While contributing the max 25% of self employment income to a SEP IRA, Turbo Tax's calculation is much lower that the maximum. Why is that?

[jimmyhaun]

There maximum calculation is only 17% of the self employment income.

[MaryK4]

The difference is the one-half of self-employment tax (7.65%).

As a self-employed individual, when figuring the contribution for your own SEP-IRA, compensation is your net earnings from self-employment, less the following deductions:

• one-half of your self-employment tax and
• contributions to your own SEP-IRA.

[dmertz]

The maximum SEP contribution for a self-employed individual is 20% of net earnings or $58,000, whichever is less.  Net earnings are net profit minus the deductible portion of self-employment taxes.