Sole proprietorship vs incorporation: after-tax income comparator

Type in your expected annual business profit and see roughly what you'd keep as a sole proprietor versus an incorporated small business in Ontario — after income tax and CPP. Other provinces coming soon.

Expected annual business profit

$100,000

Drag the slider or type an exact amount. Capped at $500,000 — the small-business limit.

Exact amount ($)

Sole proprietor

Income tax: –
CPP payable: –
Total paid: –
You keep: –

Taxed at your personal marginal rates. CPP at self-employed rates.

Incorporated

Corporate tax (12.2%): –
Personal tax on dividends: –
Total paid: –
You keep: –

Small-business rate, then taxed again as non-eligible dividends when you pay yourself.

How the math works (2026 figures)

Sole proprietor. Profit is taxed as personal income: 2026 federal brackets (14% to $58,523 · 20.5% to $117,045 · 26% to $181,440 · 29% to $258,482 · 33% above) plus 2026 Ontario brackets (5.05% to $53,891 · 9.15% to $107,785 · 11.16% to $150,000 · 12.16% to $220,000 · 13.16% above, including the Ontario surtax), minus the federal and Ontario basic personal amounts. CPP at self-employed rates: 11.9% of earnings from $3,500 to $74,600, plus 8% from $74,600 to $85,000.

Incorporated. Profit taxed at the 12.2% combined small-business rate (9% federal + 3.2% Ontario). The after-tax amount is paid out as non-eligible dividends: 15% gross-up, then personal tax at the rates above, minus the federal dividend tax credit (9.0301% of the grossed-up dividend) and the Ontario dividend tax credit (2.9863% of the grossed-up dividend).

Assumes: all profit is withdrawn in the year; no salary/dividend mix optimization; full basic personal amounts (ignores high-income phase-outs); no other income or deductions; profit under the $500,000 small-business limit. Ontario cut its small-business rate to 2.2% (11.2% combined) on July 1, 2026 — this tool uses 12.2%, so it slightly understates the incorporation case for calendar 2026.

Sources: CRA 2026 federal brackets and basic personal amount; Ontario Ministry of Finance 2026 brackets; CRA 2026 CPP/YMPE/YAMPE figures; CRA 2026 dividend gross-up and tax credit rates.