Updated October 28, 2026. Quick answer: The IRS has not yet announced the 2027 SEP IRA compensation threshold, the minimum yearly pay that makes an employee eligible for employer contributions under a simplified employee pension. For 2026 it is $800, up from $750 in 2025, per IRS Notice 2025-67. This page updates when the IRS publishes the 2027 figure.
More on the 2026 tax figures: the SEP IRA pay threshold for 2026.
What is not yet announced
As of October 28, 2026 the IRS has not published the Notice that sets the 2027 retirement plan limits; the 2026 version was Notice 2025-67. This page states only the 2026 figure, as a 2026 figure, and changes when the IRS publishes the 2027 Notice.
The threshold year by year
The IRS Notice states it this way: “The compensation threshold under section 408(k)(2)(C) regarding simplified employee pensions is increased from $750 to $800.”
| Year | SEP pay threshold | Change from prior year | Source |
|---|---|---|---|
| 2025 | $750 | Prior-year figure in IRS Notice 2025-67 | |
| 2026 | $800 | +$50 (computed) | IRS Notice 2025-67 |
| 2027 | not yet announced | Awaiting the IRS Notice |
What the statute says
A SEP must cover each employee who meets three tests. Section 408(k)(2) lists them: “(A) has attained age 21, (B) has performed service for the employer during at least 3 of the immediately preceding 5 years, and (C) received at least $450 in compensation (within the meaning of section 414(q)(4)) from the employer for the year.” The $450 in test (C) is the statute’s base amount, and it is indexed. The statute says the Treasury shall adjust it “at the same time and in the same manner as under section 415(d)”, with this rounding: “any increase in the $450 amount which is not a multiple of $50 shall be rounded to the next lowest multiple of $50.”
In practice, an employee who earned at least the threshold from you for the year, and meets the age and service tests, must receive the same-percentage contribution as everyone else. The contribution caps are separate and are on the SEP IRA contribution limit.
Check of the 2026 figure
Using public inflation data: the BLS CPI-W averaged 174.133 for July to September 2001 and 317.265 for July to September 2025, a ratio of 1.82197. $450 times 1.82197 is $819.89 (computed), which rounds down to a multiple of $50, or $800. That matches the Notice. This is our arithmetic on public data, shown to explain the 2026 figure; it is not a 2027 estimate.
Common mistakes
- Mixing this threshold up with the SEP contribution limit. This is the pay an employee must have earned to be covered, not the amount that can be contributed.
- Using last year’s $750 for the 2026 plan year. The IRS Notice sets $800 for 2026.
- Assuming a 2027 number. Until the IRS publishes the 2027 Notice there is none.
Related: the SEP IRA contribution limit, the 2026 SEP IRA limit, the SIMPLE IRA limit, and the 2027 tax numbers.
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Answer againSources
- Internal Revenue Service, Notice 2025-67, 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living: www.irs.gov
- 26 U.S.C. 408, Individual retirement accounts (U.S. Code, 2024 edition, U.S. Government Publishing Office): www.govinfo.gov
- Bureau of Labor Statistics, CPI for Urban Wage Earners and Clerical Workers (CPI-W), U.S. city average, all items, series CWUR0000SA0 (public data API): api.bls.gov
Read from the IRS and Treasury documents linked above on October 28, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.