SEP IRA Contribution Calculator
The most you can put into a SEP IRA from your freelance profit this year, and the tax it takes off your bill.
| Net profit | $100,000 |
| Minus half of SE tax | $92,935 |
| × 20% effective rate | $18,587 |
| Capped at $72,000 | $18,587 |
The 20% shortcut, explained
IRS Publication 560 gives a worksheet for self-employed SEP contributions because the plan rate (25%) applies to income after the contribution. Since contribution = 25% × (earnings − contribution), the contribution equals 20% of earnings. You reach the $72,000 cap at about $378,000 of profit.
A SEP contribution lowers income tax, not self-employment tax, and it reduces your QBI deduction slightly. The take-home calculator accounts for both if you enter the contribution under "More details".
Questions freelancers ask
How much can I contribute to a SEP IRA if I am self-employed?
Up to 20% of net self-employment earnings (net profit minus half of self-employment tax), to a maximum of $72,000 for 2026 ($70,000 for 2025). The plan document says 25%, but for sole proprietors the math reduces that to an effective 20%.
Why is the SEP IRA limit 20% and not 25%?
The 25% applies to compensation after the contribution itself is deducted. Solving that circular formula gives 25% ÷ 125% = 20% of net earnings before the contribution.
When is the SEP IRA deadline?
You can open and fund a SEP IRA up to your tax filing deadline, including extensions (October 15 with an extension), and still deduct it for the prior year.
SEP IRA or solo 401(k)?
At lower incomes a solo 401(k) usually lets you save more, because the $24,500 employee deferral (2026) is available on top of the 20% employer share. SEPs are simpler, with no annual Form 5500-EZ filing, even above $200,000 in plan assets.