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SEP IRA Calculator
Use this free SEP IRA calculator to find the maximum you can put into a SEP IRA as a self-employed worker and to project how that account could grow. Enter your net self-employment income, how many years you will keep contributing, and your expected return, and it works out your maximum annual contribution and your projected balance.
What you already have saved in the SEP IRA. Leave it at $0 if you are starting fresh.
Prefilled with $70,000, the 2025 IRS limit. Change it if the limit changes.
| Net self-employment income | |
| Less half of self-employment tax (7.65%) | |
| Adjusted income | |
| 20% of adjusted income | |
| Contribution limit applied | |
| Maximum annual contribution | |
| Total contributions over 20 years | |
| Investment growth | |
| Projected balance |
Projected balance over time
The chart shows your balance growing year by year as you contribute and earn the return above.
How the contribution is worked out
The diagram uses the default example: $100,000 of net income gives a maximum annual contribution of $18,470.
How it works
A SEP IRA — a Simplified Employee Pension — is a retirement account built for self-employed people and small business owners. Unlike a 401(k), there are no employee salary deferrals: only the employer contributes, and if you work for yourself, you are the employer. Contributions are tax-deductible, the money grows tax-deferred, and withdrawals in retirement are taxed as ordinary income. It is one of the simplest retirement plans to run, with almost no paperwork and no annual filing for a one-person business.
The maximum contribution for a self-employed person is not simply 25% of your profit. The rule is 25% of your compensation, and for someone who works for themselves, compensation is net earnings minus half of the self-employment tax minus the contribution itself. Working that through gives a figure of about 20% of your net adjusted income. This calculator follows that rule: first it subtracts half of your self-employment tax, which it estimates at 7.65% of your net income, leaving your adjusted income. Then it takes 20% of that adjusted income. Finally it caps the result at the contribution limit you enter, which is prefilled with $70,000, the 2025 IRS limit. If your income is high enough that 20% of your adjusted income passes the limit, the limit is what you can contribute.
For employees of a business, the rule is simpler: the employer can contribute up to 25% of each employee's pay, up to the same dollar limit. If you have eligible employees, you generally must contribute the same percentage of pay for them as for yourself, so the plan can get expensive as soon as you hire staff. That is the main trade-off of a SEP IRA: it is cheap and simple for a one-person business, and it becomes a real cost once you have employees.
Maximum contribution = 20% × Adjusted income, capped at the contribution limit
Projected balance = Current balance × (1 + r)n + Contribution × [((1 + r)n − 1) ÷ r]
The growth projection assumes you contribute the same maximum amount at the end of every year and that the account earns the same return every year. The current balance grows by compound interest over the full period, and each yearly contribution grows from the year it goes in. Real returns bounce around — some years up, some years down — so the projection is a planning guide, not a promise. The chart beside the calculator draws the balance year by year so you can see how slowly it starts and how quickly it bends upward as compounding takes over. Most of the growth in the later years comes from returns on money already in the account, not from new contributions.
One more thing to keep in mind: a SEP IRA contribution reduces your taxable income for the year, so the tax saving is part of the value. At a 22% marginal rate, an $18,470 contribution saves about $4,063 in federal income tax that year. The contribution deadline is also generous — you can open and fund a SEP IRA up to your tax filing deadline, including extensions, for the previous tax year, which gives you months after year-end to decide the final amount once your profit is known.
Worked example
Sam is a self-employed graphic designer with $100,000 of net self-employment income this year. She has no SEP IRA balance yet, plans to contribute for 20 years, and expects a 7% annual return. Enter those values and the calculator works like this.
Step 1: Work out half of the self-employment tax: $100,000 × 7.65% = $7,650.
Step 2: Subtract it from net income to get adjusted income: $100,000 − $7,650 = $92,350.
Step 3: Take 20% of adjusted income: $92,350 × 0.20 = $18,470. That is below the $70,000 limit, so the limit does not bite, and the maximum annual contribution is $18,470.
Step 4: Over 20 years she contributes $18,470 × 20 = $369,400 in total. With a 7% return, those yearly contributions grow to $757,186.74.
The tool shows the same result: a maximum annual contribution of $18,470.00 and a projected balance of $757,186.74 after 20 years. The growth on top of her contributions is $757,186.74 − $369,400 = $387,786.74 — more than she put in. If her net income were $200,000 instead, the maximum contribution would be $36,940 a year, and with a $50,000 starting balance and a 6% return over 10 years, the projected balance would be $576,440.95.
FAQ
What is a SEP IRA?
A SEP IRA is a retirement account for self-employed people and small business owners. The employer — which can be you, if you work for yourself — puts money in, and the contributions are tax-deductible. The money grows tax-deferred until you withdraw it in retirement, when it is taxed as ordinary income.
How much can I contribute to a SEP IRA?
For a self-employed person, the maximum is roughly 20% of net adjusted self-employment income — your net profit minus half of your self-employment tax — up to an annual dollar limit. The limit field in this calculator is prefilled with $70,000, the 2025 IRS limit, and you can change it if the limit changes. Only the employer contributes; there are no employee salary deferrals in a SEP IRA.
Who can open a SEP IRA?
Any self-employed person or small business owner can open a SEP IRA, including sole proprietors, freelancers, partners, and owners of small companies. If you have eligible employees, you generally must contribute the same percentage of pay for them as for yourself, which is the main cost of the plan for businesses with staff.
When can I take money out of a SEP IRA?
You can withdraw money at any time, but withdrawals before age 59 and a half usually face a 10% early withdrawal penalty on top of ordinary income tax, unless an exception applies. Required minimum distributions generally begin at age 73. The money is meant for retirement, so early withdrawals are expensive.
Is a SEP IRA better than a Solo 401(k)?
It depends on your income. A Solo 401(k) usually allows larger contributions at lower incomes, because it adds employee salary deferrals on top of the employer share, and it can include a Roth option. A SEP IRA is simpler to run and allows a larger employer contribution at high incomes, but it has no employee deferral and no Roth option. Run both calculators and compare the annual contribution each one allows.