For 2026, a self-employed person can put away $24,500 in employee deferrals inside a Solo 401(k), plus an employer contribution worth up to 20% of net earnings after half of self-employment tax, with total annual additions capped at $72,000. A SEP IRA has one ceiling: the lesser of 25% of compensation or $72,000. At 60 to 63, an $11,250 super catch-up lifts a Solo 401(k) total to as much as $83,250.
This guide gives you the official 2026 limit for every plan and age band, the calculation most people get wrong, a profit-by-profit table, the stacking rules when you also hold a day job, and the deadlines. Want a fast read on the profit you are starting from? Run your numbers through our self-employment tax calculator first.
The situations below are illustrative examples, not client case files.
Key takeaways
- Solo 401(k): $24,500 employee deferral plus an employer contribution of up to 20% of net earnings, with a $72,000 total under section 415(c). Savers 50 to 59 add $8,000; savers 60 to 63 add $11,250.
- SEP IRA: the lesser of 25% of compensation or $72,000 — no employee deferral, no catch-up. The 25% plan rate becomes an effective 20% of net earnings after half of self-employment tax.
- The employer contribution is 20% of (net earnings minus half of self-employment tax), not 25% of net profit. A $100,000 profit supports about $18,587, not $20,000.
- The $24,500 deferral limit is per person, not per plan. Max a 401(k) at a job and your side-business deferral room is zero — but the employer contribution remains.
- A $360,000 compensation cap sits on top. Past that ceiling, the percentage no longer grows your contribution.
Quick answer: the 2026 self-employed contribution limits at a glance
The four plans you will meet use three different limit systems, so the honest answer is a table.
The one-line answer for a solo 401(k)
A Solo 401(k) lets you contribute as both boss and employee: $24,500 in deferrals plus an employer contribution of up to 20% of net earnings after half of self-employment tax, everything combined capped at $72,000 and at 100% of compensation. Add $8,000 at 50 to 59, or $11,250 at 60 to 63.
The one-line answer for a SEP IRA
A SEP IRA is employer-only. Your contribution is the lesser of 25% of compensation or $72,000 — about 20% of net earnings after half of self-employment tax. There is no employee deferral and no catch-up.
The full 2026 limits table
| Plan | Employee deferral | Catch-up | Employer side | 2026 total ceiling |
|---|---|---|---|---|
| Solo 401(k) | $24,500 | $8,000 at 50-59 and 64+; $11,250 at 60-63 | up to 20% of (net earnings minus half of SE tax) | $72,000 under section 415(c); $80,000 at 50-59 and 64+; $83,250 at 60-63 |
| SEP IRA | none | none | up to 25% of compensation, capped at $72,000 | $72,000 |
| SIMPLE IRA | $17,000 | $4,000 at 50+; $5,250 at 60-63 | 2%-3% match or 2% nonelective | $17,000 plus catch-up |
| Traditional or Roth IRA | $7,500 | $1,100 at 50+ | not applicable | $7,500; $8,600 at 50+ |
The $80,000 and $83,250 figures are sums, not separate official numbers: $72,000 plus the $8,000 or $11,250 catch-up. For reference, 2025 ran $23,500 deferrals, a $70,000 total, and a $7,000 IRA limit; every 2026 figure above is higher.
Dana, a freelance UX designer in Austin, netted $120,000, read that she could "put away 25%," and budgeted $30,000 for a SEP IRA. Her accountant ran the Publication 560 worksheet; her real ceiling was about $22,300. She had nearly overfunded the account.
Solo 401(k) contribution limits for 2026
The solo 401k contribution limits are the ones most freelancers ask about first. It is the only plan with two contribution doors.
The employee side: a flat $24,500 deferral
Your employee deferral is a flat dollar cap, not a percentage: $24,500 for 2026, up from $23,500. It cannot exceed 100% of compensation, but at realistic profit levels that rarely bites. This is the piece a SEP IRA simply does not have.
The employer side: up to 25% of compensation
A plan written at the standard 25% rate does not let you take 25% of net profit, because compensation for plan purposes is not net profit. For a sole proprietor it is net earnings after subtracting both half of self-employment tax and your own contribution — a circular definition the IRS resolves with a reduced rate near 20%.
The combined ceiling: $72,000 under section 415(c)
Everything the plan receives for you, deferral plus employer contribution, cannot exceed the section 415(c) limit of $72,000, nor your compensation. Catch-up contributions sit outside that ceiling, which is how a 55-year-old reaches $80,000 and a 62-year-old $83,250.
SEP IRA contribution limits for the self-employed in 2026
A SEP IRA — often searched as a "SEP 401(k)" — is the lowest-effort plan on the market, and for freelancers, independent contractors, and 1099 income it is the easiest plan to open. Its single ceiling is both its appeal and its limit.
25% of compensation or $72,000 — whichever is less
Your SEP contribution is the lesser of 25% of compensation or $72,000. The circular calculation applies here too, so the effective figure is about 20% of net earnings after half of self-employment tax. You can only count compensation above $800 and up to $360,000, and the contribution is discretionary — you can skip a lean year.
What a SEP IRA does not have (no employee deferral, no catch-up)
A SEP allows no employee salary deferrals and no catch-up contributions; only the employer funds it. That is why a SEP is easier to run than a Solo 401(k), and also why it shelters less on the same profit.
How much can you actually contribute? The self-employed calculation
Your net profit is not your plan compensation, and 25% of the wrong number is still wrong.
Why you cannot just multiply your net profit by 25%
The IRS defines your plan compensation as net earnings after deducting both half of your self-employment tax and the contribution itself. Because the contribution is subtracted first, you cannot solve it with one multiplication — which is why a rate table exists.
The reduced-rate method, straight from IRS Publication 560
The IRS breaks the circularity with a reduced plan contribution rate. Its own example: a 10% plan rate becomes 9.0909%, which is 10% divided by 110%. Run the same logic on the 25% employer rate and you get 25% divided by 125%, or exactly 20%. Our guide to the 92.35% self-employment tax base shows how that figure is built.
Half of your self-employment tax comes off the base first
At $100,000 of net profit, the deductible half of self-employment tax is about $7,065, leaving plan compensation of about $92,935. Apply the 20% reduced rate and you get about $18,587 — not $20,000. A shortcut some calculators use, net profit times 92.35% times 20%, lands close, about $18,470, but it is an approximation. Your official figure comes from the Publication 560 worksheets.
Your maximum contribution by profit level
What the reduced-rate method produces across the profit range. Every figure is an estimate; your exact number comes from the Publication 560 worksheet.
| Your net profit | Estimated half of SE tax | Plan compensation | Maximum SEP IRA contribution |
|---|---|---|---|
| $50,000 | about $3,532 | about $46,468 | about $9,294 |
| $100,000 | about $7,065 | about $92,935 | about $18,587 |
| $150,000 | about $10,597 | about $139,403 | about $27,881 |
| $200,000 | about $14,117 | about $185,883 | about $37,177 |
| $300,000 | about $15,456 | about $284,544 | about $56,909 |
| about $376,500 or more | depends on the 0.9% Medicare surtax | -- | $72,000 (the cap) |
Note two things: you need roughly $376,500 of profit before a SEP even reaches $72,000, and the half-tax subtraction is why a round profit never yields a round contribution.
Why a $100,000 profit is not a $20,000 SEP contribution
The quick math takes 20% of profit: $20,000. The IRS math takes 20% after half of self-employment tax: about $18,587. Invested at 7%, that roughly $1,400 a year compounds into thousands over a career.
Curious what your own profit buys you? Nail down your net earnings with our self-employment tax estimator, then take that profit to the Publication 560 worksheet.
Catch-up contributions by age in 2026
Three age bands, and one of them comes with a new rule.
Age 50 to 59: an extra $8,000
From the year you turn 50, add $8,000 to the $24,500 deferral in a Solo 401(k), for a personal total of $32,500. In a SIMPLE IRA the 50-plus catch-up is $4,000; in an IRA it is $1,100. These belong to separate plan types and do not stack.
Age 60 to 63: the $11,250 SECURE 2.0 super catch-up
SECURE 2.0 created a higher band for ages 60 through 63. For 2026 the super catch-up remains $11,250 in a 401(k)-type plan, which is how a 62-year-old reaches $83,250. In a SIMPLE plan the higher figure is $5,250. At 64 you drop back to $8,000.
New for 2026: high earners must make catch-up contributions as Roth
If your prior-year wages topped $150,000, your 2026 catch-up contributions must be designated as Roth. Note the timing: the test is the previous year's wages, so a strong 2025 forces a Roth catch-up in 2026.
SIMPLE IRA and IRA limits for 2026
SIMPLE IRA: $17,000 plus a $4,000 catch-up
The SIMPLE IRA allows $17,000 in employee deferrals, plus $4,000 at 50 and over and $5,250 for ages 60 to 63, with an employer match or 2% nonelective contribution. SIMPLE plans suit small businesses, not solo operators, who get more room elsewhere.
Traditional and Roth IRA: $7,500 plus $1,100
The plain IRA — what many call the self-employed IRA — holds $7,500 for 2026, up from $7,000 in 2025, or $8,600 if you are 50 or older, applied across all your IRAs combined. It is separate from any workplace plan, so it is easy to add. To stack a third triple-tax-free account, see our guide to an HSA for the self-employed.
The IRA phase-out ranges that decide deductibility
A traditional IRA contribution is deductible only under the phase-out, which a workplace plan triggers. For 2026 that is $81,000 to $91,000 for a single filer covered by a plan, $129,000 to $149,000 where the contributing spouse is covered, and $242,000 to $252,000 where only the spouse is covered. Roth contributions phase out at $153,000 to $168,000 for singles and $242,000 to $252,000 for couples.
Using more than one plan: how the limits stack
Hold a day-job 401(k) and a side business, and the limits interact in ways that are easy to get wrong.
Can I contribute to a SEP IRA and a 401(k) at the same time?
Yes — you can hold a SEP IRA and a 401(k) at the same time. What you cannot do is double the $24,500 deferral, because that limit is per person. You can also run a SEP IRA alongside a Solo 401(k), but the employer-side 25%-of-compensation limit and the section 415(c) cap apply separately to each plan.
The $24,500 deferral limit is per person, not per plan
Your employee deferral cap follows you, not the plan. Contribute $24,500 to an employer 401(k) and your personal deferral room is used up, even if your side business opens a new Solo 401(k). The IRS states it plainly: the deferral limits are by person, not by plan. What remains is the employer contribution.
The $72,000 annual additions limit is per plan
The section 415(c) ceiling applies plan by plan. Your employer's plan has its own $72,000 ceiling, and your Solo 401(k) a separate one, each measured against the compensation that plan counts. A high earner with a generous match can still find room through a side business.
A side business plus a day-job 401(k)
Use your day-job 401(k) for the deferral if the match is worth it, then add the employer contribution at the side business.
Marcus, a marketing consultant in Chicago, maxed his day-job 401(k) with $24,500, then expected to defer another $24,500 into a Solo 401(k) he opened in November. The limit is per person, so his remaining deferral room was zero. All that was left was the employer contribution, about 20% of his side-business net earnings.
Deadlines: when each 2026 contribution is due
A contribution you meant to make but missed is worth nothing. These are the dates.
| Plan | Deadline for 2026 contributions |
|---|---|
| Solo 401(k) salary deferral | December 31, 2026 — the deferral election must be in place by year end |
| Solo 401(k) employer contribution | The business tax return due date, including extensions |
| SEP IRA | The business tax return due date, including extensions (the plan itself can be opened then) |
| SIMPLE IRA employer contribution | The business tax return due date, including extensions |
| Traditional and Roth IRA | April 15, 2027 — filing extensions do not extend this one |
Solo 401(k): the deferral election by December 31
The employee deferral is the one piece with a hard calendar-year cutoff. A sole proprietor must have a written deferral election in place by December 31. The employer contribution can wait until you file.
SEP IRA: up to the filing deadline, including extensions
A SEP is the flexible one. You can establish the plan and fund it up to your business return's due date, including extensions — for many sole proprietors, into the following fall.
IRA: the April filing deadline
IRA contributions are due by the April 2027 filing deadline, and a filing extension does not extend it. Fund it before mid-April.
The $360,000 compensation cap — and why your business structure decides it
Every percentage limit rests on a dollar of compensation, and that word means different things depending on your setup.
For a sole proprietor: net earnings
If you file a Schedule C, your plan compensation is net earnings from self-employment after half of self-employment tax and your own contribution. There is no separate salary to set.
For an S-corp: your W-2 salary
An S-corp changes the base entirely. Your plan compensation is your W-2 salary, not your profit, so an S-corp election lets you choose the number the percentage attaches to.
Why a low salary quietly caps your retirement room
A 25% employer rate on a $40,000 salary tops out at $10,000, however profitable the business. Pay yourself too little and you starve your own account; pay too much and you add payroll taxes. At $360,000 of salary the cap stops mattering.
How contributions move your self-employment tax, QBI, and ACA subsidy
A retirement contribution reshapes three other numbers on your return.
They lower income tax, not self-employment tax
A retirement contribution is an above-the-line deduction, so it reduces taxable income — but not self-employment tax. That 15.3% is computed separately on Schedule SE, against the $184,500 wage base, whatever you contribute.
The QBI interaction
Contributions reduce qualified business income, which reduces the QBI deduction for freelancers. Model it if you sit near a QBI threshold.
The ACA MAGI interaction
If you buy your own coverage, contributions matter more. A pre-tax contribution lowers the modified adjusted gross income that sets your ACA premium tax credits for the self-employed, which can be worth more than the tax saved. The same logic applies to your self-employed health insurance deduction. Lower income also shifts your quarterly payments, so pair a contribution with our quarterly estimated tax guide.
Five mistakes that cost you contribution room
Applying 25% to your raw net profit
The 25% rate is not 25% of profit. Subtract half of self-employment tax and use the reduced rate, or you will over-contribute.
Missing the December 31 deferral window
Leo, a freelance developer in Denver, set up his Solo 401(k) in January 2027 and elected his $15,000 deferral then. The employer contribution was still allowed, but the deferral window had closed, and $15,000 of room was gone.
Assuming a SEP IRA has catch-up contributions
It does not, at any age. Extra room for savers over 50 lives in a 401(k)-type or IRA account.
Ignoring the per-person deferral rule
Your $24,500 deferral is shared across a day-job 401(k) and your side business. Counting on double is a fast route to an excess.
Forgetting the compensation cap
Once plan compensation reaches $360,000, the percentage stops adding.
Still deciding between a SEP IRA and a Solo 401(k)?
This page answers what you can contribute, not which plan wins. The short version: a SEP takes minutes to open with no annual paperwork, while a Solo 401(k) reaches the same $72,000 on far less profit, because the extra $24,500 deferral is a door the SEP lacks, so it usually pulls ahead once profit clears roughly $100,000. For the full head-to-head, read SEP IRA vs Solo 401(k).
Key takeaways for 2026
The 2026 self-employed retirement contribution limits reward a freelancer who plans. The deferral is $24,500, the catch-up is $8,000 at 50 to 59 and $11,250 at 60 to 63, the section 415(c) ceiling is $72,000, and the SEP cap is the lesser of 25% of compensation or $72,000. The employer contribution is 20% of net earnings after half of self-employment tax — about $18,587 on a $100,000 profit, not $20,000. And the deferral limit is per person while the annual additions limit is per plan. Know the ceiling, watch your profit, and move money before December 31.
Ready to size your own contribution? Start with the free self-employment tax calculator to find your net earnings, then take that profit to the Publication 560 worksheet.
Educational information only, not tax, legal, or insurance advice. High-income and multi-plan situations are worth a conversation with a CPA.
Sources
Every figure above is drawn from the primary sources below.
- IRS, COLA increases for dollar limitations on benefits and contributions — the 2026 dollar limits for IRAs, SEP, SIMPLE, and 401(k) plans, including the $24,500 deferral, the $8,000 and $11,250 catch-ups, the $72,000 defined contribution limit, the $360,000 compensation cap, the $800 SEP minimum compensation, and the $184,500 Social Security wage base.
- IRS, 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (IR-2025-111) — the 2026 limits in news-release form, including the $32,500 total for savers 50 and over and the traditional and Roth IRA phase-out ranges.
- IRS, Notice 2025-67 — the official technical guidance setting the 2026 cost-of-living adjustments.
- IRS, One-participant 401(k) plans — the employee-deferral versus employer-contribution structure and the rule that the deferral limit applies by person, not by plan.
- IRS, Self-employed individuals: Calculating your own retirement plan contribution and deduction — the circular calculation, the reduced plan contribution rate, and the Publication 560 worksheets.
- IRS, SEP contribution limits (including grandfathered SARSEPs) — the lesser-of test quoted verbatim: 25% of compensation or $72,000 for 2026, and "Elective salary deferrals and catch-up contributions are not permitted in SEP plans."
- IRS, Retirement topics: IRA contribution limits — the 2026 IRA limit of $7,500, or $8,600 if you are 50 or older.
- IRS, Publication 560, Retirement Plans for Small Business — the rate table and worksheets for the self-employed.