A SEP-IRA calculator helps self-employed individuals and small business owners determine their maximum allowable contribution to a Simplified Employee Pension plan. For 2025, the SEP-IRA limit is the lesser of 25% of compensation or $70,000. The calculation differs by entity type — sole proprietors use a modified formula that accounts for the self-employment tax deduction, while S-corp owners base contributions on their W-2 salary. This tool handles the math for all entity types automatically.
Financial disclaimer: This calculator provides estimates for planning purposes only and does not constitute tax or legal advice. SEP-IRA rules involve complex calculations for partnerships and multi-member LLCs. Consult a CPA or tax advisor for your specific situation.
Your Information
Schedule C net profit after business expenses, before SE tax deduction
Your reasonable salary from the S-Corp (not K-1 distributions)
Used for projected account value only
Your SEP-IRA Contribution
Calculation Breakdown
SEP-IRA vs Other Retirement Plans (2025)
| Plan | Employee Deferral | Employer Max | Combined Max | Your Max |
|---|---|---|---|---|
| SEP-IRA | N/A | 25% of comp | $70,000 | $0 |
| Solo 401(k) | $23,500 | 25% of W-2 / 20% SE | $70,000 | $0 |
| SIMPLE IRA | $16,500 | 3% match or 2% flat | ~$20,000 | $0 |
| Traditional IRA | $7,000 | N/A | $7,000 | $7,000 |
Solo 401(k) comparison uses same income as SEP-IRA. Age 50+ catch-up contributions not shown.
10-Year Account Growth Projection
How to Use the SEP-IRA Calculator
The SEP-IRA (Simplified Employee Pension Individual Retirement Account) is one of the most powerful retirement savings vehicles available to self-employed individuals and small business owners. It allows contributions up to $70,000 for 2025 — far more than the $7,000 traditional IRA limit — with a simple setup and no annual filing requirements for plans covering only the owner. This SEP-IRA calculator computes your exact maximum contribution based on your entity type and income, then shows how it compares to other retirement plan options.
Step 1: Select Your Entity Type
Choose your business structure — this determines which calculation formula applies. Sole proprietors and single-member LLCs (taxed as sole props) use a modified formula. S-corp and C-corp owner-employees use their W-2 salary. Partnership and multi-member LLC members use their distributive share of partnership income as the base, adjusted for the SE tax deduction. If you are unsure which category applies, use the entity type shown on your tax return.
Step 2: Enter Your Income
For sole proprietors, enter your net self-employment income — this is your Schedule C net profit (or Schedule E net income for partnerships) before any SE tax deduction or SEP contribution deduction. For S-corp owners, enter your W-2 wages from the corporation, not K-1 distributions. The corporation (not you personally) makes the SEP contribution and deducts it as a business expense. K-1 pass-through income is not included in the contribution base for S-corps.
The Sole Proprietor Formula Explained
Sole proprietors face a circular calculation: your SEP contribution is 25% of your net earnings, but net earnings are reduced by half of self-employment tax, and SE tax is partially a function of your income after the SEP deduction. The IRS provides a simplified rate of approximately 18.587% of net self-employment income as the effective maximum contribution rate for sole proprietors. This calculator automatically applies the correct formula so you do not need to do the algebra manually.
Step 3: Compare to Other Plans
The plan comparison table shows how the SEP-IRA maximum stacks up against a Solo 401(k) and SIMPLE IRA. For many self-employed individuals with moderate income, the SEP-IRA and Solo 401(k) limits are similar. At higher income levels, the Solo 401(k) can allow slightly higher contributions because it adds an employee deferral of $23,500 on top of the employer contribution. However, the SEP-IRA has a simpler administration structure and no annual plan documents or Form 5500 filing requirements until assets exceed $250,000.
Contribution Deadline
One of the most valuable features of the SEP-IRA is its flexible contribution deadline. You can open and fund a SEP-IRA up to your tax return due date, including extensions. For a sole proprietor filing a Schedule C, that is October 15 with a six-month extension. This means you can wait to see your final income for the year before deciding how much to contribute, and even open a new account after December 31 for the prior tax year.
FAQ
Is this SEP-IRA calculator free?
Yes, completely free with no signup required. All calculations run entirely in your browser — your income data never leaves your device.
Is my data private when using this tool?
Absolutely. All computations happen locally in your browser using JavaScript. No income figures or personal data are stored or transmitted to any server.
What is the SEP-IRA contribution limit for 2025?
For 2025, the SEP-IRA contribution limit is the lesser of 25% of compensation or $70,000. For sole proprietors, 'compensation' is net self-employment income after deducting half of self-employment tax and the SEP contribution itself — which works out to approximately 18.587% of net self-employment income.
Why is the effective rate for sole proprietors about 18.587% instead of 25%?
Sole proprietors calculate compensation differently than W-2 employees. Net SE income is first reduced by the deductible half of self-employment tax (roughly 7.65% of net income). Then the SEP contribution is 25% of that adjusted compensation. Solving the circular calculation algebraically yields a net contribution rate of approximately 18.587% of net SE income.
How does the SEP-IRA formula differ for S-corp owners?
S-corp owner-employees contribute based on their W-2 wages from the corporation, not on K-1 pass-through income or self-employment income. The contribution is simply 25% of W-2 salary, up to $70,000. This makes the S-corp calculation more straightforward than the sole proprietor formula.
Can I have a SEP-IRA and a Solo 401(k) at the same time?
Generally no — if you have a SEP-IRA and establish a Solo 401(k) for the same business, the plans interact and combined contributions cannot exceed the Section 415 limit of $70,000 for 2025. However, if you have multiple businesses (one with a SEP and one with a Solo 401k), complex rules apply and you should consult a tax professional.
What is the deadline to contribute to a SEP-IRA?
You can open and fund a SEP-IRA up to your tax filing deadline, including extensions. For sole proprietors filing Schedule C, that is typically October 15 (with extension). This makes the SEP-IRA one of the few retirement accounts you can establish retroactively for the prior tax year.
Does a SEP-IRA have catch-up contributions for people over 50?
No. Unlike 401(k) plans or IRAs, SEP-IRAs do not have a separate catch-up contribution provision. However, the high $70,000 limit is already substantially higher than the $7,000 traditional IRA limit, so the lack of catch-up is less of a concern for high-income self-employed individuals.