Solo 401(k) Tax Optimizer
See exactly how much to contribute and how much you'll save in federal taxes — tailored to your 2026 numbers.
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Your 2026 retirement plan
Fill in your situation and click Calculate →
See exactly how much to contribute and how much you'll save in federal taxes — tailored to your 2026 numbers.
Your 2026 retirement plan
Fill in your situation and click Calculate →
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Enter your net self-employment income, age, filing status, and any existing retirement contributions. The optimizer calculates your maximum allowable contributions across a Solo 401(k), SEP-IRA, Traditional IRA, Roth IRA, and HSA — then shows your total tax savings in dollars at your marginal rate. All math uses 2026 IRS published limits and the standard self-employment tax deduction formula.
The result is a prioritized contribution plan: where to put each dollar for the maximum federal tax reduction. Because Solo 401(k) and HSA contributions reduce both income tax and self-employment tax (which runs at 15.3% on the first dollar), getting this order right is worth thousands of dollars per year.
A Solo 401(k) — also called an Individual 401(k), Self-Employed 401(k), or One-Participant 401(k) — is a retirement plan designed specifically for business owners with no employees other than a spouse. It combines the contribution limits of a traditional employer 401(k) with the administrative simplicity of an IRA.
The defining feature of a Solo 401(k) is that you wear two hats: as the employee, you can defer up to $24,500 of earned income in 2026. As the employer (your business), you can make an additional profit-sharing contribution of up to 25% of your net self-employment compensation. Combined, those two buckets allow total annual contributions up to $72,000.
Qualifying is straightforward: you need self-employment income and no full-time W-2 employees. That means freelancers, independent contractors, consultants, real estate agents, therapists in private practice, content creators, and anyone else earning 1099 or Schedule C income can open one — even if they also have a full-time job with a different employer.
These limits are set by the IRS and updated annually for inflation. The numbers below are sourced from IRS Notice 2025-70 and reflected in every calculation this tool produces.
| Contribution type | Under 50 | Age 50–59 / 64+ | Age 60–63 |
|---|---|---|---|
| Employee elective deferral | $24,500 | $32,500 | $35,750 |
| Employer profit-sharing | Up to 25% of net SE compensation | ||
| Total annual limit | $72,000 | $80,000 | $83,250 |
Source: IRS Notice 2025-70. The profit-sharing percentage is calculated after the self-employment tax deduction — our optimizer handles this automatically.
Both plans share the same $72,000 ceiling, but how you reach it differs — and that difference favors the Solo 401(k) at most income levels below $200,000.
Example: A freelancer with $70,000 of net self-employment income can contribute ~$36,000 to a Solo 401(k) in 2026 ($24,500 employee deferral + ~$12,000 employer contribution). The same person with a SEP-IRA is capped at ~$13,000 (25% × ~$52,000 after the SE tax deduction). The Solo 401(k) shelters nearly 3× more income.
For self-employed professionals who maximize all three accounts, the tax savings compound dramatically. Here's how the stack works:
Solo 401(k) — up to $72,000
Pre-tax contributions reduce both income tax and self-employment tax. At a combined federal + SE effective rate of ~35%, every $10,000 contributed saves roughly $3,500 in taxes today.
HSA — $4,400 self / $8,750 family
Triple tax-free: deductible going in, grows tax-free, and tax-free on qualified medical withdrawals. Unlike a 401(k), HSA contributions also reduce self-employment tax — a detail most financial advisors miss.
Backdoor Roth IRA — $7,500
If your income exceeds the Roth phase-out ($153,000 single / $242,000 married), contribute to a Traditional IRA then immediately convert. The result is $7,500 per year in permanent tax-free retirement savings — no income limit, no catch.
Any self-employed individual with no full-time W-2 employees (other than a spouse) qualifies. This includes sole proprietors, single-member LLC owners, independent contractors, freelancers, consultants, gig workers, and business owners. You must have earned self-employment income — net profit from Schedule C, Schedule F, or a partnership K-1.
The total Solo 401(k) limit for 2026 is $72,000. This breaks down into two buckets: the employee elective deferral (up to $24,500, or $32,500 if you're 50 or older, or $35,750 if you're between 60 and 63) plus the employer profit-sharing contribution (up to 25% of net self-employment income). The two buckets combined cannot exceed $72,000.
The employee deferral is the portion you contribute as an employee of your own business — up to $24,500 per year. The employer profit-sharing contribution is the additional amount your business contributes on your behalf, calculated as 25% of your net self-employment compensation (after the self-employment tax deduction). Together they can reach the $72,000 annual cap.
Yes — and this is one of the most powerful tax combinations available to self-employed people. A Solo 401(k) reduces your ordinary income tax, while an HSA (up to $4,400 self-only or $8,750 family in 2026) reduces both income tax and self-employment tax. Money in an HSA grows tax-free and is withdrawn tax-free for medical expenses. The StackedTools optimizer calculates both contributions simultaneously.
Yes, but the employee deferral limit ($24,500) is per person, not per plan. If your W-2 employer already took $24,500 in 401(k) deferrals for you, you cannot defer any more as the employee of your own business. You can still make employer profit-sharing contributions from your self-employment income. Our calculator accounts for prior-year deferrals through the "Other 401(k) contributions this year" field.
For most self-employed people, the Solo 401(k) wins — especially at lower income levels. The reason: the Solo 401(k) lets you contribute the full employee deferral (up to $24,500) regardless of income, while a SEP-IRA caps contributions at 25% of net compensation. At $60,000 of net income, a Solo 401(k) can shelter $38,000+ while a SEP-IRA caps at about $11,000. The SEP-IRA is simpler to administer and better at very high income levels (above ~$200,000) where 25% contributions become large.
The plan must be established (legally opened) by December 31 of the tax year you want to contribute for. However, if you're a sole proprietor who files on Schedule C, you can make contributions until your tax filing deadline including extensions (typically October 15). The plan adoption deadline is the hard constraint — you cannot open a Solo 401(k) in April and backdate it.
Yes. If your spouse earns income from your business, they can participate in the same Solo 401(k) plan and contribute their own employee deferral and employer profit-sharing amounts — effectively doubling the household contribution capacity. This is one of the most underused tax strategies for couples running a business together.