Last updated . Tax year 2026. llms.txt
$43,087 is the 2026 solo 401(k) contribution on $100,000 of Schedule C profit, single, under 50, at a 25% plan rate: a $24,500 deferral plus $18,587 from the employer. A SEP IRA on the same profit is $18,587. Federal income tax falls by $5,243.17.
Deductible contribution
$43,087.00
Deductible $43,087.00. Tax saved $5,243.17.
How the total splits
Pub 560 worksheet.
| Net earnings after half of SE tax | $92,935 |
|---|---|
| Reduced plan rate | 0.200000 |
| Elective deferral | $24,500 |
| Catch-up | $0 |
| Employer contribution | $18,587 |
| Annual additions, excluding catch-up | $43,087 |
| Deductible contribution | $43,087 |
| SEP IRA at 25% | $18,587 |
| Federal income tax saved | $5,243.17 |
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Employer contribution = net profit minus half of SE tax, times the Publication 560 reduced rate. Deferral and catch-up are added, then the annual-additions and compensation caps apply.
The elective deferral is $24,500 for 2026. Someone who is 50 or older can add a $8,000 catch-up. Someone who turns 60, 61, 62, or 63 in 2026 can add $11,250 instead. Catch-up is on top of the annual-additions limit and is added here only when the deferral you type reaches $24,500.
The employer piece starts from net profit minus the deductible half of self-employment tax. Publication 560 then reduces the plan rate: rate divided by 1 plus the rate, so 25% becomes 0.200000. A whole percent uses the rate table. Any other percent is rounded to three decimals. The result cannot use compensation above $360,000, and deferrals plus the employer contribution cannot pass $72,000. Catch-up is not in that $72,000.
A SEP IRA on this page is the same Publication 560 worksheet with no elective deferral and a 25% plan rate. On $100,000 of profit that is $18,587, against $43,087 in the solo 401(k). The SEP dollar cap for 2026 is $72,000, the same defined-contribution limit. There is no SEP catch-up.
The solo 401(k) is ahead by the deferral, and by the catch-up when age allows it, until the annual-additions cap binds. On $500,000 of profit at age 60–63, both the SEP and the solo 401(k) employer piece stop at $72,000 of annual additions. The solo 401(k) still adds the $11,250 catch-up, for $83,250.
| Elective deferral | $24,500 |
|---|---|
| Employer contribution | $18,587 |
| Deductible contribution | $43,087 |
| SEP IRA at 25% | $18,587 |
| Income tax saved | $5,243.17 |
| Net earnings after the $13,596 SE deduction | $186,404 |
|---|---|
| Reduced rate | 0.078 |
| Maximum deduction | $14,540 |
| Annual additions | $72,000 |
|---|---|
| Catch-up | $11,250 |
| Solo 401(k) | $83,250 |
| SEP IRA at 25% | $72,000 |
The elective deferral limit is $24,500. The catch-up is $8,000 at age 50 or older, and $11,250 for a person who turns 60, 61, 62, or 63 in 2026. Those dollar amounts are the 2026 limits in Notice 2025-67. A lower amount you type is kept. An amount above $24,500 is cut to the cap.
Publication 560 reduces the plan rate because the contribution and the net earnings depend on each other. A 25% plan rate becomes 0.200000. The worksheet applies that reduced rate to profit minus half of self-employment tax, then keeps the smaller of that amount, 25% of the compensation limit, and the room left under the annual-additions limit.
A SEP IRA has no elective deferral and no catch-up. At a 25% rate the contribution is 20% of net earnings after half of self-employment tax, and not more than $72,000. On $100,000 that is $18,587. The solo 401(k) on the same profit adds the $24,500 deferral. At age 50 the same profit allows $51,087 because of the $8,000 catch-up.