SEP IRA Calculator

2026

Calculate maximum SEP IRA contribution for self-employed. 2026 limit: $72,000 or 25% of compensation.

By Konstantin Iakovlev · Updated September 2026 · Source: IRS Notice 2025-67 — 2026 retirement plan limits

$
Contribution Amount

Max SEP Contribution

$18,587.05

Your Contribution

$18,587.05

Annual Tax Savings

$4,089.15

Balance at 65

$1,257,905.60

2026 SEP IRA Limits

  • Maximum contribution: $72,000
  • Self-employed: 20% of net profit minus half of SE tax (IRS Pub. 560)
  • Your marginal tax rate: 22%

Contribution & Growth Summary

Annual Contribution$18,587.05
Years to Retirement25
Total Contributions$464,676.13
Investment Growth$793,229.47
Projected Balance at 65$1,257,905.60

Year-by-Year Projection

Age 40$19,888.14
Age 45$142,265.63
Age 50$313,906.40
Age 55$554,641.46
Age 60$892,284.83
Age 64$1,257,905.60

Use the SEP IRA Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

For the self-employed and small business owners, a Simplified Employee Pension (SEP) IRA is one of the most generous retirement shelters available, and pinning down your maximum contribution is the first step to using it fully. The deduction can be substantial, but only if the number is right. This tool works the 2026 tax year specifically, applying the $72,000 SEP IRA contribution limit alongside the 25% of compensation rule.

Two ceilings decide your maximum, and the calculator measures both. It takes your net earnings from self-employment, the figure left after deducting one-half of your self-employment taxes and your SEP IRA contributions, and multiplies by 25%. Because the contribution is itself part of that deduction, the owner's maximum works out to 20% of net profit after subtracting half of self-employment tax, which is the figure the calculator shows. That result is then held against the 2026 IRS annual cap of $72,000, and the lower of the two governs.

For SEP IRA purposes, 'compensation' means net earnings from self-employment, gross income less allowable business expenses and one-half of your self-employment tax, not the top-line revenue your business brought in. Reaching for gross income is the classic overshoot and a fast path to over-contributing. The same care applies to the rate: it is 25% of your net earnings, never 25% of your gross.

Example: Self-Employed Photographer, 2026

  1. 1 A self-employed photographer has $150,000 of gross receipts and $30,000 of business expenses in 2026, so net profit on Schedule C is $120,000.
  2. 2 Self-employment tax: $120,000 × 92.35% = $110,820 of net earnings subject to SE tax, × 15.3% = $16,955.46. Half of it, $8,477.73, is deductible.
  3. 3 Net earnings for the SEP: $120,000 − $8,477.73 = $111,522.27. Because the contribution also reduces the owner's own compensation, a 25% plan rate works out to 20% for the owner (0.25 ÷ 1.25): $111,522.27 × 20% = $22,304.45.
  4. 4 Check: $22,304.45 is 25% of ($111,522.27 − $22,304.45) = 25% of $89,217.82, and it is far below the 2026 cap of $72,000, so $22,304.45 is the maximum. Taking 25% of $111,522.27 instead would over-contribute by about $5,576.

Source: IRS Notice 2025-67 — 2026 retirement plan limits · Last updated: September 2026

Frequently Asked Questions

What is the SEP IRA contribution limit for 2026?
For a self-employed owner, the 2026 SEP IRA limit is the lesser of $72,000 or 20% of net profit after subtracting half of self-employment tax (the 25% plan rate applied to earnings that are also reduced by the contribution itself). For employees, the limit is 25% of compensation up to $72,000.
Can I contribute to both a SEP IRA and a traditional IRA?
Yes, but your traditional IRA deduction may be limited since you are covered by an employer plan. In 2026, the traditional IRA deduction phases out for SEP IRA participants with modified AGI of $81,000-$91,000 (single) or $129,000-$149,000 (married filing jointly).
What is the SEP IRA deadline?
SEP IRA contributions for the 2025 tax year can be made until your tax filing deadline, including extensions. That means October 15, 2026, if you file an extension.

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