SEP IRA Calculator
2026 SEP IRA contribution limit, self-employed or employee
Estimated maximum SEP contribution
$22,304
Updates as you change the inputs below
?
?
Your maximum 2026 SEP IRA contribution
$22,304
Rate applied
20%
Of net profit
18.59%
What limits it
Plan rate
As a sole proprietor your 25% plan rate becomes 20% of your net earnings after the self-employment tax deduction, because your own contribution also reduces the earnings it is figured on.
Pub 560 Deduction Worksheet for Self-Employed
| Step | Amount | |
|---|---|---|
| 1 | Net profit (Schedule C line 31) | $120,000 |
| 2 | Deduction for half of self-employment tax | $8,478 |
| 3 | Net earnings from self-employment (1 minus 2) | $111,522 |
| 4 | Reduced rate: plan rate / (1 + plan rate) | 0.200000 |
| 5 | Step 3 times step 4 | $22,304 |
| 6 | $360,000 times the plan rate | $90,000 |
| 7 | Smaller of step 5 or step 6 | $22,304 |
| 8 | Contribution dollar limit | $72,000 |
| 21 | Maximum deductible contribution: smaller of step 7 or step 8 | $22,304 |
Step 2 comes from Schedule SE: $110,820 of net earnings (92.35% of profit), $13,742 of Social Security tax at 12.4% up to $184,500, $3,214 of Medicare tax at 2.9%, $16,956 in all, half deductible.
Steps 9 to 20 are only for plans with elective deferrals, which a SEP does not allow. Whole dollars, as on the IRS worksheet.
By the Coast FIRE Calculator editorial team · Methodology · Official sources: IRS Notice 2025-67: 2026 limits for retirement plans; IRS: 401(k) limit increases to $24,500 for 2026 (IR-2025-111) · Sources checked September 28, 2026 · Corrections: hello@coastfirecalculator.io
SEP IRA contribution limit 2026
| 2026 | 2025 | |
|---|---|---|
| Most for an employee: the lesser of 25% of pay or | $72,000 | $70,000 |
| Pay counted per person | $360,000 | $350,000 |
| Most for yourself if self-employed | 20% of net earnings, up to $72,000 | 20% of net earnings, up to $70,000 |
| Pay that makes an employee eligible (with age 21 and 3 of the last 5 years) | $800 | $750 |
| Social Security wage base, for the SE tax on step 2 | $184,500 | $176,100 |
| Elective deferrals and catch-up contributions | Not allowed | Not allowed |
From IRS Notice 2025-67, the IRS SEP contribution limits page, Publication 560 and SSA's 2026 fact sheet, checked September 28, 2026. The contribution rate is set in your SEP plan document and has to be the same for every eligible employee; the IRS model SEP is Form 5305-SEP.
How the SEP IRA calculator works
Employees, including an owner who pays themselves a W-2 salary from an S or C corporation, get the plan rate times their pay, counting pay up to $360,000, and never more than $72,000. S corporation profit that passes through to you is not net earnings from self-employment, so only your wages count.
Sole proprietors cannot simply multiply their Schedule C profit by the plan rate. Your compensation is your net earnings after two deductions, half of your self-employment tax and your own SEP contribution, and the contribution depends on that compensation. The IRS solves this with a reduced rate and the Deduction Worksheet for Self-Employed in Publication 560, which the calculator follows line by line:
- Net profit, minus the deduction for half of your self-employment tax (Schedule SE: 92.35% of profit, taxed at 12.4% up to $184,500 and 2.9% on all of it).
- Times the reduced rate, plan rate / (1 + plan rate).
- Capped at $360,000 times the plan rate, and at $72,000.
With a net profit of $100,000 and a 25% plan, the self-employment tax deduction is $7,065, net earnings are $92,935, and 20% of that is $18,587. To reach the full $72,000 you need a net profit of about $376,500, against $288,000 of W-2 pay for an employee.
Maximum SEP contribution by income, 2026
| Net profit or W-2 pay | Half of SE tax (self-employed) | Self-employed, 25% plan | Employee, 25% plan |
|---|---|---|---|
| $50,000 | $3,533 | $9,293 | $12,500 |
| $100,000 | $7,065 | $18,587 | $25,000 |
| $150,000 | $10,597 | $27,881 | $37,500 |
| $200,000 | $14,117 | $37,177 | $50,000 |
| $300,000 | $15,456 | $56,909 | $72,000 |
| $400,000 | $16,796 | $72,000 | $72,000 |
Self-employed figures assume no W-2 wages from other jobs; wages from a job reduce the Social Security part of self-employment tax and so raise net earnings slightly.
Rate table for self-employed
| Plan rate | Your rate | Plan rate | Your rate |
|---|---|---|---|
| 1% | 0.009901 | 14% | 0.122807 |
| 2% | 0.019608 | 15% | 0.130435 |
| 3% | 0.029126 | 16% | 0.137931 |
| 4% | 0.038462 | 17% | 0.145299 |
| 5% | 0.047619 | 18% | 0.152542 |
| 6% | 0.056604 | 19% | 0.159664 |
| 7% | 0.065421 | 20% | 0.166667 |
| 8% | 0.074074 | 21% | 0.173554 |
| 9% | 0.082569 | 22% | 0.180328 |
| 10% | 0.090909 | 23% | 0.186992 |
| 11% | 0.099099 | 24% | 0.193548 |
| 12% | 0.107143 | 25% | 0.200000 |
| 13% | 0.115044 |
The same values as the Rate Table for Self-Employed in Publication 560. For a rate that is not a whole percentage, divide the rate by 1 plus the rate; the IRS asks for at least 3 decimal places, and the calculator uses 6. The table applies only if the business has one defined contribution plan, and not to SARSEPs.
The IRS worked example
Publication 560 works through a sole proprietor with no employees, a net profit of $200,000 and a plan rate of 8½%, using 2025 figures. The calculator's functions give the same lines:
- Self-employment tax deduction (step 2): $13,596, from $21,836 + $5,356 of self-employment tax on $184,700 with the $176,100 wage base of 2025.
- Net earnings (step 3): $186,404.
- Reduced rate (step 4): 0.085 / 1.085 rounded to 3 places, 0.078.
- Step 3 times step 4 (step 5): $14,540; $350,000 times 8½% (step 6): $29,750.
- Maximum deductible contribution (step 21): $14,540.
The same profit in 2026 with a 25% plan: step 2 is $14,117, step 3 $185,883, and the maximum is $37,177, 18.59% of the net profit.
SEP rules to know
- Employer money only. A SEP takes no salary deferrals and no catch-up contributions. Contributions are optional each year, but when you make them they go to every eligible employee under the same written formula.
- Eligible employees. Anyone who has reached 21, worked for you in at least 3 of the last 5 years and received at least $800 from you in 2026. Your plan can use looser rules but not stricter ones.
- Deadline. You can set up the SEP and make the contributions for a year up to the due date of your tax return, including extensions.
- Where you deduct it. A sole proprietor deducts contributions for employees on Schedule C and their own on Schedule 1 (Form 1040), as the deduction for self-employed SEP, SIMPLE and qualified plans.
- Roth SEP. For tax years after 2022 a SEP can let participants choose a Roth IRA to receive the contributions; those contributions are reported as income to the participant.
- Your IRA is separate. SEP contributions do not reduce your traditional or Roth IRA limit; see the IRA calculator and the Roth IRA calculator.
Contributions have to be based on a written allocation formula that does not favor highly paid employees, and the IRS says the rate must be uniform for all employees.
If you want to add your own deferrals on top of the employer contribution, the solo 401k calculator shows how far a one-participant 401(k) goes on the same income.
Sources
- IRS Notice 2025-67: 2026 limits for retirement plans
- IRS: 401(k) limit increases to $24,500 for 2026 (IR-2025-111)
- IRS Publication 560: Retirement plans for small business (chapter 2 and the Table and Worksheets for the Self-Employed)
- IRS: Simplified Employee Pension plan (SEP)
- IRS: SEP contribution limits (including grandfathered SARSEPs)
- IRS: Self-employed individuals, calculating your own retirement plan contribution and deduction
- IRS Schedule SE (Form 1040): Self-employment tax
- IRS Form 1040-ES (2026): 2026 self-employment tax and deduction worksheet
- SSA: 2026 cost-of-living adjustment fact sheet (maximum taxable earnings)
- 26 U.S.C. 408(k): simplified employee pensions
Checked September 28, 2026.