SEP IRA Calculator 2026

Calculate your maximum Simplified Employee Pension (SEP) IRA contribution for the 2026 tax year. Enter your net self-employment profit to see your allowed contribution.

Enter Your Net Profit →

$
Your net profit after deducting business expenses from gross self-employment income (Schedule C line 31 or equivalent)
📈 Your SEP IRA Contribution Summary
Max SEP Contribution $0
Effective Rate 0%
Contribution Deadline —
ItemAmount
Net Profit from Self-Employment$0
Adjusted Compensation (92.35% of net profit)$0
Maximum SEP IRA Contribution (lesser of 25% or $72,000)$0
Effective Contribution Rate—
Deadline for 2026 Contributions—

💸 How SEP IRA Contributions Work

SEP IRA contributions are tax-deductible and reduce your taxable income dollar-for-dollar. For 2026, the maximum contribution is the lesser of 25% of your adjusted compensation or $72,000.

Your contributions grow tax-deferred until withdrawal in retirement. Unlike a Solo 401(k), the SEP IRA does not allow employee salary deferrals — all contributions come from the employer (you).

• Deadline: You can contribute up to the tax filing deadline (including extensions)
• No catch-up: SEP IRAs do not have catch-up contributions for those over 50
• Simpler administration: No annual IRS filing required for basic SEP plans
• Same rate for all: If you have employees, you must contribute the same percentage for them
Tax Disclaimer: This calculator provides estimates for informational purposes only. Actual SEP IRA contribution limits depend on your specific net profit, self-employment tax adjustments, and business structure. Consult a qualified CPA or tax professional for advice specific to your situation.

Frequently Asked Questions

Answers to common questions about SEP IRA contributions for 2026

A Simplified Employee Pension (SEP) IRA is a retirement plan designed for self-employed individuals and small business owners. It allows you to make tax-deductible employer contributions to a traditional IRA. Contributions are tax-deductible in the year they are made, grow tax-deferred, and are taxed as ordinary income upon withdrawal in retirement. SEP IRAs are simple to establish and maintain, with no annual IRS filing requirement for basic plans.
For the 2026 tax year, the maximum SEP IRA contribution is the lesser of 25% of your compensation (after the self-employment tax adjustment) or $72,000. For self-employed individuals, compensation is calculated as net profit from self-employment minus the deductible portion of self-employment tax, multiplied by 92.35%. This typically results in an effective contribution rate of approximately 20% of your net profit.
For self-employed individuals, the contribution calculation involves a two-step adjustment. First, your net profit is reduced by 50% of your self-employment tax (the deductible portion). Second, the result is multiplied by 92.35% to determine the "net earnings from self-employment." The SEP contribution is then 25% of this adjusted amount, capped at $72,000 for 2026. In practical terms, this works out to about 20% of your original net profit.
The deadline for SEP IRA contributions is generally April 15 of the following tax year. For the 2026 tax year, the deadline is April 15, 2027. If you file for a tax extension (Form 4868), you can contribute by the extended deadline (typically October 15, 2027). This extended deadline is a key advantage of SEP IRAs — you can calculate your actual profit for the year and then make contributions up to 15 months after year-end.
To establish a SEP IRA, you must be a self-employed individual, independent contractor, or small business owner (including sole proprietors, partnerships, LLCs, and S-corporations). Eligible employees must be at least 21 years old, have worked for the employer in at least 3 of the last 5 years, and have received at least $750 in compensation in 2026. If you have eligible employees, you must contribute the same percentage of compensation for them as you do for yourself.
A SEP IRA is simpler to set up with minimal paperwork, while a Solo 401(k) requires a written plan document and annual IRS reporting once assets exceed $250,000. However, a Solo 401(k) allows higher total contributions because you can contribute both as an employee (up to $24,500 in 2026, plus $8,000 catch-up if over 50) and as an employer (up to 25% of compensation), with total limits capped at $72,000. Solo 401(k)s also allow Roth contributions and participant loans, which SEP IRAs do not offer. For very high earners, a Solo 401(k) may allow slightly more total contributions.
The key difference is contribution limits and who contributes. A SEP IRA allows contributions up to $72,000 or 25% of compensation in 2026, while a Traditional IRA is limited to $7,000 ($8,000 if age 50+). SEP IRA contributions are made by the employer (even if you are self-employed), while Traditional IRA contributions are made by the individual. Both offer tax-deductible contributions and tax-deferred growth. However, SEP IRAs do not have income limits for deductibility, while Traditional IRA deductions may be phased out if you or your spouse have access to a workplace retirement plan.
Opening a SEP IRA is straightforward and involves three steps: (1) Choose a financial institution such as Vanguard, Fidelity, Schwab, or a local bank that offers SEP IRA accounts. (2) Complete IRS Form 5305-SEP to formally adopt the plan (this is a simple one-page form that does not need to be filed with the IRS). (3) Open a SEP IRA account for yourself and any eligible employees, then make contributions by the tax deadline. There is no annual filing requirement for basic SEP plans, making it one of the easiest employer-sponsored retirement plans.

What Is a SEP IRA and How Does It Work for 2026?

A Simplified Employee Pension (SEP) IRA allows self-employed individuals and small business owners to make tax-deductible retirement contributions on behalf of themselves and their employees. Established by the IRS as a simplified alternative to more complex retirement plans, SEP IRAs offer contribution limits far higher than Traditional or Roth IRAs. For the 2026 tax year, you can contribute the lesser of 25% of your compensation (after self-employment tax adjustments) or $72,000. This makes SEP IRAs one of the most powerful retirement savings vehicles for freelancers, independent contractors, and small business owners looking to maximize their tax-advantaged savings.

How SEP IRA Contributions Are Calculated for the Self-Employed

Calculating your SEP IRA contribution as a self-employed individual requires an adjustment to your net profit. The IRS considers "compensation" for SEP purposes to be your net earnings from self-employment, which is calculated as your net profit multiplied by 92.35% (to account for the employer-equivalent portion of self-employment tax) minus the deductible portion of self-employment tax. The maximum SEP contribution is then 25% of this adjusted figure, capped at $72,000. In practical terms, this works out to roughly 20% of your net profit for most self-employed individuals.

Key Benefits of a SEP IRA for Freelancers and Small Business Owners

SEP IRA Contribution Deadline for 2026

The deadline to make SEP IRA contributions for the 2026 tax year is April 15, 2027. If you file a tax extension using Form 4868, you can contribute by the extended deadline of October 15, 2027. This extended timeline is particularly valuable for self-employed individuals because you can calculate your exact net profit after year-end, determine the maximum allowable contribution, and fund the account before the deadline. Contributions made by the deadline can be deducted on your 2026 tax return, reducing your tax bill or increasing your refund.

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