SEP-IRA Contribution Calculator (2026)
Enter your Schedule C profit and see the most you can put into a SEP-IRA this year, how the figure is built, and what the contribution saves in federal and state tax.
Federal 2026 data checked against the official publications, last on 2026-09-05 Runs in your browser — nothing you type is sent anywhere, not even when you reload or share the link No sign-up Methodology and data status
- Maximum SEP-IRA contribution
- $18,587
- At the maximum, tax saved
- $2,891
- Effective saving
- 15.6%
- A solo 401(k) would allow
- $43,087
| How the maximum is built | |
|---|---|
| Net profit | $100,000 |
| Less the deductible half of self-employment tax | −$7,065 |
| Net earnings (the contribution base) | $92,935 |
| Employer contribution: 20.0% of net earnings (25% of compensation after the contribution) | $18,587 |
| Maximum SEP-IRA contribution | $18,587 |
| What contributing $18,587 does | Without | With |
|---|---|---|
| Self-employment tax | $14,130 | $14,130 |
| Adjusted gross income | $92,935 | $74,348 |
| Qualified business income deduction | $15,367 | $11,650 |
| Federal taxable income | $61,468 | $46,599 |
| Federal income tax after credits | $8,235 | $5,344 |
| Tax saved (federal) | $2,891 · 15.6% of the contribution |
The contribution reduces adjusted gross income and, through Reg. §1.199A-3, qualified business income; it does not change self-employment tax, which is computed on profit before the deduction. A SEP-IRA contribution cannot exceed the figure above on this profit. A solo 401(k) adds an elective deferral to the same employer share, which is worth more at every level of profit until the annual additions limit takes over. The figure is a contribution ceiling and the tax saving assumes it all goes in pre-tax. Designated Roth contributions count against the same limits but are not deducted, so they reduce the saving without changing the maximum.
How the SEP-IRA maximum is computed
A SEP-IRA takes an employer contribution only, limited to 25% of compensation (§408(k)(3)(C)). For a self-employed person, compensation means net earnings from self-employment after two subtractions: the deductible half of self-employment tax, and the contribution itself (§401(c)(2), §404(a)(8)). Because the contribution reduces the base it is measured against, 25% of the base after the contribution equals 20% of the base before it — the figure Publication 560's rate worksheet reaches by dividing 25% by 1.25. The result cannot exceed the §415(c) annual additions limit, $72,000 for 2026, and a person with several businesses combines their net earnings for the test.
W-2 wages from a job do not count toward the base, but they change the ½-SE-tax figure slightly, because the Social Security wage base is shared between wages and self-employment earnings; the calculator handles that.
Maximums by profit level (2026)
| Net profit | Net earnings after ½ SE tax | SEP-IRA maximum | Solo 401(k), for comparison |
|---|---|---|---|
| $25,000 | $23,234 | $4,647 | $23,234 |
| $50,000 | $46,468 | $9,294 | $33,794 |
| $100,000 | $92,935 | $18,587 | $43,087 |
| $200,000 | $185,883 | $37,177 | $61,677 |
| $400,000 | $383,205 | $72,000 | $72,000 |
Below roughly $360,000 of net earnings a solo 401(k) allows more, because it adds an elective deferral of up to $24,500 to the same 20% employer share. The two plans are compared in SEP-IRA vs solo 401(k).
What the contribution changes
The SEP contribution is an adjustment to income on Schedule 1. It lowers adjusted gross income and therefore federal income tax at the filer's marginal rate, and state income tax in states that start from federal AGI. It also lowers qualified business income (Reg. §1.199A-3(b)(1)(vi)), so the 20% QBI deduction shrinks by a fifth of the contribution and the effective saving is below the bracket rate. It does not reduce self-employment tax, which is computed on Schedule C profit before adjustments.
Deadlines and paperwork
A SEP-IRA can be opened and funded for 2026 at any time up to the due date of the 2026 return including extensions, which for a sole proprietor on extension is October 15, 2027. The plan is adopted with Form 5305-SEP or the custodian's equivalent, there is no annual filing, and contributions are reported on the custodian's Form 5498. Employees who meet the plan's eligibility terms must receive the same percentage of compensation as the owner.
How these figures were checked
The SEP-IRA maximum follows Publication 560's "Deduction Worksheet for Self-Employed" step by step, for one sole proprietor with no wages from a job, no other business, a plan contribution rate of 25% and pre-tax contributions. The cases below are worked from Schedule C profit through Schedule SE to the worksheet's total, and they are the same cases the site's tests check.
The rules and where they come from
- Net earnings (worksheet steps 1–3): profit less the deductible half of self-employment tax, from Schedule SE lines 4a–13 — 92.35% of profit, no tax below $400 of that amount (§1402(b)(2)), Social Security on earnings up to the $184,500 2026 wage base.
- Employer contribution (steps 4–7): 20% of net earnings, the rate table's figure for a 25% plan (§404(a)(8)(D)), on no more than $360,000 of compensation (§401(a)(17)).
- Dollar limit (step 8): $72,000 of annual additions (§415(c)(1)(A)).
- 2026 dollar amounts: IRS Notice 2025-67, and the Social Security Administration's wage base.
Worked examples (2026)
| Case | Net profit | Half of SE tax (step 2) | Net earnings (step 3) | Employer (step 7) | Maximum |
|---|---|---|---|---|---|
| The 20% rate binds (step 7) | $50,000 | $3,532.39 | $46,467.61 | $9,293.52 | $9,293.52 |
| The $72,000 §415(c) dollar limit binds (step 8) | $400,000 | $16,795.30 | $383,204.70 | $72,000.00 | $72,000.00 |
Half of SE tax is shown to the cent, but it is carried exactly; only the worksheet's results are rounded, and always down, because a maximum must never round up. Subtracting the rounded figure by hand can therefore differ from net earnings by a cent. The IRS worksheet itself works in whole dollars, so a hand-completed return can differ by a dollar or two.
What the checks are
- The rules were read from the primary documents twice, in separate software-agent sessions, and every difference was resolved from the document; an adversarial pass then recomputed cases by hand. The maintainer reviewed each reconciliation. See the editorial policy.
- Every case in the table above and on the solo 401(k) page (10 cases in all) is also computed by a separate program written directly from the Schedule SE lines and the worksheet steps, for tax years 2025 and 2026. The two agree to the cent, and the site is not built while any of these tests fails.
- Publication 560's own example — $200,000 of 2025 profit with a $13,596 self-employment tax deduction — is reproduced: the engine gives $13,596.35.
- Nothing here has been reviewed by a CPA, enrolled agent or attorney.
What this does not cover
- Designated Roth contributions: they count against the same limits but are not deductible (worksheet steps 20–21), so the maximum contribution shown is not a deduction figure for Roth money.
- Wages from a job share the Social Security wage base, so together with large self-employment earnings they can reduce SE tax. The calculator above accounts for them; the worked examples assume none.
- Employees, partnerships, S corporations, more than one business or plan, and related employers treated as one.
- Whether you can open or fund the plan: eligibility, plan documents and deadlines are not tested.
Errors found and fixed
Until 8 September 2026 the contribution entered in the calculator was capped only at the §415(c) limit and net earnings, so an amount above a SEP-IRA's real ceiling was accepted. It is now capped by plan type. The fix is dated in the corrections log.
Common questions
Can I contribute more than 20% if I only have a small profit?
No. The percentage is fixed by statute; a small profit yields a small maximum. A solo 401(k)'s elective deferral is the route to contributing most of a small profit, up to 100% of net earnings.
Does the SEP contribution reduce the tax I pay quarterly?
Yes, in proportion to the income tax it saves; the quarterly calculator accepts the contribution and recomputes the safe harbor. Self-employment tax is unchanged.
Can I have a SEP-IRA and a 401(k) at a job?
Yes. The SEP limit is computed on the self-employment income alone, and deferrals at the job do not reduce it — unlike a solo 401(k), whose deferral limit is shared with the job's plan.