Additional Medicare Tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year.

2013 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%*	$113,700	$14,098.80
Medicare Tier 1	2.9%**	$200,000	no limit
Medicare Tier 2	3.8%**	over $200,000	no limit

There were some payroll tax breaks in 2011 and 2012. I'm including these in case you are doing back work and need to remember the sequence of events.

For 2012, your self employment tax rate (SICA) is 13.3% of your first $110,100 of net income ... and 2.9% on the remainder.

2012 rates on your self employment income reflect the Temporary Payroll Tax Cut Continuation Act of 2011 announced December 23, 2011 in IR-2011-124 and the Middle Class Tax Relief and Job Creation Act of 2012 announced February 23, 2012 in IR-2012-27.

2012 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	10.4	$110,100	$11,450.40
Medicare	2.9%	unlimited	no limit

For 2011, your self employment tax rate (SICA) has been reduced to 13.3% of your first $106,800 of net income ... and 2.9% on the remainder.

2011 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	10.4%	$106,800	$11,107.20
Medicare	2.9%	unlimited	no limit

If your self employment net income is $400 or more, your self employment tax rate (SICA) for 2010 is 15.3% of your first $106,800 of net income ... and 2.9% on the remainder.

2010 FICA	Rate	Wage Base Limit	Maximum Tax
Social Security	12.4%	$106,800	$13,243.20
Medicare	2.9%	unlimited	no limit

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