New Jersey (NJ) Self-Employed Retirement Contribution Calculator
Tax year: 2026 · Figures for Tax Year 2026 · Source: IRS
Built and audited by the CalcSumly Engineering Team using official IRS and State Department of Revenue data.
Your Schedule C net profit before the retirement contribution deduction.
Age as of December 31. Determines your Solo 401(k) catch-up contribution tier (ages 50+, 60-63).
Solo 401(k)
Recommended$46,804
maximum contribution · 2026
New Jersey does not allow a deduction for Solo 401(k) or SEP-IRA contributions on the NJ state return. Income deferred into these plans is taxable in NJ in the year contributed. NJ state income tax savings are $0.
SEP-IRA
$22,304
maximum contribution · 2026
New Jersey does not allow a deduction for Solo 401(k) or SEP-IRA contributions on the NJ state return. Income deferred into these plans is taxable in NJ in the year contributed. NJ state income tax savings are $0.
State savings are $0 for New Jersey. See conformity notes below.
At $120,000 of self-employment income in New Jersey, a Solo 401(k) allows $46,804 maximum contribution versus $22,304 for a SEP-IRA — a difference of $24,500 in contribution capacity.
How self-employed retirement contributions work in New Jersey for 2026
Solo 401(k) and SEP-IRA contributions are above-the-line deductions on Form 1040 Schedule 1. They reduce federal AGI but do not affect self-employment tax (SE tax is calculated on Schedule C net profit before contributions).
New Jersey does not recognize federal retirement deductions. NJ requires that income deferred into a Solo 401(k) or SEP-IRA be reported as NJ taxable income in the year contributed. NJ state savings shown are $0.
Solo 401(k) vs SEP-IRA comparison
The Solo 401(k) allows a larger contribution at most income levels because it adds an employee elective deferral ($24,500) before the employer profit-sharing portion. The SEP-IRA has only the employer portion (20% of net SE compensation, capped at $72,000). At very high incomes where the Solo 401(k) base also hits $72,000, the plans become equal unless you qualify for a catch-up contribution (Solo 401(k) only).
Catch-up contributions (Solo 401(k) only)
Filers age 50-59 or 64+ add $8,000 in catch-up above the §415(c) cap. Filers age 60-63 add $11,250 (SECURE 2.0 enhanced catch-up). SEP-IRA has no catch-up at any age.
Scope and limitations
This calculator models standard deduction filers. It does not include QBI deduction, health insurance deduction, other plan types, or interactions with employer 401(k) plans from W-2 employment. Consult a tax professional and plan custodian before contributing.
Sources
- IRS Notice 2025-67 — 2026 Retirement Plan Limits (§415, §402(g), §401(a)(17))
- IRS Publication 560 — Retirement Plans for Small Business (SEP, SIMPLE, Qualified Plans)
- IRS Rev. Proc. 2025-32 — 2026 Standard Deduction Amounts
- NJ Division of Taxation — NJ Income Tax Rates (nj.gov)
- NJ Division of Taxation — NJ-W-4 Employee Withholding Certificate
- Tax Foundation — New Jersey Income Tax Rates 2026
Frequently asked questions
Do retirement contributions reduce self-employment tax?+
No. Solo 401(k) and SEP-IRA contributions are above-the-line deductions on Form 1040 Schedule 1, not Schedule C deductions. SE tax is calculated on Schedule C net profit before contributions. Contributions reduce federal AGI, which lowers federal income tax and most state income taxes, but SE tax is unchanged.
What is the maximum Solo 401(k) contribution for self-employed in 2026?+
The 2026 Solo 401(k) base maximum is $72,000 (§415(c)) plus catch-up: $8,000 for ages 50-59 or 64+ and $11,250 for ages 60-63 (SECURE 2.0). The employee elective deferral is $24,500. The employer portion is 20% of net SE compensation (IRS Pub 560 formula). The elective deferral plus employer contribution cannot exceed $72,000.
What is the maximum SEP-IRA contribution for 2026?+
The 2026 SEP-IRA maximum is 20% of net SE compensation (net profit minus the deductible half of SE tax), capped at $72,000. Net SE compensation is also capped at the §401(a)(17) compensation limit of $360,000. SEP-IRA has no employee deferral and no catch-up option.
Does New Jersey recognize federal retirement plan deductions?+
New Jersey does not allow a deduction for contributions to Solo 401(k) or SEP-IRA plans on the NJ state return for traditional plan contributions. New Jersey taxes income that is excluded from federal income through retirement plan deductions. This is a significant NJ non-conformity: federal income tax savings are real, but NJ state income tax savings from retirement contributions are not recognized under current NJ law.
Why does New Jersey not recognize retirement deductions?+
New Jersey has its own income tax system that does not conform to many federal retirement plan provisions. NJ requires that income deferred into a Solo 401(k) or SEP-IRA be reported as NJ taxable income in the year contributed, then excluded when distributed (the reverse of federal treatment). As a result, NJ state income tax is not reduced by the contribution. The calculator shows $0 in NJ state savings for this reason.
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