Updated
Short answer: On $100,000 of sole-proprietor net profit, the 2026 SEP-IRA contribution is $18,587.04. A 25% plan rate is 20% of net self-employment earnings. W-2 and S-corp wages stay at 25% of compensation. The dollar cap is $72,000 and compensation above $360,000 is ignored.
Plan rate 25% is an owner rate of 20% of net self-employment earnings $92,935.22 = $18,587.04. 25% of the $360,000 compensation cap is $90,000.00. Contribution $18,587.04 (the smallest of that amount, the compensation-cap amount, and $72,000). Net profit $100,000.00. Half of SE tax $7,064.78.
| Step | Amount |
|---|---|
| Net profit | $100,000.00 |
| W-2 Social Security wages already taxed | $0.00 |
| 92.35% net earnings | $92,350.00 |
| Schedule SE tax | $14,129.55 |
| Half of SE tax | $7,064.78 |
| Net SE earnings | $92,935.22 |
| Compensation used (cap $360,000) | $92,935.22 |
| Owner rate (25% ÷ 1.25) | 20% |
| Owner-rate amount | $18,587.04 |
| 25% of the $360,000 compensation cap | $90,000.00 |
| Dollar cap | $72,000.00 |
| SEP contribution (smallest) | $18,587.04 |
IRS source, checked 2026-10-11. IRS Publication 560 divides a sole proprietor's plan percent by one plus that percent, then applies that owner rate to net earnings after half of the self-employment tax.
IRS: a SEP-IRA employer contribution cannot exceed the lesser of 25% of compensation or $72,000 for 2026. The compensation that can be counted is limited to $360,000. Elective salary deferrals are not permitted in SEP plans. The SEP minimum compensation to participate is $800; this page does not test eligibility. The sole-proprietor sketch uses the W-2 Social Security wages field, default $0, against the $184,500 wage base. It does not add the 0.9% Additional Medicare Tax.
Sources, checked 11 Oct 2026: IRS Publication 560, IRS SEP contribution limits, and IRS COLA table (Notice 2025-67). Planning only. This is not tax advice.
Solo 401(k) · HSA contribution · Self-employment tax · Price your work to cover this
| Net profit | SEP contribution |
|---|---|
| $25,000 | $4,646.76 |
| $50,000 | $9,293.52 |
| $100,000 | $18,587.04 |
| $200,000 | $37,176.57 |
| $400,000 | $72,000.00 |
The employer contribution cannot exceed the lesser of 25% of compensation or $72,000. Compensation counted for the percentage is capped at $360,000. Elective deferrals are not allowed in a SEP.
The default is a sole proprietor. IRS Publication 560 divides the plan percent by one plus that percent, so 25% becomes 20% of net self-employment earnings. Net self-employment earnings are net profit minus half of the self-employment tax. On $100,000 at 25% the contribution is $18,587.04. On $100,000 at 10% it is $8,448.66. On $500,000 at 10% it is $36,000, which is 10% of the $360,000 compensation cap. The contribution is the smallest of the owner-rate amount, the plan percent of $360,000, and $72,000. W-2 and S-corp wages use the plan percent itself, up to 25% of compensation.