SEP IRA Contribution Calculator
- SE tax
- SEP contribution
- Rest
Contributions for a tax year can be made up to your tax filing deadline, including extensions.
How the SEP IRA contribution calculation works
Your maximum SEP IRA contribution as a self-employed owner or as a W-2 owner of your own corporation.
Self-employed: start with net SE earnings
Net profit minus half your self-employment tax. $100,000 of profit has $14,129.55 of SE tax, leaving $92,935.23.
Use 20%, not 25%
The 25% plan rate applies to compensation after the contribution is taken off, which works out to 25% ÷ 1.25 = 20% of net SE earnings. That is $18,587.05 here.
W-2 owners use 25% of wages
If your S corp or C corp pays you wages, the company can contribute up to 25% of them. $80,000 of wages allows $20,000.
Apply the yearly caps
Compensation above the plan limit ($360,000 in 2026) doesn't count, and the contribution can't pass the dollar limit ($72,000 in 2026). A sole proprietor reaches $72,000 at about $376,481 of net profit; a W-2 owner at $288,000 of wages.
Worked example. A sole proprietor with $100,000 of net profit pays $14,129.55 of SE tax, so net SE earnings are $92,935.23. At the 20% self-employed rate, the maximum SEP IRA contribution is $18,587.05.
SEP IRA Contribution FAQ
How much can I contribute to a SEP IRA if I'm self-employed?
About 20% of net profit after subtracting half of your SE tax, up to the yearly dollar limit. On $100,000 of profit that is $18,587.05.
Why is it 20% and not 25%?
The 25% applies to compensation after the contribution itself is deducted. Solving that for a sole proprietor gives 25% ÷ 1.25, which is 20% of net SE earnings.
What are the SEP IRA contribution limits for 2026?
The lesser of 25% of compensation or $72,000, and only the first $360,000 of compensation counts (IRS COLA table, IR-2025-111). For a self-employed owner the 25% becomes 20% of net SE earnings. SEPs have no catch-up contributions for age 50 and over.
What were the SEP IRA limits for 2025?
$70,000, with a $350,000 compensation limit. Enter those figures in the two limit fields to check a 2025 contribution that you still make before your 2025 filing deadline.
How much profit do I need to max out a SEP IRA?
In 2026 a sole proprietor needs about $376,481 of net profit. After $32,960.73 of SE tax, net SE earnings are about $360,000, and 20% of that is $72,000. A W-2 owner of a corporation needs $288,000 of wages (25% × $288,000).
Do I have to contribute for my employees too?
Yes. A SEP must give every eligible employee the same percentage of pay that you give yourself. An employee is eligible after reaching age 21, working for you in at least 3 of the last 5 years and earning at least $800 in 2026 ($750 in 2025). Your plan can use looser rules, not stricter ones.
When is the SEP IRA contribution deadline?
The due date of your business's federal income tax return for that year, including extensions. You can also set up a new SEP as late as that same date, so a sole proprietor can still open and fund a SEP for 2026 while filing the 2026 return.
SEP IRA or solo 401(k)?
With no employees, a solo 401(k) usually allows more at the same income because it adds a $24,500 employee deferral on top of the same 20% employer part. On $100,000 of profit in 2026 that is $43,087.05 in a solo 401(k) against $18,587.05 in a SEP. A SEP has less paperwork.
Sources: IRS: Simplified Employee Pension plan (SEP) · IRS Publication 560: Retirement plans for small business · IRS: COLA increases for dollar limitations (2026 limits) · IRS: SEP contribution limits (including grandfathered SARSEPs)