SEP IRA contribution calculator (2026)

How the SEP maximum is worked out

The SEP plan rate is 25% of compensation, but for a sole proprietor compensation is not your profit. The IRS defines it as net earnings from self-employment minus half of your self-employment tax and minus the SEP contribution itself. Because the contribution shrinks its own base, Publication 560 converts the plan rate: 25% divided by 1.25 gives a self-employed rate of 20%, applied to net earnings before the contribution.

So the calculator runs Schedule SE first. Profit times 92.35% gives net earnings from self-employment; Social Security takes 12.4% of that up to the 2026 wage base of $184,500 and Medicare takes 2.9% of all of it. Half of that tax comes off the profit, and 20% of what remains is your SEP maximum. Two caps sit on top: $72,000 for 2026, and the $360,000 compensation limit. On a 25% plan both bind at the same point, about $376,500 of profit.

The deadline is generous. Publication 560 lets you set up a SEP and make the contribution as late as the due date of your return, including extensions. For a 2026 return that is April 15, 2027, or October 15, 2027 if you file an extension. The extension only moves the deadline if you actually file it.

A day job, a solo 401(k), and what this leaves out

A 401(k) at a day job does not touch this number. SEP plans take no salary deferrals, so there is no per-person deferral limit to share, and your employer's plan has its own annual cap. That is the main way a SEP differs from a solo 401(k), where day-job deferrals eat into the $24,500 employee bucket. The line under the results shows what a solo 401(k) would allow on the same profit; the solo 401(k) calculator adds catch-up and day-job deferrals.

The calculator assumes no employees, one business, a calendar tax year and no W-2 wages. Large wages from a job can use up part of the Social Security wage base, which lowers your self-employment tax and nudges the SEP maximum slightly up, so the figure here is the conservative one. It does not model a Roth SEP, a plan rate below 25%, or a SEP alongside another plan; Publication 560 adds contributions to all your defined contribution plans together for the $72,000 limit. The longer comparison is in Solo 401(k) vs SEP IRA.