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US · Tax Year 2026
IRS 2026 limits · Verified

SEP IRA Contribution Calculator 2026

How much you can put in — and how that changes because of the other accounts you already have.

Schedule C line 31, before any retirement or health insurance deduction.
Entered before the SEP limit, because the deduction lowers the profit the percentage applies to. Leave at zero if you are covered through a job or a spouse.
Everything counts here — your deferrals and any employer match or profit sharing — because the shared ceiling applies to the total.
The SEP itself has no salary deferral, so age does not change the employer contribution.

Your result

Tax year 2026
Net earnings from self-employment $0 Profit after the health insurance deduction, multiplied by 92.35%.
Half of self-employment tax $0
Compensation base for the 25% test $0 Profit − health premiums − half the self-employment tax.
Maximum SEP contribution $0
Room left under the $72,000 ceiling $0
Tax saved at a 22% marginal rate $0
Effective percentage of profit 0% Shown so you can see why the headline is 20% and not the 25% in the statute.

Where these figures come from

Contribution ceiling
$72,000 · IRS 2026 limits
Deduction limit
25% of compensation · IRC §404(h)
Net earnings factor
92.35% · IRC §1402(a)(12)
IRA catch-up (50+)
$1,100 · SECURE 2.0, indexed
SEP rules
IRS Publication 560
Verified
2 October 2026
How this is worked out

The employer may deduct 25% of compensation, but a sole proprietor's contribution is paid out of the profit it is measured against — which is why the workable figure on profit is 20%. Every line says which base it uses.

Profit after the health insurance deduction
Net profit − Self-employed health insurance premiums
IRC §162(l)
This is the 'before or after' question. The health insurance deduction comes first, so it reduces the base the SEP percentage is applied to. Claiming $3,000 of premiums lowers the maximum SEP contribution by roughly $600.
Net earnings from self-employment
(Profit after health insurance) × 92.35%
IRC §1402(a)(12)
Self-employment tax
min(Net earnings, $184,500) × 12.4% + Net earnings × 2.9% + Additional Medicare
IRC §1401
Compensation (the base the 25% applies to)
Profit after health insurance − (Self-employment tax ÷ 2)
IRS Publication 560, Deduction Worksheet
This is 'compensation' for a sole proprietor — not the gross profit.
Maximum employer contribution
min(25% of compensation, $72,000)
IRC §404(h) · IRS 2026 limits
Both figures circulate and both are right. 25% of compensation equals 20% of compensation-plus-contribution, which is the number you get working from profit directly. 25% of net profit, taken as a flat rate, overstates the contribution by about $6,400 on $100,000 of profit.
Room left under the overall ceiling
$72,000 − contributions already made to related plans
IRS 2026 limits · IRC §415(c)
A SEP and a 401(k) share one ceiling when the employers are related. This is the line that answers 'can I do both?' — yes, up to the same $72,000 in total.
Catch-up at 50 and over
$1,100 — the IRA figure, not the 401(k) figure
SECURE 2.0 Act · IRS 2026 limits
A SEP IRA is an IRA. The 50-and-over catch-up for a 401(k) is $8,000 in 2026; for an IRA, and therefore for SEP contributions made as regular IRA contributions, it is $1,100. Pages that say a SEP has 'no catch-up' are describing the missing salary deferral, not this.
Tax saved
Contribution × marginal rate
Derived — illustrated at 22%
A SEP contribution reduces income tax. It does not reduce self-employment tax — that was already fixed by net profit, which the contribution does not change. Several pages imply otherwise.
Effective percentage of profit
(Contribution ÷ Net profit) × 100
Derived — shown to explain the 20% figure

The formulas are shown as the authority defines them, in its own terms — the arithmetic is not copyrightable and the rates are public-domain US government material. What these lines cannot tell you is where your figures came from; that is what the table above is for.

Answer the three questions, enter your profit, then press Calculate.

Frequently asked questions

I already maxed my Roth IRA. Can I still contribute to a SEP?

Yes. This is the single most common misunderstanding about SEPs, and it stops people claiming a deduction they are entitled to. A SEP contribution is made by the business as the employer; a Roth or traditional IRA contribution is made by you as an individual. They are separate limits and they do not compete. Maxing the Roth leaves the SEP untouched.

Can I have a SEP and a 401(k) at the same time?

Yes — but they share one ceiling when the employers are related. Contributions to all defined-contribution plans count together against $72,000 for 2026. That is the total, not per plan. If you are using the SEP to add to retirement saving on top of a 401(k), the question is not "am I allowed" but "how much room is left under the shared limit" — which is the third field above.

Is the limit 25% or 20% of my profit?

Both, on different bases. The statute allows a deduction of 25% of compensation. For a sole proprietor, the contribution comes out of the very profit it is calculated from, so once you solve for that, the effective rate on (profit − half of self-employment tax) is 20%. Taking a flat 25% of net profit is the error: on $100,000 of profit it overstates the contribution by about $6,400. The page shows both numbers so you can see they agree.

Does a SEP contribution reduce my self-employment tax?

No. Self-employment tax is charged on net profit, and a retirement contribution does not change net profit — it is a deduction below that line. A SEP lowers your income tax, not your SECA tax. Pages that show a combined saving including self-employment tax are adding something that is not there.

I have employees. What does a SEP cost me?

More than the contribution for yourself. If you have eligible employees you must contribute the same percentage of compensation for each of them. Eligibility is broad — age 21, worked for you in three of the last five years, and a low annual earnings threshold. This is why many self-employed people with staff choose a different plan; the flexibility of a SEP is paid for with the obligation to cover everyone. There is no partial participation.

When is the deadline?

Later than an IRA. The SEP deadline is the tax filing deadline including extensions, so a sole proprietor filing an extended return can still make the contribution months after April. A traditional or Roth IRA closes at the original deadline. This is the SEP's practical advantage over an IRA, and one reason it is worth setting up even late in the season.

Does a SEP IRA have catch up contributions if I am 50 or older?

Not the catch up you are thinking of. The $8,000 figure people have in mind is the 401k catch up, and a SEP does not have it — a SEP contribution is an employer contribution, and that catch up applies only to employee salary deferrals. What a SEP can have, in some plans, is the much smaller IRA catch up of $1,100 for 2026, because a SEP is technically an IRA. Many SEP plans do not permit it at all, and it is set by the plan document rather than by the IRS. If a large catch up is the point, you need a solo 401k, where the employee side carries the $8,000 — or $11,250 at ages 60 to 63, a temporary higher figure that applies from 2025 to 2027.

I already maxed out my Roth IRA — does that stop me using a SEP?

No, and this is the misunderstanding that costs people the most. The SEP does not use up your personal IRA limit, and your IRA contribution does not use up your SEP limit: they are separate. One is money you put in as an individual, capped at $7,500 ($8,600 if you are 50 or older) for 2026. The other is money your business puts in as your employer, capped at $72,000 or 20% of net earnings. Maxing one does not close the other. What being covered by a SEP can do is phase out the deduction on a traditional IRA contribution at higher incomes — a different thing from the contribution limit itself.

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