If you're self-employed with no employees, the biggest lever for cutting your tax bill and building retirement savings is picking the right plan — and the two most common options, a Solo 401(k) and a SEP-IRA, don't have the same ceiling. This calculator takes your net self-employment income and age and works out the maximum 2026 contribution each plan allows, so you can see which one lets you shelter more before you open an account.
How it works
Both plans let you contribute a slice of your self-employment earnings, but a Solo 401(k) stacks two pieces on top of each other while a SEP-IRA only gets one. First, the calculator adjusts your net self-employment income the way the IRS does for retirement-plan purposes: it subtracts the deductible half of your self-employment tax (the same figure that lands on Schedule 1), giving an adjusted base.
From that base, a SEP-IRA allows 20% of the adjusted base, capped at the overall IRS defined-contribution limit. A Solo 401(k) allows that same 20% employer-side contribution, plus a flat employee elective deferral — $24,500 for 2026, or $32,500 if you're 50 or older thanks to the $8,000 catch-up — all capped at the overall limit (which rises by the catch-up amount too, once you qualify). Because the Solo 401(k) gets the extra deferral on top of the same 20% math, it almost always allows a larger contribution at the same income level.
Worked example
Say your net self-employment income is $100,000 and you're 45 (under the catch-up age).
- Self-employment tax deductible half (via Schedule SE mechanics): $7,064.78
- Adjusted base: $100,000 − $7,064.78 = $92,935.22
- SEP-IRA max: 20% × $92,935.22 = $18,587.04
- Solo 401(k) max: $24,500 deferral + 20% × $92,935.22 = $24,500 + $18,587.04 = $43,087.04
- Result: the Solo 401(k) allows $24,500.00 more than the SEP-IRA at this income and age.
Bump the same person to age 55 with $400,000 in net income, and both numbers hit their ceilings: the SEP-IRA caps at the $72,000 overall limit, and the Solo 401(k) — now with the $8,000 catch-up added to both the deferral and the overall cap — tops out at $80,000.
How to interpret your result
The primary number is your Solo 401(k) maximum — the plan that usually wins. The SEP-IRA figure sits alongside it so you can see the gap directly, and the "higher limit" line just names whichever plan comes out ahead for your numbers. At low-to-moderate income the gap is close to the full elective deferral amount; at high income, both plans eventually get squeezed down to the same overall dollar cap, and the advantage of a Solo 401(k) shrinks to just the catch-up (if you qualify).
This is a limits comparison, not investment or tax advice, and it doesn't model everything. It doesn't factor in Roth vs. traditional treatment, doesn't check whether your specific SEP-IRA or Solo 401(k) plan document actually permits contributions up to the IRS maximum, and doesn't clamp the Solo 401(k) elective-deferral portion against very low or zero self-employment income — in the real world, you can't defer more than you actually earned. It also doesn't apply the higher "age 60-63 super catch-up" that SECURE 2.0 introduces for 2026; it uses the standard age-50-and-over catch-up only. This tool is US-only and covers federal limits for a sole proprietor or single-member LLC with no employees — not partnerships, S-corps, or plans with common-law employees, which have their own rules.
Methodology & sources
Adjusted base = net self-employment income − deductible half of self-employment tax (computed the same way as this site's Self-Employment Tax calculator). SEP-IRA max = the lesser of 20% of the adjusted base or the IRS overall defined-contribution limit. Solo 401(k) max = the lesser of (elective deferral + 20% of the adjusted base) or (the overall limit, plus the catch-up if age 50+). For 2026: the employee elective deferral limit is $24,500, the age-50+ catch-up is $8,000, and the overall defined-contribution limit under IRC section 415(c)(1)(A) is $72,000 (up from $70,000 in 2025) — all confirmed directly from the IRS.
See the IRS announcement 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 and the IRS's COLA increases for dollar limitations on benefits and contributions table for the source figures, and the IRS's SEP contribution limits page for how SEP-IRA contribution limits work. This tool is for the 2026 tax year only, is US federal only, and is not a substitute for a financial advisor, plan provider, or the IRS's own guidance.