SEP IRA Contribution Calculator (2026)
Work out your maximum 2026 SEP IRA contribution from net self-employment or W-2 earnings, with the 20% effective rate and $72,000 cap applied.
SEP IRA Contribution Calculator (2026)
Tax Year
Business Type
Determines whether the self-employed 20% rate or the W-2 25% rate applies.
Net Self-Employment Earnings
Schedule C net profit (gross income minus business expenses), before the SE-tax and contribution adjustments.
W-2 Compensation
Your corporate wages (Box 1 / plan compensation). The 25% rate applies directly, with no SE-tax adjustment.
Marginal Tax Rate
Used only to estimate your income-tax savings. It does not change the contribution limit.
Estimate only. Federal figures for the 2026 tax year. Does not model state tax or QBI interaction. Download Tax47 for a full federal estimate.
2026 Limits Applied
SEP IRAs have no employee deferral and no age-50 catch-up.
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How the 2026 SEP IRA contribution limit works
A SEP IRA (Simplified Employee Pension) is an employer-funded retirement plan. Only the employer puts money in, and there are no employee salary deferrals or catch-up contributions. That's the main thing that sets it apart from a Solo 401(k).
For 2026, the contribution runs up to 25% of compensation, with a hard dollar cap of $72,000 (IRC 415(c), up $2,000 from 2025). Compensation above the annual limit of $360,000 (IRC 401(a)(17)) gets ignored. A W-2 employee of a corporation uses the full 25%. For a self-employed owner, that 25% turns into an effective 20% of net earnings, because the contribution itself shrinks the compensation base it's figured on.
How to calculate your self-employed SEP IRA contribution step by step
If you're a sole proprietor or partner, you figure the contribution from net profit after a self-employment tax adjustment:
- Net earnings: net profit times 92.35% (the Schedule SE factor).
- SE tax: 12.4% Social Security on net earnings up to the $184,500 wage base, plus 2.9% Medicare on all net earnings.
- One-half SE tax: 50% of the SE tax, which is your above-the-line adjustment.
- Plan compensation: net profit minus one-half of the SE tax.
- Apply the rate: 20% of plan compensation (capped at $360,000 of compensation).
- Apply the dollar cap: the result is limited to $72,000.
Here's how it plays out on $100,000 of net profit: net earnings come to $92,350, SE tax is about $14,130, half of that is roughly $7,065, plan compensation works out to about $92,935, and 20% of that is about $18,587, comfortably under the $72,000 cap.
SEP IRA vs Solo 401(k) for the self-employed
Both plans share the same $72,000 overall 2026 limit, but they get there by different routes. A Solo 401(k) stacks an employee salary deferral on top of the employer portion, plus an age-50 catch-up, so it often lets you contribute more at low and moderate incomes, and it can offer a Roth option too. A SEP IRA has no deferral, no catch-up, and no Roth, but it's easier to set up and run. Once your net earnings climb, the two end up close to the dollar cap anyway.
SEP IRA contribution deadlines and how to deduct it
You can fund SEP contributions up to your business tax-filing deadline including extensions, which can mean as late as October 2027 for the 2026 tax year. Self-employed owners deduct the contribution on Schedule 1 as an above-the-line adjustment, which lowers adjusted gross income. Corporations deduct it as a business expense. The deduction cuts your income tax but not your self-employment tax. For a full federal refund estimate, you can download Tax47.
This calculator provides estimates for educational purposes only and is not tax or legal advice. Verify your specific situation with a qualified tax professional or the IRS.
Frequently Asked Questions
Common questions about sep ira contribution calculator (2026)
How much can I contribute to a SEP IRA in 2026?
For 2026 you can put away up to 25% of compensation, capped at $72,000. If you're self-employed (a sole proprietor or partner), that 25% statutory rate works out to an effective 20% of your net earnings once you make the one-half self-employment tax adjustment. Incorporated owners who take a W-2 use the full 25% of their W-2 wages.
Why is the self-employed SEP IRA rate 20% instead of 25%?
When you're self-employed, the contribution itself lowers the compensation base it's figured on, so the math chases its own tail. The IRS handles this with a reduced rate: 25% / (1 + 25%) = 20%. So a sole proprietor applies 20% to net earnings (after subtracting one-half of self-employment tax), while a W-2 employee of a corporation applies the full 25%.
Do I subtract self-employment tax before calculating my SEP contribution?
Yes, if you're self-employed. Start with net profit from Schedule C, subtract one-half of your self-employment tax, and that gives you plan compensation. Apply the 20% rate to that figure. If you want a head start on the SE-tax piece, run the self-employment tax calculator at /tools/self-employment-tax-calculator/.
What is the 2026 SEP IRA compensation limit?
The 2026 annual compensation limit under IRC 401(a)(17) is $360,000, up from $350,000 in 2025. Any compensation above $360,000 gets ignored when you figure your contribution. For the self-employed, 20% of $360,000 comes to $72,000, which lands right on the dollar cap.
What is the SEP IRA contribution deadline for 2026?
You can make SEP IRA contributions up to your business tax-filing deadline, extensions included. For the 2026 tax year that can stretch as late as October 2027 if you file an extension. That extra funding window is one of the practical perks of a SEP IRA.
SEP IRA vs Solo 401(k): which lets me contribute more?
At lower incomes, a Solo 401(k) usually lets you contribute more because it stacks an employee salary deferral on top of the employer portion, plus an age-50 catch-up. A SEP IRA means less paperwork but caps out near 20% of net earnings for the self-employed. Both share the same $72,000 overall 2026 limit before deferrals and catch-ups.
Can I have a SEP IRA and a Traditional or Roth IRA in the same year?
Usually yes. The SEP IRA limit is separate from the personal Traditional or Roth IRA limit of $7,500 ($8,600 if you're 50 or older) for 2026. The deduction on a Traditional IRA contribution can phase out at higher incomes if you're covered by a workplace plan. See the IRA deduction calculator at /tools/ira-deduction-calculator/.
Are SEP IRA contributions tax-deductible?
Yes. Self-employed owners deduct SEP contributions as an above-the-line adjustment on Schedule 1. Corporations deduct them as a business expense. The deduction lowers federal income tax, but it won't touch your self-employment tax. This calculator shows an estimated income-tax savings figure based on the marginal rate you pick.