SEP IRA Contribution Limits 2026 and 2027
For 2026, a SEP IRA contribution for each employee can be up to the lesser of 25% of compensation or $72,000, and no more than $360,000 of pay counts. The IRS had not published its 2027 limits when we checked on November 1, 2026, so the 2027 figures on this page are computed from the statute and inflation data, not official: $75,000 dollar cap and $375,000 of pay counted.
Maintained by Archie Chang · Reviewed November 1, 2026 · Methodology & sources
Status: 2026 is official; 2027 is computed, not official. When we checked on November 1, 2026, the IRS had not published its 2027 limits. The 2027 figures are our computation from the statute and inflation data, with the method and back-test on the 401(k) contribution limits 2027 page. They are replaced by the official amounts when the IRS notice is added to our data.
Not affiliated with the IRS; this is general information, not tax advice.
SEP IRA calculator
The starting numbers are an example, not a recommendation. Replace them with yours. The calculator covers employer contributions to a SEP IRA only; it does not include IRA contributions or other plans. The self-employed setting assumes you have no W-2 wages from another job.
Your maximum SEP IRA contribution
Maximum for 2026
$27,881
The plan rate sets the amount.
- Net profit
- $150,000
- Self-employment tax
- $21,194.33
- Half of that tax (deductible)
- $10,597
- Plan compensation (net profit less that half)
- $139,403
- Reduced rate for your plan (Publication 560)
- 20.0%
- Pay limit for 2026
- $360,000
- Dollar cap for 2026
- $72,000
SEP IRA limits: 2026 and 2027
| Limit | 2026 | 2027 | 2027 status |
|---|---|---|---|
| Dollar cap per employee (section 415(c)) | $72,000 | $75,000 | Computed, not official |
| Pay counted per employee (section 401(a)(17)) | $360,000 | $375,000 | Computed, not official |
The percentage is 25% of compensation. The IRS lists the dollar cap and the pay limit in the same annual notice as the 401(k) limits, so a SEP IRA moves with them. The minimum pay that makes an employee eligible is set in that notice too; for 2026 it is $800 (see below).
What the IRS says the limit is
“Contributions an employer can make to an employee's SEP-IRA cannot exceed the lesser of:
25% of the employee's compensation, or
$72,000 for 2026, subject to cost-of-living adjustments
Note: Elective salary deferrals and catch-up contributions are not permitted in SEP plans.”
“You can't consider the part of an employee's compensation over $350,000 when figuring your contribution limit for that employee. However, $70,000 is the maximum contribution for an eligible employee. These limits increase to $360,000 and $72,000, respectively, in 2026.”
In other words, each employee’s contribution is at most 25% of that employee’s pay, counting no more than the pay limit, and not more than the dollar cap. The cap is the same section 415(c) amount that limits a 401(k) plan’s total contributions, which are on the 401(k) contribution limits page.
If you are self-employed
For your own contribution, the IRS gives a different percentage:
“Excess contributions are your contributions to an employee's SEP IRA (or to your own SEP IRA) for 2025 that exceed the lesser of the following amounts.
25% of the employee's compensation (or, for you, 20% of your net earnings from self-employment).
$70,000.”
“For purposes of the SEP plan rules, a self-employed individual's compensation means net earnings from self-employment determined under Internal Revenue Code section 1402(a).”
“The deduction for contributions to your own SEP IRA and your net earnings depend on each other. For this reason, you determine the deduction for contributions to your own SEP IRA indirectly by reducing the contribution rate called for in your plan. To do this, use the Rate Table for Self-Employed or the Rate Worksheet for Self-Employed, whichever is appropriate for your plan's contribution rate, in chapter 5. Then, figure your maximum deduction by using the Deduction Worksheet for Self-Employed in chapter 5.”
The calculator follows that method. It takes net profit, subtracts half of the self-employment tax, and applies the reduced rate from the Publication 560 rate table, which is 20% for a 25% plan. The result is capped at the dollar cap ($72,000 for 2026) and at 25% of the pay limit. These examples use a 25% plan and the 2026 limits:
| Net profit | Half of self-employment tax | Plan compensation | Maximum contribution | What sets it |
|---|---|---|---|---|
| $50,000 | $3,532 | $46,468 | $9,294 | Plan rate |
| $150,000 | $10,597 | $139,403 | $27,881 | Plan rate |
| $400,000 | $16,795 | $383,205 | $72,000 | Dollar cap |
These figures are for a sole proprietor with no other earnings. If a corporation pays you W-2 wages, use the W-2 employee setting instead. To compare with a solo 401(k), see the solo 401(k) calculator.
No catch-up contributions in a SEP, with one exception
“No, SEPs are funded by employer contributions only. Catch-up contributions apply only to employee elective deferrals. However, if you are permitted to make traditional IRA contributions to your SEP-IRA account, you may be able to make catch-up IRA contributions.”
The IRS page on SEP limits describes the exception for older SARSEP plans:
“Participants in Salary Reduction Simplified Employee Pension (SARSEP) plans established before 1997 were entitled to make elective salary deferral contributions. For these plans that are still in operation, a participant’s elective deferral contributions are limited to $24,500 in 2026 or 25% of their compensation, whichever is less. Catch-up contributions are not subject to this limit. The overall contribution limit (including both employer and employee contributions, but excluding catch-up contributions) is the same as the SEP limit, above.”
The IRA catch-up amounts are on the Roth IRA contribution limits 2027 and 401(k) pages.
Who is an eligible employee
Publication 560 lists these requirements for an eligible employee:
“Has reached age 21.
Has worked for you in at least 3 of the last 5 years.
Has received at least $750 in compensation from you in 2025. The amount is $800 for 2026.
Tip:
You can use less restrictive participation requirements than those listed, but not more restrictive ones.”
“The compensation threshold under section 408(k)(2)(C) regarding simplified employee pensions is increased from $750 to $800.”
The same chapter says some employees can be left out:
“Excludable employees.
The following employees can be excluded from coverage under a SEP.
Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you.
Nonresident alien employees who have received no U.S. source wages, salaries, or other personal services compensation from you. For more information about nonresident aliens, see Pub. 519, U.S. Tax Guide for Aliens.”
SEP IRA limits by year, 2018 to 2026
| Year | Dollar cap (415(c)) | Pay counted (401(a)(17)) | IRS notice |
|---|---|---|---|
| 2018 | $55,000 | $275,000 | Notice 2017-64 |
| 2019 | $56,000 | $280,000 | Notice 2018-83 |
| 2020 | $57,000 | $285,000 | Notice 2019-59 |
| 2021 | $58,000 | $290,000 | Notice 2020-79 |
| 2022 | $61,000 | $305,000 | Notice 2021-61 |
| 2023 | $66,000 | $330,000 | Notice 2022-55 |
| 2024 | $69,000 | $345,000 | Notice 2023-75 |
| 2025 | $70,000 | $350,000 | Notice 2024-80 |
| 2026 | $72,000 | $360,000 | Notice 2025-67 |
For the SEP, the dollar cap is the section 415(c) limit. See all contribution limits and 401(k) contribution limits 2027.
Frequently asked questions
What is the SEP IRA contribution limit for 2026?
For each employee, the employer's contribution cannot exceed the lesser of 25% of the employee's compensation or $72,000 for 2026, subject to cost-of-living adjustments. Pay above $360,000 is not counted when figuring the limit.
What is the SEP IRA contribution limit for 2027?
When we checked on November 1, 2026, the IRS had not published its 2027 limits. Computed from the statute and inflation data, not official, the 2027 SEP IRA dollar cap is $75,000, compared with $72,000 for 2026. The same method reproduces the official amounts for earlier years. The pay counted per employee is $375,000.
How much can a self-employed person put in a SEP IRA?
Publication 560 says an owner uses a reduced rate: for a 25% plan, 20% of net earnings from self-employment after subtracting half of self-employment tax, capped at $72,000 and at 25% of $360,000 of earnings for 2026. For example, a sole proprietor with $150,000 of net profit has about $10,597 of deductible self-employment tax, $139,403 of plan compensation and a maximum SEP contribution of $27,881 for 2026. The calculator on this page follows the same method.
Can I make catch-up contributions to a SEP IRA?
Generally no. The IRS says elective salary deferrals and catch-up contributions are not permitted in SEP plans, and its FAQs add that catch-up contributions apply only to employee elective deferrals. However, if you are permitted to make traditional IRA contributions to your SEP-IRA account, you may be able to make catch-up IRA contributions there under the IRA rules. The exception is a SARSEP established before 1997 that is still in operation: its participants may make elective deferrals, limited to $24,500 in 2026 or 25% of compensation, whichever is less, and the IRS says catch-up contributions are not subject to that limit.
Which employees must a SEP cover?
Publication 560 lists three requirements for an eligible employee: age 21, work for you in at least 3 of the last 5 years, and at least $750 of compensation from you in 2025, which is $800 for 2026 under Notice 2025-67. A plan can use less restrictive requirements, but not more restrictive ones. The IRS says employees covered by a union agreement whose retirement benefits were bargained for in good faith, and certain nonresident aliens with no U.S. source compensation from you, can be excluded.
Is the SEP IRA limit the same as the solo 401(k) limit?
Both use the $72,000 dollar limit for 2026, but a SEP takes employer contributions only, while a solo 401(k) also allows employee deferrals of up to $24,500. At lower incomes a solo 401(k) can allow more; compare both with the solo 401(k) calculator.
Related limits and calculators
Sources
- IRS Notice 2025-67, 2026 amounts relating to retirement plans and IRAs
- IRS news release IR-2025-111 (November 13, 2025)
- IRS: SEP contribution limits (including grandfathered SARSEPs)
- IRS Publication 560 (2025), Retirement Plans for Small Business: SEP chapter
- IRS: FAQs regarding SEPs
- IRS Notice 2025-67, SEP compensation threshold (section 408(k)(2)(C))
- IRS: One-participant 401(k) plans
- 26 U.S.C. 415 (limits on contributions, 415(c) and 415(d)) (Cornell LII)
- 26 U.S.C. 401(a)(17) (compensation limit) (Cornell LII)
- 26 U.S.C. 408 (SEP in 408(k), SIMPLE IRA in 408(p)) (Cornell LII)
Dollar limits for 2018 to 2026 are the amounts printed in the IRS notices, listed in the history table. Quoted passages are copied from the IRS pages named under each quote.