SEP IRA Contribution Calculator
See your SEP IRA limit as a sole proprietor, 1099 consultant or S corporation owner, what it saves in federal tax, and what a Solo 401(k) allows instead.
The 2026 SEP IRA limit is 25% of compensation up to $72,000. Self-employed, that works out to 20% of net profit after half of self-employment tax: $18,587 on $100,000 of net profit, saving about $4,089 in federal tax for a single filer with no other income. An S corporation owner paid $100,000 in W-2 wages can put in $25,000.
SEP IRA maximum by net profit, 2026
| Net profit | Half of SE tax | SEP maximum | Share of profit | Federal tax saved | Solo 401(k) maximum |
|---|---|---|---|---|---|
| $50,000 | $3,532 | $9,294 | 18.6% | $1,115 | $33,794 |
| $100,000 | $7,065 | $18,587 | 18.6% | $4,089 | $43,087 |
| $200,000 | $14,117 | $37,177 | 18.6% | $8,922 | $61,677 |
| $350,000 | $16,126 | $66,775 | 19.1% | $23,214 | $72,000 |
| $500,000 | $18,134 | $72,000 | 14.4% | $25,200 | $72,000 |
Why it is 20%, not 25%, when you are self-employed
A SEP lets the business put in up to 25% of your pay. What counts as pay depends on how you file:
- Your own S corporation: your pay is your W-2 wages, so 25% is the real number. $100,000 of wages allows $25,000.
- Schedule C: your "pay" is net earnings after the contribution itself. So the IRS has you first subtract half of your self-employment tax, then multiply by 20% instead.
Most of the difference between what people expect and what they can put in comes from those two steps.
The $72,000 cap applies per person per employer, and a SEP has no catch-up for age 50 and over.
Every dollar you contribute comes off your taxable income this year. So the savings in the table climb with your top bracket, from 12% at $50,000 of profit to 35% at $350,000.
Before you open one: the backdoor Roth problem
If you earn too much for a direct Roth IRA and use a backdoor Roth, a SEP IRA balance gets in the way.
The pro-rata rule adds up every pretax traditional, SEP and SIMPLE IRA dollar you hold on December 31 and makes the conversion taxable in proportion.
A Solo 401(k) is outside that calculation, which is why it is often the better account for a high earner with no employees. The full comparison is in Solo 401(k) vs SEP IRA, and the rules for opening and running a SEP are in our SEP IRA guide.
Which account fits depends on the rest of the picture:
- Employees you may hire
- Whether you plan Roth conversions
- How the business is set up
That is the work Nino does for business owners.
A $100,000 SEP balance next to a $7,500 nondeductible contribution leaves about 93% of the conversion taxable.