How much can I contribute to a SEP IRA in 2026?

Okay, let's break down SEP IRA contribution limits for 2026.

Here's what you need to know:

* **Contribution Limit:** For 2026, the maximum SEP IRA contribution is the *lesser* of:

* **20% of your net self-employment income** (income after business expenses).

* **$69,000** (this is the limit for 2026 – it’s subject to annual IRS adjustments).

* **Calculating Net Self-Employment Income:** This is *not* your gross income. It's your business revenue *minus* all allowable business deductions (expenses). For example:

* If you earn $80,000 in self-employment income and have $10,000 in deductible business expenses, your net self-employment income is $70,000.

* 20% of $70,000 = $14,000. You could contribute up to $14,000 to your SEP IRA.

* **Income Base for the 20% Calculation:** You *only* calculate the 20% on income you *actually* have. You don’t get to contribute 20% of a hypothetical income you *could* have earned.

* **Example with Higher Income:** If your net self-employment income is $345,000 or more, you're still limited to the $69,000 maximum contribution for 2026. (20% of $345,000 is $69,000).

* **Who Can Contribute**: You can contribute as a sole proprietor, freelancer, or partner in a partnership.

* **Employer Contributions**: If you have employees, you must contribute the same percentage of pay for them as you contribute for yourself.

⚠️ Disclaimer: This is for educational purposes only. Always consult a licensed CPA for personalized advice.