SEP-IRA Contribution Calculator
Find your maximum SEP-IRA contribution for 2026 (or 2025): IRS Pub 560 worksheet for sole proprietors and partners, 25% of W-2 pay for incorporated owners, the $72,000 cap, employee contributions, tax saved, a solo 401(k) comparison and a growth projection.
How it works
Self-employed: SE tax = min(profit × 92.35%, wage base − other wages) × 12.4% + profit × 92.35% × 2.9% · net earnings = profit − ½ SE tax · max = min(net earnings × rate ÷ (1 + rate), $360,000 × rate, $72,000) · incorporated: max = min(W-2 wages, $360,000) × rate, capped at $72,000 (2026 figures; rate up to 25%)
A SEP-IRA is an employer plan, so the limit is 25% of compensation up to a dollar cap: $72,000 for 2026 ($70,000 for 2025), with compensation counted only up to $360,000 ($350,000). If your business is a corporation that pays you a W-2 salary, that is simply 25% of salary. For a sole proprietor or partner, compensation is net earnings from self-employment after deducting half of the self-employment tax and the contribution itself, which is circular. IRS Publication 560 solves it with a reduced rate of rate ÷ (1 + rate), so a 25% plan gives you 20% of net earnings. The calculator follows the Pub 560 worksheet step by step, including the Social Security wage base ($184,500 for 2026), which matters if you also have wages from another job. If you have employees, the SEP must give each eligible one the same percentage of pay, which the calculator adds as a cost. It also compares the result with a solo 401(k), which adds an employee deferral and catch-up on top, and projects the account balance.
Worked example
On $100,000 of net profit, the SE-tax base is $92,350 and SE tax is $14,129.55, so about $7,065 is deducted to give about $92,935 of net earnings. At the 20% reduced rate the maximum SEP-IRA contribution is about $18,587, well under the $72,000 cap, saving about $4,089 at a 22% tax rate. A solo 401(k) could take $43,087 (the same $18,587 plus a $24,500 deferral). Net profit of about $376,500 is needed to reach the $72,000 SEP maximum.
Sources: IRS Publication 560 — Retirement Plans for Small Business · IRS Notice 2025-67 — 2026 plan limits · SSA — contribution and benefit base · IRS — SEP contribution limits
Frequently asked questions
Why is the rate 20% and not 25% for the self-employed?
The 25% limit applies to compensation, but a sole proprietor’s own contribution reduces that compensation. IRS Publication 560 solves this with a reduced rate of 25% ÷ 1.25, which is 20% of net earnings after the half-SE-tax deduction. Incorporated owners paid by W-2 use the full 25% of salary.
What is the SEP-IRA limit for 2026?
The lesser of 25% of compensation or $72,000 for 2026 (up from $70,000 in 2025). Compensation above $360,000 is ignored. There is no catch-up contribution for people aged 50 or over in a SEP-IRA.
Do I have to contribute for my employees?
Yes. Every eligible employee — generally aged 21 or older, who worked for you in at least 3 of the last 5 years and earned at least $800 in 2026 — must receive the same percentage of pay as you. Enter their total pay to see the cost. You can choose a lower plan rate, or skip a year, as long as everyone is treated the same.
How does a SEP-IRA compare with a solo 401(k)?
A solo 401(k) allows the same employer contribution plus an employee deferral of up to $24,500 in 2026 and catch-ups from age 50, so it allows more at every income until the SEP itself reaches the cap (about $376,500 of self-employment profit in 2026). It is only available if you have no employees other than a spouse, and it involves a little more paperwork. The calculator shows both.
When is the deadline for SEP-IRA contributions?
You can contribute for a tax year until your return is due, including extensions. For 2026 that means 15 April 2027, or 15 October 2027 if you file an extension.
Related calculators
Uses 2026 and 2025 IRS limits (IRS Notice 2025-67) and Social Security wage bases. Educational estimate, not tax advice: it ignores state rules, other retirement plans you or your business sponsor, and controlled-group rules. Confirm with a tax professional or IRS Publication 560.