SEP-IRA Contribution Calculator
Calculate your 2026 SEP-IRA maximum contribution as a self-employed worker or small business owner. Uses the IRS 20% effective rate on net self-employment earnings (after the half-SE-tax adjustment), capped at $70,000.
What Is a SEP-IRA?
A SEP-IRA (Simplified Employee Pension) is a retirement plan built for self-employed workers and small businesses. It allows employer-only contributions of up to 25% of compensation, is easy to administer (no annual Form 5500), and has no employee matching requirements. For solo freelancers it acts like a tax-deductible retirement bucket that scales with income.
2026 SEP-IRA Contribution Limit
The 2026 SEP-IRA limit is the lesser of 25% of net self-employment earnings or $70,000. For Schedule C filers, the effective rate is 20% of net earnings (net profit minus half of self-employment tax), because the IRS formula applies 25% to the post-contribution base. Compensation above $350,000 (2026 cap) is ignored when calculating the 25% share.
SEP-IRA vs Solo 401(k)
At lower incomes, Solo 401(k) wins big because its $23,500 employee deferral is not tied to income — a freelancer earning $30,000 can save roughly $29,500 in a Solo 401(k) but only $5,580 in a SEP-IRA. At higher incomes both plans converge on the $70,000 cap. SEP-IRAs are simpler (no plan document), while Solo 401(k)s allow Roth treatment, loans, and spouse participation.
SEP-IRA Deadlines and Rules
You can establish and fund a SEP-IRA as late as the tax filing deadline including extensions (typically October 15 of the following year). Contributions are fully tax-deductible against self-employment income. Withdrawals before 59½ face a 10% early-withdrawal penalty plus ordinary income tax. Required minimum distributions begin at age 73.