Contractor vs Employee: Toronto 2026 — Net Income Calculator
See whether going independent actually pays more after tax, social security, and business overheads.
As an Employee
As a Contractor / Freelancer
Enter your rate as if you worked 52 weeks — we'll adjust for time off below.
e.g. 4 weeks off = 4
Going contractor in Toronto puts $17,248 more in your pocket per year.
| Metric | Employee | Contractor |
|---|---|---|
| Annual Revenue / Gross Salary | $80,000 | $120,000 |
| Unbilled Weeks Adjustment | — | $9,231 |
| Actual Gross Income | $80,000 | $110,769 |
| Business Overheads | — | $4,700 |
| Taxable Income | $80,000 | $106,069 |
| Social Security | $4,760 | $6,311 |
| Income Tax | $12,202 | $19,472 |
| Effective Tax Rate | 21.2% | 24.3% |
| Net Annual Income | $63,038 | $80,286 |
| Net Monthly Income | $5,253 | $6,691 |
To match your employee take-home of $63,038/year, you need to invoice at least $73,382/year as a contractor in Toronto.
That's roughly $1,411/week or $282/day.
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Frequently Asked Questions
Is it worth going contractor in Toronto?
Yes — at a revenue of $120,000/year, a contractor in Toronto takes home $80,286/year (effective rate: 24.3%), compared to $63,038/year as an employee (effective rate: 21.2%).
What contractor rate do I need to match my employee salary in Toronto?
To match an employee take-home of $63,038/year in Toronto, you need to invoice at least $73,382/year as a contractor — roughly $1,411/week or $282/day.
How this calculator works
This calculator compares the net income of a contractor (B2B / freelance) against an employee earning the same gross amount. It applies each country's corporate and personal tax rules, social security, and estimates the break-even invoicing rate a contractor needs to match an employee's take-home pay.
What's included
- Employee income tax and social security
- Contractor / B2B corporate tax and distributions
- Break-even contractor day rate
- Effective tax rate comparison
What's not included
- IR35 / deemed employment rules (UK-specific)
- VAT registration and reclaim
- Business expenses or deductions
- Employer pension contributions
Data sources: Official tax authority publications for each jurisdiction: HMRC (UK), IRS (US), Autoridade Tributária (PT), KVK/Belastingdienst (NL), IRAS (SG). Updated for 2025/26.