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SEP IRA Contribution Calculator 2026

Find the most a self-employed person can put into a SEP IRA for 2026 from Schedule C profit, the tax it could save, and how a Solo 401(k) compares.

Your numbers

Amounts are in US dollars (USD).

$

Business income minus business expenses, before the SEP contribution.

$

Used only for the Social Security wage base.

Maximum SEP IRA contribution for 2026

$22,304

Estimated federal income tax saved

$4,907

Net earnings from self-employment
$111,522
Deductible half of SE tax
$8,478
Contribution as share of profit
18.6%
Solo 401(k) maximum for comparison (under 50)
$46,804
The math behind it

  1. Half of SE tax

    $16,955 ÷ 2equals$8,478

  2. Net earnings

    $120,000 − $8,478equals$111,522

  3. SEP maximum

    20% × $111,522 (cap $72,000)equals$22,304

  4. Income tax saved

    tax before − tax after the deductionequals$4,907

A SEP IRA is the simplest retirement plan for the self-employed: no annual filing, one contribution a year, and a deduction that can be large. The rule sounds simple, 25% of compensation, but for a sole proprietor it works out to about 20% of profit after the self-employment tax deduction. This calculator does that math with the 2026 IRS limits.

Figures checked by Muhammad Ahmad against IRS: 2026 retirement plan limits (IR-2025-111), IRS: SEP contribution limits and IRS Publication 560. Prices and rules change, so confirm with the official source before relying on them. How we check the math

How it works

Start from Schedule C profit and subtract the deductible half of self-employment tax. The result is your net earnings from self-employment, the base the IRS uses in Publication 560.

For a self-employed person, the SEP limit of 25% of compensation works out to 20% of net earnings, because the contribution itself reduces the compensation it's measured on. For 2026 the total can't exceed $72,000, and no more than $360,000 of earnings can count.

The tax saving estimates federal income tax only, using the 2026 brackets and standard deduction without the QBI deduction: the contribution comes off taxable income, so the saving is roughly the contribution times your top rate. It doesn't reduce self-employment tax, and state income tax savings come on top.

The Solo 401(k) figure uses the same net earnings, adding the $24,500 employee deferral to the SEP-style employer share. It shows how much more a Solo 401(k) could shelter at the same profit.

A worked example

With $120,000 of profit, self-employment tax is about $16,955, so the deductible half is $8,477.73 and net earnings are $111,522.27. The maximum SEP contribution is 20% of that, $22,304. A single filer taking the standard deduction saves about $4,907 of federal income tax, because the contribution comes off income taxed at 22%. At the same profit, a Solo 401(k) could take up to $46,804.

Questions people ask

How much can I contribute to a SEP IRA in 2026?

Up to 25% of compensation, capped at $72,000. For a sole proprietor that is about 20% of Schedule C profit after deducting half of self-employment tax.

Why is it 20% and not 25% for self-employed people?

The 25% is measured on compensation after the contribution is deducted. Solving that circular rule gives 20% of net earnings before the contribution.

When is the deadline for a 2026 SEP IRA contribution?

Your tax filing deadline for 2026, including extensions. You can open and fund a SEP after the year ends, up to that date.

Is a SEP IRA or a Solo 401(k) better?

Until profit reaches about $376,000, a Solo 401(k) allows more, because it adds the $24,500 employee deferral on top of the same employer share. Above that both reach the $72,000 cap, and with catch-up contributions from age 50 a Solo 401(k) is higher at any income. A SEP is simpler: no Form 5500-EZ, which a Solo 401(k) needs once assets pass $250,000.

Does a SEP contribution reduce self-employment tax?

No. It reduces income tax only. Self-employment tax is still due on your full net earnings.

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