SEP IRA Contribution Calculator 2026
Estimate a 2026 SEP IRA contribution for either an employee-style compensation calculation or a self-employed planning estimate using the official IRS annual cap.
Last updated: April 3, 2026
Calculator
For employees, this calculator applies the entered contribution rate to compensation, subject to the 2026 compensation cap and annual contribution cap. For self-employed users, it uses a planning approximation rather than a full return-level computation.
2026 SEP IRA values used
- Maximum annual contribution: $72,000
- Compensation cap used for the formula: $360,000
- Minimum compensation threshold often used for plan coverage: $800
- Common employer rate used in examples: up to 25%
Employee estimate vs self-employed estimate
An employee-style calculation is the simple version: take eligible compensation, apply the contribution rate, then cap the result at the annual SEP IRA maximum. That is why SEP planning often looks straightforward for employees of an incorporated business.
Self-employed planning is different because the contribution is based on adjusted net earnings, not a flat percentage of Schedule C profit. This calculator uses a simplified net-earnings factor and an effective rate to give you a practical estimate without pretending it is a final tax-return worksheet.
Examples
Employee with $120,000 of compensation
At a 25% contribution rate, the estimated SEP contribution is $30,000. That is well below the $72,000 annual cap.
High-income employee
If compensation is above the $360,000 cap, the contribution formula stops at the cap. At 25%, the raw calculation would exceed the annual limit, so the final result is capped at $72,000.
Self-employed owner
A self-employed owner with $100,000 of net income should not assume a flat $25,000 SEP contribution. The actual planning estimate is usually lower because the IRS formula effectively works off adjusted earnings.
Common mistakes
- Applying 25% directly to self-employment profit without adjustment.
- Forgetting the $360,000 compensation cap.
- Ignoring the $72,000 annual maximum.
- Assuming SEP and SIMPLE rules work the same way.
Related pages
FAQ
Is this a filing-ready number?
No. It is a planning estimate, especially in self-employed mode.
Why is the self-employed result lower than 25% of profit?
Because the self-employed formula works off adjusted net earnings and uses an effective contribution rate rather than a flat 25% of raw profit.
Does this include state taxes?
No. The tool focuses on the federal contribution limit logic.