SEP IRA Contribution Calculator

Choose profit or eligible compensation

For a sole proprietor, begin with net business profit after business expenses. Do not enter gross receipts. The calculation adjusts that profit for the deductible portion of regular self-employment tax before applying the reduced self-employed contribution rate.

For an incorporated business owner's eligible employee compensation, use the plan's qualifying wage amount. Business distributions are not automatically compensation for this purpose. Enter the employer contribution percentage permitted by the plan, up to the applicable maximum, and check whether contributions for other eligible employees are required.

If you have wages from another employer, enter your individual Social Security wages and tips when estimating the self-employment tax adjustment. A spouse's wages do not use up your individual Social Security wage base. Other plans, related businesses, or unusual compensation rules require additional coordination.

Continue with Solo 401(k) Contribution Calculator or Roth Conversion Calculator for the next calculation.

2026 SEP limits and calculation

The IRS SEP contribution guidance gives the 2026 maximum as the lesser of 25% of an employee's compensation or $72,000. The compensation considered is also limited under the annual rules. A SEP contribution is an employer contribution; an ordinary SEP does not add a separate employee elective-deferral allowance or an age-based catch-up contribution.

For a self-employed owner, the contribution itself affects the compensation calculation. IRS Publication 560 uses a reduced rate. At a 25% plan contribution rate, that reduced rate is 20% of adjusted net earnings before the owner's retirement contribution. Using 25% of unadjusted net profit would overstate the result.

The reduced rate is the plan rate divided by one plus the plan rate. For example, 25% divided by 1.25 equals 20%. The tool then applies the annual dollar and compensation limits. A lower plan percentage produces a different reduced rate; the calculator should not always force 20%.

Example: the same $100,000 input can mean two things

Assume a sole proprietor has $100,000 net profit in 2026, no other wages, and no special self-employment tax method. Regular self-employment tax is $14,129.55. Subtracting its deductible half leaves $92,935.225 of adjusted earnings before display rounding.

At the maximum 25% plan rate, the reduced 20% calculation produces a modeled SEP contribution of $18,587.05. It is below the 2026 annual dollar cap.

For an eligible employee with $100,000 of qualifying compensation, 25% is $25,000 before any other applicable limitations. These results differ because net business profit and employee compensation are not interchangeable inputs. The example is an arithmetic illustration, not a determination that a particular business can fund either amount.

Review the business-wide cost

An owner's maximum is only part of the SEP decision. Contributions may also be required for eligible employees under the plan's allocation rules. A contribution level that looks affordable for the owner alone can produce a larger business expense when the full workforce is included.

This calculator estimates one person's contribution capacity. It does not establish employee eligibility, test the plan's allocation, coordinate multiple related-employer plans, or prepare a tax return. Confirm the plan document, deadlines, and compensation calculation before depositing money.

Use the retirement withdrawal calculator to explore how accumulated retirement savings might support future spending. The fixed-period annuity calculator can illustrate payments over a chosen period; it is a separate payout model, not a SEP contribution calculation.

Frequently asked questions