25% of your net profit from self-employment is more than you are permitted to contribute to a SEP plan. The maximum SEP contribution is 20% of net earnings. Net earnings are your net profit minus the deductible portion of self-employment taxes.
A traditional IRA contribution will reduce your MAGI for ACA purposes only if the contribution is deductible. Since a SEP-IRA contribution will make you covered by a workplace retirement plan, deductibility of your traditional IRA contribution will be determined from your filing status and your MAGI for the purpose of deducting the traditional IRA contribution (an MAGI different from the MAGI for ACA). However, given that you are doing this to qualify for ACA Premium Tax Credits, your MAGI for the purpose of a deduction for a traditional IRA contribution will certainly be low enough to allow the deduction.
You and your spouse can both make a deductible $6,500 traditional IRA contribution provided that you have sufficient net profit from self employment reduced by the amount that you contribute to the SEP-IRA and the deductible portion of SE taxes plus compensation reported on the W-2 to support the traditional IRA contributions.
Note that you could establish a solo 401(k) before year-end and contribute to that instead of establishing and contributing to a SEP plan. Because a solo 401(k) plan allows employee elective deferrals in addition to employer contributions, the maximum permissible self-employed retirement deduction with a solo 401(k) plan is greater than with a SEP contribution. However, a SEP plan is much simpler to manage, so if the SEP plan allows a sufficient contribution to get your ACA MAGI to where you need it, a SEP plan might be the better choice.
