How Much Can a Self-Employed Person Contribute to an IRA?

A self-employed person can contribute up to $7,500 to a Traditional or Roth IRA in 2026, or $8,600 at age 50 or older. If you’re asking how much a self-employed person can contribute to an IRA in the broader sense that most people mean — including the IRA-style plans built for business owners — the ceiling jumps to $72,000 through a SEP IRA or Solo 401(k), with catch-up contributions pushing it higher still.¹ Which number applies to you depends on the plan you use and how much you earn.

The Standard IRA Limit: $7,500 for 2026

The plain Traditional and Roth IRA limit doesn’t care whether you’re self-employed or on a payroll. For 2026, you can put in $7,500 across all your Traditional and Roth IRAs combined, or $8,600 if you’re 50 or older. The catch-up amount rose to $1,100 for 2026.¹

Two income rules can shrink that number. Roth IRA contributions phase out for single filers between $153,000 and $168,000 of modified adjusted gross income, and for joint filers between $242,000 and $252,000. Married filing separately phases out from $0 to $10,000, which effectively closes the Roth door under that status.² The Traditional IRA deduction phases out only if you (or your spouse) are covered by a workplace plan. If you also run a SEP IRA, SIMPLE IRA, or Solo 401(k), the IRS treats you as covered.³ For 2026, the deduction phases out from $81,000 to $91,000 for a covered single filer and from $129,000 to $149,000 for a covered joint filer.¹ If neither spouse is covered, the full contribution is deductible at any income.⁴

Why Your Contribution Base Isn’t Your Net Profit

Every percentage-based limit that follows runs off a specific figure the IRS calls net earnings from self-employment. Start with the net profit on your Schedule C or Schedule F, then subtract the deductible half of your self-employment tax.⁵ That reduced number is your compensation for retirement contribution purposes.

The gap is meaningful. On $150,000 of Schedule C net profit, roughly $10,597 comes off for the SE tax deduction, leaving about $139,403 as the base. Every SEP and Solo 401(k) calculation below uses that lower figure, not the $150,000. Skipping the adjustment is the most common way self-employed people accidentally over-contribute.

SEP IRA: Up to $72,000

The Simplified Employee Pension IRA is the easiest higher-limit plan to open. All contributions come from the business, meaning you’re contributing to your own account as the employer. The 2026 ceiling is 25% of compensation up to $72,000, with the compensation base itself capped at $360,000.⁶²

The 25% rate doesn’t apply cleanly when you’re both employer and employee, because the contribution itself lowers the compensation figure it’s based on. The IRS resolves that circularity by treating the effective rate for self-employed individuals as approximately 20% of net earnings from self-employment after the SE tax deduction.⁷ On adjusted net earnings of $139,403, your maximum SEP contribution is roughly $27,881, not the $34,851 that a straight 25% would imply.

The SEP’s real appeal is flexibility. You can max it one year, skip it entirely the next, and adjust freely as the business fluctuates. Under SECURE 2.0, employers can also let participants designate SEP contributions as Roth.⁸

SIMPLE IRA: $17,000 Plus a Required Employer Piece

The SIMPLE IRA fits self-employed people who have staff or expect to. It’s open to businesses with 100 or fewer employees and combines an employee deferral with a mandatory employer contribution.⁹

For 2026, you can defer up to $17,000 of your self-employment income as the employee portion.¹ Catch-ups depend on age:

Age 50 to 59, or 64 and older: $4,000 additional, for a total deferral of $21,000.
Age 60 to 63: $5,250 additional under the SECURE 2.0 super catch-up, for a total of $22,250.

On top of the deferral, the employer contribution is required every year. You pick one of two formulas: a dollar-for-dollar match of employee deferrals up to 3% of compensation, or a flat 2% for all eligible employees whether they defer or not.⁹ The 2% version uses a compensation cap of $360,000 for 2026.² That mandatory piece is the trade-off against the SEP: even in a lean year, you owe something.

Solo 401(k): The Highest Ceiling for Owner-Only Businesses

The Solo 401(k) reaches the highest total of any self-employed plan. It’s available to owner-only businesses, plus a spouse if the spouse works for the business, and its power sits in combining two contribution buckets.

The employee deferral limit for 2026 is $24,500.¹ On top of that, you can add an employer profit-sharing contribution of up to 25% of compensation, which lands at that same effective 20% rate for self-employed individuals as the SEP calculation.⁷ The combined total from both buckets cannot exceed $72,000 for 2026 before catch-ups.²

Catch-up contributions sit on top of that $72,000:

Age 50 to 59, or 64 and older: $8,000 additional, for a potential total of $80,000.
Age 60 to 63: $11,250 additional under the SECURE 2.0 super catch-up, for a potential total of $83,250.

The Solo 401(k) beats a SEP for most owner-only businesses because of that flat $24,500 deferral. A SEP caps every dollar at the 20% effective rate; a Solo 401(k) lets you put the $24,500 in first regardless of income percentage, then layer the profit-sharing piece on top. Someone earning $60,000 in net self-employment income can contribute roughly $36,500 through a Solo 401(k), against about $12,000 through a SEP. The gap narrows as income climbs, but at low- and mid-six-figure earnings, the Solo 401(k) puts more away.¹⁰

One boundary: a Solo 401(k) can’t continue once you have eligible employees beyond your spouse. Hire a W-2 worker who is 21 or older and works at least 1,000 hours in a year, and you’ll need to convert the plan or move the assets elsewhere.

Can You Contribute to Both an IRA and a SEP or Solo 401(k)?

Yes. Running a SEP IRA or Solo 401(k) does not block you from also funding a Traditional or Roth IRA in the same year. Employer contributions to a SEP-IRA don’t count against your $7,500 personal IRA limit.³ What may shrink is the deductibility of the Traditional IRA piece, because the employer plan makes you “covered” for phase-out purposes. A Roth IRA sidesteps deductibility entirely, since Roth contributions are never deductible, but you still have to clear the Roth income limits.

Deadlines That Decide Whether You Can Actually Contribute

Each plan has its own setup and funding timing, and missing the window can cost you a full year of contribution room.

SEP IRA: You can establish and fund a SEP as late as your tax filing deadline, including extensions. It’s the only employer-style plan you can set up retroactively for the prior year.³
SIMPLE IRA: The plan generally must be established between January 1 and October 1 of the year it takes effect. Businesses that start after October 1 can set it up as soon as administratively feasible.⁹
Solo 401(k): The plan must be established by December 31 of the tax year for which you want to make employee salary deferrals. Employer profit-sharing contributions can be funded later, up to your tax filing deadline including extensions.

The Solo 401(k) deadline trips people up most. Decide in March that you want one for the prior year, and you’ve missed the deferral window. A SEP is still available at that point, but only for the employer piece.

What Happens If You Contribute Too Much

Contributing over your limit triggers a 6% excise tax on the excess for every year it stays in the account.¹¹ To avoid the penalty, withdraw the excess and any earnings it generated by your tax filing deadline, including extensions; the withdrawn earnings are taxable in the year the excess contribution was made.¹² Miss that window and the 6% keeps compounding until the excess comes out.

1
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
2
Internal Revenue Service. Notice 2025-67 – 2026 Amounts Relating to Retirement Plans and IRAs
3
Internal Revenue Service. Retirement Plans FAQs Regarding SEPs
4
Internal Revenue Service. Retirement Topics – IRA Contribution Limits
5
Internal Revenue Service. Instructions for Schedule C (Form 1040)
6
Internal Revenue Service. COLA Increases for Dollar Limitations on Benefits and Contributions
7
Internal Revenue Service. Publication 560 – Retirement Plans for Small Business
8
Internal Revenue Service. SECURE 2.0 Act Changes Affect How Businesses Complete Forms W-2
9
Internal Revenue Service. Retirement Plans FAQs Regarding SIMPLE IRA Plans
10
Internal Revenue Service. One-Participant 401(k) Plans
11
Internal Revenue Service. Excess IRA Contributions
12
Internal Revenue Service. IRA Year-End Reminders