Updated November 5, 2026. Quick answer: The Rate Worksheet for Self-Employed in Publication 560 (2025) turns the contribution rate in your plan into the lower rate you use for your own contribution: line 1 is your plan rate as a decimal, line 2 is line 1 plus 1, and line 3 is line 1 divided by line 2. A 10% plan rate becomes 0.090909 and 8.5% becomes 0.078. That line 3 rate goes on Step 4 of the Deduction Worksheet for Self-Employed, which is on its own page.
Who uses the rate worksheet and why the rate is lowered
The publication says “if you are self-employed, you must use the rate table or rate worksheet and deduction worksheet to figure your deduction for contributions you made for yourself to a SEP IRA or qualified plan”. The reason the rate is lowered is circular: “The deductions for your own contributions and your net earnings depend on each other.” The publication solves it this way: “you determine the deduction for your own contributions indirectly by reducing the contribution rate called for in your plan”.
There is a limit on who may use it. “The table and the worksheets in chapter 5 apply only to self-employed individuals who have only one defined contribution plan, such as a profit-sharing plan.” It adds “A SEP plan is treated as a profit-sharing plan.” and “don’t use this worksheet for SARSEPs”.
Rate table or rate worksheet
The publication offers two ways to the same number. “If your plan’s contribution rate is a whole percentage” you can read it from the Rate Table for Self-Employed (1% to 25%, below). For any other rate, “you can’t use the Rate Table for Self-Employed” and the worksheet below is the tool.
The three lines of the Rate Worksheet for Self-Employed
| Line | What it asks |
|---|---|
| 1 | “Plan contribution rate as a decimal” |
| 2 | “Rate in line 1 plus 1” |
| 3 | “Self-employed rate as a decimal rounded to at least 3 decimal places” |
In plain terms, the rate you carry to Step 4 is your plan rate divided by one plus your plan rate. That is why it is always smaller than the plan rate.
Example from the publication
The publication’s own example is a sole proprietor whose plan contributes 8.5% (0.085) of compensation. The worksheet goes:
| Line | Entry | Value |
|---|---|---|
| 1 | Plan contribution rate as a decimal (the publication’s example, 8.5%) | 0.085 |
| 2 | Line 1 plus 1 (computed) | 1.085 |
| 3 | Line 1 divided by line 2, 0.085 divided by 1.085 is 0.07834 (computed), rounded to three places as the publication’s example does | 0.078 |
The line 3 instruction says to round to at least three places, so more places are allowed. The publication’s example uses three. The effect is real: computed to five places the rate is 0.07834, and on the publication’s own net earnings of $186,404 that is about $14,603 (computed, 186,404 times 0.07834) rather than the $14,540 that 0.078 gives. Follow the rounding your preparer or software uses, and keep the same rate through the whole Deduction Worksheet.
Rate Table for Self-Employed, whole percentages
Each rate below is the plan percentage divided by 100 plus that percentage, to six places. Each row matches the rate printed in the publication’s table, and the 25% row is the one the publication stars.
| Plan contribution rate (shown as %) | Your rate (as a decimal) |
|---|---|
| 1 | 0.009901 |
| 2 | 0.019608 |
| 3 | 0.029126 |
| 4 | 0.038462 |
| 5 | 0.047619 |
| 6 | 0.056604 |
| 7 | 0.065421 |
| 8 | 0.074074 |
| 9 | 0.082569 |
| 10 | 0.090909 |
| 11 | 0.099099 |
| 12 | 0.107143 |
| 13 | 0.115044 |
| 14 | 0.122807 |
| 15 | 0.130435 |
| 16 | 0.137931 |
| 17 | 0.145299 |
| 18 | 0.152542 |
| 19 | 0.159664 |
| 20 | 0.166667 |
| 21 | 0.173554 |
| 22 | 0.180328 |
| 23 | 0.186992 |
| 24 | 0.193548 |
| 25* | 0.200000* |
* “The deduction for annual employer contributions (other than elective deferrals) to a SEP plan, a profit-sharing plan, or a money purchase pension plan can’t be more than 20% of your net earnings (figured without deducting contributions for yourself) from the business that has the plan”, which is why the 25% row is capped at 0.200000. The next page uses the rate: the Deduction Worksheet for Self-Employed, Steps 1 to 21.
Edition
This page reads Publication 560 (2025), Retirement Plans for Small Business, the file irs.gov served on 2026-11-05. Step numbers and dollar amounts belong to that edition, so check the label printed on the worksheet in your own copy before you follow a step reference.
Common mistakes
- Using the plan rate itself on Step 4. The worksheet exists to lower it, and the full plan rate overstates the deduction.
- Using the table for a rate that is not a whole percent. In a computed example, a plan rate of 10.5% is not in the table, so line 1 is 0.105 and line 3 is 0.095 to three places.
- Using these worksheets with a second plan or for a SARSEP. The publication limits them to one defined contribution plan and excludes SARSEPs.
- Mixing rounding. Pick the number of decimal places once and use the same rate on Step 4 and every later check.
Related: Publication 560, the SEP IRA contribution limit, and the Solo 401(k) contribution calculator.
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Answer againSources
- Publication 560 (2025), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans): https://www.irs.gov/pub/irs-pdf/p560.pdf
- IRS, About Publication 560, Retirement Plans for Small Business: https://www.irs.gov/forms-pubs/about-publication-560
Read from the IRS documents linked above on November 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.