diff --git a/changelog.d/fix-se-pension-earned-income-limit.fixed.md b/changelog.d/fix-se-pension-earned-income-limit.fixed.md
new file mode 100644
index 00000000000..a6a53eca924
--- /dev/null
+++ b/changelog.d/fix-se-pension-earned-income-limit.fixed.md
@@ -0,0 +1 @@
+Limit the self-employed SEP, SIMPLE and qualified plan deduction to the Pub. 560 maximum for a SEP or a qualified defined contribution plan, based on Schedule C net profit less its share of the deductible part of self-employment tax, so the deduction can no longer exceed that earned income. A SIMPLE IRA can allow slightly more than this limit in a narrow band, which the model doesn't yet capture.
diff --git a/docs/contributed_reforms/owners_draw.md b/docs/contributed_reforms/owners_draw.md
index 34dc304c919..34d5019be6d 100644
--- a/docs/contributed_reforms/owners_draw.md
+++ b/docs/contributed_reforms/owners_draw.md
@@ -119,6 +119,11 @@ profits beyond the OASDI room with HI off stay out of line 5. With
 omits the draw and the limit follows the baseline formula. Disabled years
 use the baseline formula.
 
+The reform also replaces `self_employed_pension_earned_income` (Pub. 560
+Deduction Worksheet for Self-Employed, step 3). Step 2 takes the Schedule C
+business's share of the deductible SE tax, split by net profit as above, and
+the same draw profits join the split.
+
 ## Benefit credit and active NIIT interaction
 
 `owners_draw_credited_earnings` exposes N_D when benefit credit is enabled,
diff --git a/policyengine_us/parameters/gov/irs/gross_income/retirement_contributions/limit/profit_sharing_deduction_rate.yaml b/policyengine_us/parameters/gov/irs/gross_income/retirement_contributions/limit/profit_sharing_deduction_rate.yaml
new file mode 100644
index 00000000000..ebb046eb324
--- /dev/null
+++ b/policyengine_us/parameters/gov/irs/gross_income/retirement_contributions/limit/profit_sharing_deduction_rate.yaml
@@ -0,0 +1,16 @@
+description: The US limits the deduction for employer contributions to a SEP or profit-sharing plan to this share of participants' compensation.
+values:
+  2002-01-01: 0.25
+metadata:
+  unit: /1
+  period: year
+  label: SEP and profit-sharing plan employer deduction limit rate
+  reference:
+  - title: 26 U.S. Code § 404(a)(3)(A)(i)(I) and (h)(1)(C) - Profit-sharing trusts and simplified employee pensions
+    href: https://www.law.cornell.edu/uscode/text/26/404#a_3_A_i_I
+  - title: Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107-16, § 616 (15 to 25 percent, years beginning after 2001)
+    href: https://www.congress.gov/107/plaws/publ16/PLAW-107publ16.pdf#page=66
+  - title: IRS Publication 560 (2025), Rate Table for Self-Employed
+    href: https://www.irs.gov/pub/irs-prior/p560--2025.pdf#page=40
+  - title: IRS Publication 560 (2022), Rate Table for Self-Employed
+    href: https://www.irs.gov/pub/irs-prior/p560--2022.pdf#page=35
diff --git a/policyengine_us/reforms/ssa/owners_draw.py b/policyengine_us/reforms/ssa/owners_draw.py
index 8d676167dda..e41ba70bd03 100644
--- a/policyengine_us/reforms/ssa/owners_draw.py
+++ b/policyengine_us/reforms/ssa/owners_draw.py
@@ -18,6 +18,10 @@
 from policyengine_us.variables.gov.irs.income.taxable_income.adjusted_gross_income.above_the_line_deductions.self_employed_health_insurance_earned_income_limit import (
     self_employed_health_insurance_earned_income_limit as baseline_sehi_limit,
 )
+from policyengine_us.variables.household.expense.retirement.self_employed_pension_earned_income import (
+    self_employed_pension_earned_income as baseline_pension_earned_income,
+    pension_plan_earned_income,
+)
 from policyengine_us.variables.gov.ssa.social_security.ss_aime import (
     ss_aime as baseline_aime,
     _compute_aime,
@@ -333,6 +337,25 @@ def formula(person, period, parameters):
                 - retirement_plan_deduction,
             )
 
+    class self_employed_pension_earned_income(baseline_pension_earned_income):
+        def formula(person, period, parameters):
+            if not _enabled(period, parameters):
+                return baseline_pension_earned_income.formula(
+                    person, period, parameters
+                )
+            # Pub. 560 step 2 takes the Schedule C business's share of
+            # Schedule 1 line 15, split by net profit as on Form 7206 lines 5
+            # to 8. As in the health insurance limit above, the draw profits
+            # whose SECA is in line 15 join the profits it is split over.
+            draw_profits_in_line_15 = where(
+                parameters(period).gov.contrib.ssa.owners_draw.half_seca_deduction,
+                person("owners_draw_niit_exclusion", period),
+                0,
+            )
+            return pension_plan_earned_income(
+                person, period, other_line_5_profits=draw_profits_in_line_15
+            )
+
     class ss_aime(baseline_aime):
         def formula(person, period, parameters):
             supplied = person("ss_aime_input", period)
@@ -366,6 +389,7 @@ def apply(self):
             self.update_variable(self_employment_medicare_tax)
             self.update_variable(self_employment_tax_ald_person)
             self.update_variable(self_employed_health_insurance_earned_income_limit)
+            self.update_variable(self_employed_pension_earned_income)
             self.update_variable(ss_aime)
 
     return reform
diff --git a/policyengine_us/tests/policy/baseline/gov/irs/credits/retirement_saving/savers_credit_qualified_contributions.yaml b/policyengine_us/tests/policy/baseline/gov/irs/credits/retirement_saving/savers_credit_qualified_contributions.yaml
index 15d986812cd..715d4dbcc83 100644
--- a/policyengine_us/tests/policy/baseline/gov/irs/credits/retirement_saving/savers_credit_qualified_contributions.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/irs/credits/retirement_saving/savers_credit_qualified_contributions.yaml
@@ -10,7 +10,9 @@
     roth_ira_contributions_desired: 1_000
     roth_401k_contributions_desired: 1_000
     roth_403b_contributions_desired: 1_000
-    self_employment_income: 1_000
+    # Enough profit for the self-employed plan limit (earned income of
+    # 9,293.52) to allow the full 1,000.
+    self_employment_income: 10_000
     self_employed_pension_contributions_desired: 1_000
     able_contributions_person: 100
     retirement_distributions: 1_000
@@ -36,7 +38,9 @@
 - name: Self-employed pension contributions count after applying the annual additions cap
   period: 2026
   input:
-    self_employment_income: 100_000
+    # 20% of earned income plus the 24,500 deferral limit exceeds the 72,000
+    # annual additions limit at this profit.
+    self_employment_income: 500_000
     self_employed_pension_contributions_desired: 100_000
   output:
     self_employed_pension_contributions: 72_000
diff --git a/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employed_health_insurance_earned_income_limit.yaml b/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employed_health_insurance_earned_income_limit.yaml
index ab97a8aa061..b3dc39c9877 100644
--- a/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employed_health_insurance_earned_income_limit.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employed_health_insurance_earned_income_limit.yaml
@@ -22,7 +22,7 @@
   output:
     # Schedule 1 line 15: 20,000 x 0.9235 x 0.153 / 2 = 1,412.955.
     self_employment_tax_ald_person: 1_412.955
-    # Schedule 1 line 16 (within the $66,000 annual additions limit).
+    # Schedule 1 line 16: 3,000, within the Pub. 560 maximum of 18,587.045.
     self_employed_pension_contribution_ald_person: 3_000
     # Lines 8 to 10: 20,000 - 1,412.955 - 3,000.
     self_employed_health_insurance_earned_income_limit: 15_587.045
@@ -94,7 +94,7 @@
   output:
     self_employed_health_insurance_earned_income_limit: 0
 
-- name: Case 9, a plan deduction as large as net profit leaves no limit.
+- name: Case 9, a plan deduction as large as earned income leaves no limit.
   period: 2023
   absolute_error_margin: 0.01
   input:
@@ -103,9 +103,10 @@
   output:
     # Schedule 1 line 15: 20,000 x 0.9235 x 0.153 / 2 = 1,412.955.
     self_employment_tax_ald_person: 1_412.955
-    # Schedule 1 line 16: the model caps the plan deduction at net profit.
-    self_employed_pension_contribution_ald_person: 20_000
-    # Lines 8 to 13: max(0, 20,000 - 1,412.955 - 20,000).
+    # Schedule 1 line 16: the Pub. 560 maximum, which elective deferrals let
+    # reach all of earned income: 20,000 - 1,412.955 = 18,587.045.
+    self_employed_pension_contribution_ald_person: 18_587.045
+    # Lines 8 to 13: max(0, 20,000 - 1,412.955 - 18,587.045).
     self_employed_health_insurance_earned_income_limit: 0
 
 - name: Case 10, SSTB and non-SSTB Schedule C income are one plan business, so an SSTB loss reduces line 4.
diff --git a/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employed_pension_contribution_ald.yaml b/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employed_pension_contribution_ald.yaml
new file mode 100644
index 00000000000..8c61e21b77c
--- /dev/null
+++ b/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employed_pension_contribution_ald.yaml
@@ -0,0 +1,55 @@
+- name: Case 1, the deduction cannot make AGI negative when Schedule C profit is the only income.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: 20_000
+        self_employed_pension_contributions_desired: 20_000
+  output:
+    # Half of self-employment tax: 20,000 x 92.35% x 15.3% / 2 = 1,412.955.
+    # Pub. 560 Deduction Worksheet step 3: 20,000 - 1,412.955 = 18,587.045,
+    # the most the plan deduction can be (26 U.S.C. 404(a)(8)(C)).
+    self_employment_tax_ald: 1_412.96
+    self_employed_pension_contribution_ald_person: [18_587.05]
+    self_employed_pension_contribution_ald: 18_587.05
+    adjusted_gross_income: 0
+
+- name: Case 2, contributions supplied directly are still limited.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: 20_000
+        self_employed_pension_contributions: 20_000
+  output:
+    self_employed_pension_contribution_ald_person: [18_587.05]
+    adjusted_gross_income: 0
+
+- name: Case 3, a married couple's limits are each spouse's own.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: 200_000
+        self_employed_pension_contributions_desired: 100_000
+      person2:
+        age: 40
+        self_employment_income: 30_000
+        self_employed_pension_contributions_desired: 30_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    marital_units:
+      marital_unit:
+        members: [person1, person2]
+  output:
+    # Person 1: 20% x 186,403.65 (step 3 in the Pub. 560 2025 example) +
+    # 23,500 = 60,780.73. Person 2: (27,880.5675 + 23,500) / 2 = 25,690.28.
+    self_employed_pension_contribution_ald_person: [60_780.73, 25_690.28]
+    self_employed_pension_contribution_ald: 86_471.01
diff --git a/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employment_income.yaml b/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employment_income.yaml
index 4110518fd83..0e714dc6cdd 100644
--- a/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employment_income.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employment_income.yaml
@@ -18,11 +18,14 @@
 
 - name: Self-employed pension ALD uses SSTB income
   period: 2024
+  absolute_error_margin: 0.01
   input:
     sstb_self_employment_income: 8_000
     self_employed_pension_contributions_desired: 9_000
   output:
-    self_employed_pension_contribution_ald_person: 8_000
+    # Earned income: 8,000 - 7,388 x 15.3% / 2 = 7,434.82, all of which
+    # elective deferrals can cover (Pub. 560 Deduction Worksheet steps 9-19).
+    self_employed_pension_contribution_ald_person: 7_434.82
 
 - name: Loss ALD includes SSTB self-employment losses
   period: 2024
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ut/tax/property/homeowner_renter_relief/ut_homeowner_renter_relief.yaml b/policyengine_us/tests/policy/baseline/gov/states/ut/tax/property/homeowner_renter_relief/ut_homeowner_renter_relief.yaml
index 4471bfc9683..57144640fae 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/ut/tax/property/homeowner_renter_relief/ut_homeowner_renter_relief.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/ut/tax/property/homeowner_renter_relief/ut_homeowner_renter_relief.yaml
@@ -215,6 +215,7 @@
 
 - name: Case 12, nontaxable income uses self-employed pension contributions.
   period: 2026
+  absolute_error_margin: 0.01
   input:
     people:
       person1:
@@ -230,5 +231,7 @@
         members: [person1]
         state_code: UT
   output:
-    self_employed_pension_contributions: 72_000
-    ut_homeowner_renter_relief_nontaxable_income: 72_000
+    # Pub. 560 worksheet: 20% x 92,935.23 of earned income + 24,500 of
+    # deferrals + the 8,000 catch-up at age 66.
+    self_employed_pension_contributions: 51_087.05
+    ut_homeowner_renter_relief_nontaxable_income: 51_087.05
diff --git a/policyengine_us/tests/policy/baseline/household/expense/retirement/self_employed_pension_contribution_limit.yaml b/policyengine_us/tests/policy/baseline/household/expense/retirement/self_employed_pension_contribution_limit.yaml
index 885e4783141..5428b074081 100644
--- a/policyengine_us/tests/policy/baseline/household/expense/retirement/self_employed_pension_contribution_limit.yaml
+++ b/policyengine_us/tests/policy/baseline/household/expense/retirement/self_employed_pension_contribution_limit.yaml
@@ -1,29 +1,50 @@
+# Expected values follow the Pub. 560 Deduction Worksheet for Self-Employed
+# (2025: https://www.irs.gov/pub/irs-prior/p560--2025.pdf#page=39; 2022:
+# https://www.irs.gov/pub/irs-prior/p560--2022.pdf#page=34), with the 25% plan
+# rate (step 4 rate 0.2) and, unless the case says otherwise, elective
+# deferrals (step 9) and catch-up contributions (step 17) equal to the
+# person's remaining section 402(g) room. Step 3 is Schedule C net profit less
+# its share of the deductible part of self-employment tax: half of 15.3% (12.4%
+# only up to the Social Security wage base less wages) of 92.35% of all net
+# profit, split by each business's share of the positive net profits. With more
+# than one business, step 2 is that share, as on Form 7206 lines 5 to 8; the
+# worksheet as printed enters all of Schedule 1 line 15.
+
 - name: Self-employed pension contributions are limited by the 2026 annual additions dollar limit.
   period: 2026
+  absolute_error_margin: 0.01
   input:
     people:
       person1:
-        self_employment_income: 100_000
+        self_employment_income: 500_000
         self_employed_pension_contributions_desired: 100_000
   output:
+    # Step 3: 500,000 - (184,500 x 12.4% + 461,750 x 2.9%) / 2 = 481,865.63.
+    # Step 5: 20% x 481,865.63 = 96,373.13; step 6 caps it at 360,000 x 25% =
+    # 90,000 (step 7). Steps 13 + 15 stop at the $72,000 dollar limit.
     self_employed_pension_contribution_limit: 72_000
     self_employed_pension_contributions: 72_000
     self_employed_pension_contribution_ald_person: 72_000
 
 - name: Self-employed pension contributions are also limited by self-employment compensation.
   period: 2026
+  absolute_error_margin: 0.01
   input:
     people:
       person1:
         self_employment_income: 50_000
         self_employed_pension_contributions_desired: 100_000
   output:
-    self_employed_pension_contribution_limit: 50_000
-    self_employed_pension_contributions: 50_000
-    self_employed_pension_contribution_ald_person: 50_000
+    # Step 3: 50,000 - 46,175 x 15.3% / 2 = 46,467.61. Step 7: 9,293.52.
+    # Step 9: 24,500. Step 12: (46,467.61 - 24,500) / 2 = 10,983.81.
+    # Steps 13 + 15: 9,293.52 + 24,500 = 33,793.52.
+    self_employed_pension_contribution_limit: 33_793.52
+    self_employed_pension_contributions: 33_793.52
+    self_employed_pension_contribution_ald_person: 33_793.52
 
-- name: Unrelated employee elective deferrals do not reduce the self-employed pension limit.
+- name: Elective deferrals to an employer's 401(k) use up the deferral room, leaving the 20% SEP and profit-sharing rate.
   period: 2026
+  absolute_error_margin: 0.01
   input:
     people:
       person1:
@@ -35,11 +56,16 @@
   output:
     elective_deferral_limit: 35_750
     traditional_401k_contributions: 35_750
-    self_employed_pension_contribution_limit: 72_000
-    self_employed_pension_contributions: 72_000
+    # Wages of 100,000 leave 84,500 of the 184,500 wage base. Step 3:
+    # 100,000 - (84,500 x 12.4% + 92,350 x 2.9%) / 2 = 93,421.93.
+    # No deferral room is left, so the limit is step 7: 20% x 93,421.93.
+    self_employed_pension_earned_income: 93_421.93
+    self_employed_pension_contribution_limit: 18_684.39
+    self_employed_pension_contributions: 18_684.39
 
 - name: Annual additions cap does not apply to IRA contributions.
   period: 2026
+  absolute_error_margin: 0.01
   input:
     people:
       person1:
@@ -50,16 +76,292 @@
   output:
     ira_contribution_limit: 8_600
     traditional_ira_contributions: 8_600
-    self_employed_pension_contribution_limit: 72_000
-    self_employed_pension_contributions: 72_000
+    # Step 3: 100,000 - 92,350 x 15.3% / 2 = 92,935.23. Steps 13 + 15:
+    # 18,587.05 + 24,500 = 43,087.05. Step 18: the 8,000 catch-up.
+    self_employed_pension_contribution_limit: 51_087.05
+    self_employed_pension_contributions: 51_087.05
 
 - name: Self-employed pension contributions use desired input.
   period: 2026
+  absolute_error_margin: 0.01
   input:
     people:
       person1:
         self_employment_income: 100_000
         self_employed_pension_contributions_desired: 100_000
   output:
-    self_employed_pension_contribution_limit: 72_000
-    self_employed_pension_contributions: 72_000
+    self_employed_pension_contribution_limit: 43_087.05
+    self_employed_pension_contributions: 43_087.05
+
+- name: Pub. 560 2025 example net profit, with elective deferrals at the 402(g) limit.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: 200_000
+        self_employed_pension_contributions_desired: 100_000
+  output:
+    # Steps 1 to 3 as in the Pub. 560 example: 200,000 - 13,596.35 = 186,403.65.
+    self_employment_tax_ald_person: 13_596.35
+    self_employed_pension_earned_income: 186_403.65
+    # Step 7: 20% x 186,403.65 = 37,280.73. Step 9: 23,500. Step 10: 46,500.
+    # Step 12: (186,403.65 - 23,500) / 2 = 81,451.83. Step 13: 37,280.73.
+    # Step 15: 23,500. Step 19: 60,780.73.
+    self_employed_pension_contribution_limit: 60_780.73
+    self_employed_pension_contribution_ald_person: 60_780.73
+
+- name: Pub. 560 2025 example net profit, with no elective deferral room left (SEP and profit-sharing path).
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income: 23_500
+        traditional_401k_contributions_desired: 23_500
+        self_employment_income: 200_000
+        self_employed_pension_contributions_desired: 100_000
+  output:
+    # Wages of 23,500 leave 152,600 of the 176,100 wage base. Step 2:
+    # (152,600 x 12.4% + 184,700 x 2.9%) / 2 = 12,139.35.
+    self_employed_pension_earned_income: 187_860.65
+    # Steps 9 to 20 do not apply: steps 7 and 8 give 20% x 187,860.65.
+    self_employed_pension_contribution_limit: 37_572.13
+
+- name: Catch-up contributions at age 55 add to the limit (steps 16 to 18).
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 55
+        self_employment_income: 200_000
+        self_employed_pension_contributions_desired: 100_000
+  output:
+    # Steps 13 and 15 as in the age 40 case (60,780.73). Step 16:
+    # 186,403.65 - 37,280.73 - 23,500 = 125,622.92. Step 18: 7,500.
+    self_employed_pension_contribution_limit: 68_280.73
+
+- name: The age 60 to 63 catch-up amount applies from 2025.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 61
+        self_employment_income: 200_000
+        self_employed_pension_contributions_desired: 100_000
+  output:
+    self_employed_pension_contribution_limit: 72_030.73
+
+- name: Catch-up contributions add to the dollar limit when it binds.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 55
+        self_employment_income: 500_000
+        self_employed_pension_contributions_desired: 100_000
+  output:
+    self_employed_pension_contribution_limit: 80_000
+
+- name: Catch-up contributions can't take the limit above earned income.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 55
+        self_employment_income: 20_000
+        self_employed_pension_contributions_desired: 30_000
+  output:
+    # Step 3: 20,000 - 18,470 x 15.3% / 2 = 18,587.05. Step 9 at 18,587.05
+    # leaves steps 11 to 13 at zero, and step 16 is 18,587.05 - 18,587.05 = 0,
+    # so step 18 adds none of the 7,500 catch-up: step 19 is 18,587.05
+    # (sections 404(a)(8)(C) and 414(v)(2)(A)(ii)).
+    self_employed_pension_earned_income: 18_587.05
+    self_employed_pension_contribution_limit: 18_587.05
+    self_employed_pension_contributions: 18_587.05
+
+- name: With low profit, deferrals can reach all of earned income but no more.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: 20_000
+        self_employed_pension_contributions_desired: 20_000
+  output:
+    # Step 3: 20,000 - 18,470 x 15.3% / 2 = 18,587.05. Step 9 at 18,587.05
+    # leaves steps 11 to 13 at zero, so step 19 equals step 3.
+    self_employed_pension_earned_income: 18_587.05
+    self_employed_pension_contribution_limit: 18_587.05
+    self_employed_pension_contributions: 18_587.05
+
+- name: The 100%-of-compensation limit binds when deferrals are large relative to profit.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: 30_000
+        self_employed_pension_contributions_desired: 30_000
+  output:
+    # Step 3: 30,000 - 27,705 x 15.3% / 2 = 27,880.57. Step 7: 5,576.11.
+    # Step 12: (27,880.57 - 23,500) / 2 = 2,190.28, the smallest, so step 13
+    # is 2,190.28. Step 14: 25,690.28. Step 15: 23,500. Step 19: 25,690.28.
+    self_employed_pension_earned_income: 27_880.57
+    self_employed_pension_contribution_limit: 25_690.28
+
+- name: Deferrals to an employer's plan use the regular limit first and leave the catch-up room.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 52
+        employment_income: 50_000
+        traditional_401k_contributions_desired: 20_000
+        self_employment_income: 100_000
+        self_employed_pension_contributions_desired: 100_000
+  output:
+    # 402(g) limit 24,500 + 8,000 catch-up = 32,500, less 20,000 of deferrals:
+    # 4,500 of regular room and the 8,000 catch-up. Step 3: 92,935.23.
+    # Steps 13 + 15: 18,587.05 + 4,500. Step 18: 8,000.
+    self_employed_pension_earned_income: 92_935.23
+    self_employed_pension_contribution_limit: 31_087.05
+
+- name: Deferrals to another employer's 403(b) plan use up the deferral room too.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income: 60_000
+        traditional_403b_contributions_desired: 20_000
+        self_employment_income: 100_000
+        self_employed_pension_contributions_desired: 100_000
+  output:
+    # Section 402(g) aggregates 401(k) and 403(b) deferrals: 24,500 - 20,000
+    # leaves 4,500 of room. Wages of 60,000 leave 124,500 of the wage base, so
+    # step 3 is 100,000 - 92,350 x 15.3% / 2 = 92,935.23. Steps 13 + 15:
+    # 18,587.05 + 4,500 = 23,087.05.
+    self_employed_pension_earned_income: 92_935.23
+    self_employed_pension_contribution_limit: 23_087.05
+
+- name: With deferral room close to earned income, the limit is step 12, which a SIMPLE IRA can exceed.
+  period: 2023
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income: 60_000
+        traditional_401k_contributions_desired: 17_500
+        self_employment_income: 5_600
+        self_employed_pension_contributions_desired: 10_000
+  output:
+    # 402(g) limit 22,500 less 17,500 deferred leaves 5,000 of room. Schedule
+    # SE line 4: 5,600 x 0.9235 = 5,171.60. Line 15: 5,171.60 x 15.3% / 2 =
+    # 395.63. Step 3: 5,600 - 395.63 = 5,204.37. Step 7: 867.40. Step 12:
+    # (5,204.37 - 5,000) / 2 = 102.19, the smallest, so steps 13 + 15 are
+    # (5,204.37 + 5,000) / 2 = 5,102.19.
+    # A SIMPLE IRA would allow more (Pub. 560 (2025), page 15; section
+    # 415(a)(2)): the 5,000 deferral, under its 15,500 limit for 2023, plus a
+    # 3% match of Schedule SE line 4 before the contributions (0.03 x
+    # 5,171.60 = 155.15), 5,155.15 in all. This limit cuts that by 52.96.
+    self_employed_pension_earned_income: 5_204.37
+    self_employed_pension_contribution_limit: 5_102.19
+    self_employed_pension_contributions: 5_102.19
+
+- name: Farm earnings take part of the self-employment tax deduction, which is split by net profit.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: 60_000
+        farm_operations_income: 40_000
+        self_employed_pension_contributions_desired: 100_000
+  output:
+    # Self-employment tax deduction: 92,350 x 15.3% / 2 = 7,064.78, of which
+    # 60% (4,238.87) is attributable to the Schedule C business.
+    self_employment_tax_ald_person: 7_064.78
+    self_employed_pension_earned_income: 55_761.14
+    # Steps 13 + 15: 20% x 55,761.14 + 23,500 = 34,652.23.
+    self_employed_pension_contribution_limit: 34_652.23
+
+- name: A plan under the Schedule C business counts only that business's earned income, not a partnership's.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: 1_000
+        partnership_self_employment_net_earnings: 50_000
+        self_employed_pension_contributions_desired: 5_000
+  output:
+    # Schedule 1 line 15: 51,000 x 0.9235 x 0.153 / 2 = 3,603.04, of which
+    # 1 / 51 (70.65) is the Schedule C business's. Step 3: 1,000 - 70.65 =
+    # 929.35, which elective deferrals can cover in full. Pub. 560 (2025),
+    # page 7: with one plan, only that business's earned income counts.
+    self_employment_tax_ald_person: 3_603.04
+    self_employed_pension_earned_income: 929.35
+    self_employed_pension_contribution_limit: 929.35
+    self_employed_pension_contributions: 929.35
+
+- name: Net profit under the self-employment tax threshold is all earned income.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: 400
+        self_employed_pension_contributions_desired: 1_000
+  output:
+    # 92.35% of 400 is under $400, so there is no self-employment tax.
+    self_employment_tax_ald_person: 0
+    self_employed_pension_earned_income: 400
+    self_employed_pension_contribution_limit: 400
+
+- name: Pub. 560 2022 example net profit, with elective deferrals at the 402(g) limit.
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: 200_000
+        self_employed_pension_contributions_desired: 100_000
+  output:
+    # Step 2: (147,000 x 12.4% + 184,700 x 2.9%) / 2 = 11,792.15. The Pub.
+    # 560 (2022) example's step 21, 0.078 x step 3, is 14,680.
+    self_employment_tax_ald_person: 11_792.15
+    self_employed_pension_earned_income: 188_207.85
+    # Step 7: 37,641.57. Step 9: 20,500. Steps 13 + 15: 58,141.57, under the
+    # $61,000 dollar limit.
+    self_employed_pension_contribution_limit: 58_141.57
+
+- name: A Schedule C loss allows no contribution.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 40
+        self_employment_income: -5_000
+        self_employed_pension_contributions_desired: 5_000
+  output:
+    self_employed_pension_earned_income: 0
+    self_employed_pension_contribution_limit: 0
+    self_employed_pension_contributions: 0
+    self_employed_pension_contribution_ald_person: 0
diff --git a/policyengine_us/tests/policy/contrib/ssa/owners_draw_self_employed_pension_earned_income.yaml b/policyengine_us/tests/policy/contrib/ssa/owners_draw_self_employed_pension_earned_income.yaml
new file mode 100644
index 00000000000..174577d748c
--- /dev/null
+++ b/policyengine_us/tests/policy/contrib/ssa/owners_draw_self_employed_pension_earned_income.yaml
@@ -0,0 +1,47 @@
+# Pub. 560 Deduction Worksheet for Self-Employed, step 3, with the owners'
+# draw reform on. Step 2 takes the Schedule C business's share of Schedule 1
+# line 15, split by net profit as on Form 7206 lines 5 to 8. The reform adds
+# the gross draw profits that bear SECA when half_seca_deduction puts that
+# SECA into line 15, as it does for the self-employed health insurance limit.
+# Synthetic caps follow owners_draw.yaml; q = 0.9235. Hand-computed.
+
+- name: The draw's profits join the profits line 15 is split over
+  period: 2027
+  absolute_error_margin: 0.02
+  reforms: policyengine_us.reforms.ssa.owners_draw.owners_draw
+  input:
+    gov.contrib.ssa.owners_draw.current_law_cap: 200_000
+    gov.contrib.ssa.owners_draw.in_effect: true
+    gov.contrib.ssa.owners_draw.phase_in_share: 1
+    gov.irs.payroll.social_security.cap: 200_000
+    gov.simulation.aime_lookback_years: 0
+    self_employment_income: 40_000
+    # 64,970.22 x 0.9235 = 59,999.998 of draw net earnings.
+    s_corp_income: 64_970.22
+  output:
+    # Schedule C SE tax 40,000 x 0.9235 x 15.3% = 5,651.82; draw OASDI
+    # 59,999.998 x 12.4% = 7,440.00; half of 13,091.82 = 6,545.91.
+    self_employment_tax_ald_person: 6_545.91
+    # Share 40,000 / 104,970.22 = 0.3810605; step 2 = 2,494.39; step 3 =
+    # 40,000 - 2,494.39. The whole line 15 would give 33,454.09.
+    self_employed_pension_earned_income: 37_505.61
+
+- name: Nondeductible draw SECA keeps the draw out of the split
+  period: 2027
+  absolute_error_margin: 0.02
+  reforms: policyengine_us.reforms.ssa.owners_draw.owners_draw
+  input:
+    gov.contrib.ssa.owners_draw.current_law_cap: 200_000
+    gov.contrib.ssa.owners_draw.in_effect: true
+    gov.contrib.ssa.owners_draw.phase_in_share: 1
+    gov.contrib.ssa.owners_draw.half_seca_deduction: false
+    gov.irs.payroll.social_security.cap: 200_000
+    gov.simulation.aime_lookback_years: 0
+    self_employment_income: 40_000
+    s_corp_income: 64_970.22
+  output:
+    # Only the Schedule C SE tax is deductible: 5,651.82 / 2 = 2,825.91.
+    self_employment_tax_ald_person: 2_825.91
+    # The Schedule C business is the only profit in the split: 40,000 -
+    # 2,825.91.
+    self_employed_pension_earned_income: 37_174.09
diff --git a/policyengine_us/tests/reforms/test_owners_draw.py b/policyengine_us/tests/reforms/test_owners_draw.py
index f8e483ede75..2413846fedc 100644
--- a/policyengine_us/tests/reforms/test_owners_draw.py
+++ b/policyengine_us/tests/reforms/test_owners_draw.py
@@ -39,6 +39,9 @@
 from policyengine_us.variables.gov.irs.income.taxable_income.adjusted_gross_income.above_the_line_deductions.self_employment_tax_ald_person import (
     self_employment_tax_ald_person,
 )
+from policyengine_us.variables.household.expense.retirement.self_employed_pension_earned_income import (
+    self_employed_pension_earned_income,
+)
 from policyengine_us.variables.gov.irs.tax.payroll.social_security.taxable_earnings_for_social_security import (
     taxable_earnings_for_social_security,
 )
@@ -70,6 +73,7 @@
         self_employment_tax,
         self_employment_tax_ald_person,
         self_employed_health_insurance_earned_income_limit,
+        self_employed_pension_earned_income,
     )
 }
 PERIOD = period("2027")
diff --git a/policyengine_us/tests/unit/test_self_employed_pension_limit_properties.py b/policyengine_us/tests/unit/test_self_employed_pension_limit_properties.py
new file mode 100644
index 00000000000..670d4b06637
--- /dev/null
+++ b/policyengine_us/tests/unit/test_self_employed_pension_limit_properties.py
@@ -0,0 +1,360 @@
+"""Properties of the self-employed SEP, SIMPLE and qualified plan deduction limit.
+
+A self-employed person's plan compensation is earned income under 26 U.S.C.
+401(c)(2), which is net of the deductible part of self-employment tax and of
+the plan deduction itself, and 404(a)(8)(C) caps the deduction at that earned
+income before the plan deduction. IRS Publication 560 turns this into the
+Deduction Worksheet for Self-Employed (2025 edition, page 39). The model's
+single input does not say which plan the person has, so the model's limit is
+the worksheet's largest total over the elective deferrals and catch-up
+contributions the person could still make (`self_employed_pension_contribution_limit`).
+
+The reference below runs worksheet steps 4 to 19 literally, with the IRS's
+published dollar amounts rather than model parameters, and takes the largest
+step 19 over a grid of elective deferrals (step 9) and catch-up contributions
+(step 17). Schedule 1 line 15 is computed here from Schedule SE with the
+published wage bases, and step 2 is Schedule C's share of it, split by net
+profit as on Form 7206 lines 5 to 8. Hypothesis draws batches of single filers
+across three years, and each batch runs as one vectorized simulation. For
+every person and year:
+
+1. Line 15 equals half of the Schedule SE tax, the limit equals the worksheet
+   maximum, and step 3 equals Schedule C net profit less step 2.
+2. The deduction is min(desired contributions, limit), is at most earned
+   income (404(a)(8)(C)), which is at most Schedule C net profit, and is at
+   most the dollar limit plus the person's catch-up amount, which is all
+   414(v)(3)(A) puts outside 415(c).
+3. For a filer whose only income is Schedule C profit, AGI is never negative
+   when the profit is not, because the deduction is at most profit less line
+   15.
+
+A deterministic grid checks, at its points, that the limit rises with Schedule
+C profit (it dips just past $433 of profit, where self-employment tax starts)
+and falls as deferrals to an employer's plan use up the room.
+
+The model computes in float32, so comparisons allow a relative error of 1e-6
+on top of the $0.01 tolerance.
+"""
+
+import itertools
+
+import numpy as np
+import pytest
+from hypothesis import HealthCheck, given, settings
+from hypothesis import strategies as st
+
+from policyengine_us import Simulation
+
+TOLERANCE = 0.01
+RTOL = 1e-6
+# Plan contribution rate: 26 U.S.C. 404(a)(3)(A)(i)(I) and 404(h)(1)(C).
+PLAN_RATE = 0.25
+# Published amounts: IRS Notices 2021-61 (2022), 2024-80 (2025) and 2025-67
+# (2026); section 414(v)(2)(E) for ages 60 to 63 from 2025.
+PUBLISHED = {
+    2022: dict(
+        annual_additions=61_000,
+        compensation_limit=305_000,
+        deferral=20_500,
+        catch_up=6_500,
+        catch_up_60_to_63=6_500,
+    ),
+    2025: dict(
+        annual_additions=70_000,
+        compensation_limit=350_000,
+        deferral=23_500,
+        catch_up=7_500,
+        catch_up_60_to_63=11_250,
+    ),
+    2026: dict(
+        annual_additions=72_000,
+        compensation_limit=360_000,
+        deferral=24_500,
+        catch_up=8_000,
+        catch_up_60_to_63=11_250,
+    ),
+}
+YEARS = list(PUBLISHED)
+
+# Schedule SE, as test data rather than model parameters.
+# 26 U.S.C. 1402(a)(12): net earnings are 92.35% of net profit.
+NET_EARNINGS_SHARE = 0.9235
+# 26 U.S.C. 1402(b)(2): no net earnings below $400.
+NET_EARNINGS_EXEMPTION = 400
+# 26 U.S.C. 1401(a) and (b).
+SOCIAL_SECURITY_RATE = 0.124
+MEDICARE_RATE = 0.029
+# Contribution and benefit bases, https://www.ssa.gov/oact/cola/cbb.html.
+WAGE_BASE = {2022: 147_000, 2025: 176_100, 2026: 184_500}
+
+
+def schedule_se_deduction(year, net_profit, wages):
+    """Schedule 1 line 15: half of Schedule SE self-employment tax."""
+    net_earnings = net_profit * NET_EARNINGS_SHARE
+    net_earnings = np.where(net_earnings < NET_EARNINGS_EXEMPTION, 0, net_earnings)
+    social_security_room = np.maximum(WAGE_BASE[year] - wages, 0)
+    tax = SOCIAL_SECURITY_RATE * np.minimum(
+        net_earnings, social_security_room
+    ) + MEDICARE_RATE * np.maximum(net_earnings, 0)
+    return tax / 2
+
+
+def close(actual, expected, message):
+    np.testing.assert_allclose(
+        actual, expected, rtol=RTOL, atol=TOLERANCE, err_msg=message
+    )
+
+
+def at_most(actual, bound):
+    return np.all(actual <= bound + TOLERANCE + RTOL * np.abs(bound))
+
+
+def catch_up_amount(year, age):
+    amounts = PUBLISHED[year]
+    return np.select(
+        [age < 50, (age >= 60) & (age <= 63)],
+        [0, amounts["catch_up_60_to_63"]],
+        amounts["catch_up"],
+    )
+
+
+def worksheet_step_19(step_3, deferrals, catch_up, amounts):
+    """Pub. 560 Deduction Worksheet for Self-Employed, steps 4 to 19."""
+    step_4 = PLAN_RATE / (1 + PLAN_RATE)  # Rate Table: 25% -> 0.2
+    step_5 = step_3 * step_4
+    step_6 = amounts["compensation_limit"] * PLAN_RATE
+    step_7 = np.minimum(step_5, step_6)
+    step_8 = amounts["annual_additions"]
+    step_9 = deferrals
+    step_10 = step_8 - step_9
+    step_11 = step_3 - step_9
+    step_12 = step_11 / 2
+    step_13 = np.minimum(np.minimum(step_7, step_10), step_12)
+    step_14 = step_3 - step_13
+    step_15 = np.minimum(step_9, step_14)
+    step_16 = step_14 - step_15
+    step_18 = np.minimum(step_16, catch_up)
+    with_deferrals = step_13 + step_15 + step_18
+    # Without elective deferrals the worksheet skips to step 21.
+    without_deferrals = np.minimum(step_7, step_8)
+    return np.where((deferrals > 0) | (catch_up > 0), with_deferrals, without_deferrals)
+
+
+def worksheet_maximum(step_3, regular_room, catch_up_room, amounts, points=41):
+    """Largest step 19 over deferrals and catch-up contributions in their room."""
+    best = np.zeros_like(step_3)
+    for d, c in itertools.product(np.linspace(0, 1, points), repeat=2):
+        # A deferral can't exceed compensation, so the grid stops at step 3.
+        deferrals = d * np.minimum(regular_room, step_3)
+        catch_up = c * catch_up_room
+        best = np.maximum(best, worksheet_step_19(step_3, deferrals, catch_up, amounts))
+    return best
+
+
+def every_year(value):
+    return {year: value for year in YEARS}
+
+
+def build_situation(people_inputs):
+    people, tax_units, households = {}, {}, {}
+    for i, inputs in enumerate(people_inputs):
+        name = f"p{i}"
+        people[name] = {variable: every_year(v) for variable, v in inputs.items()}
+        tax_units[f"t{i}"] = {"members": [name]}
+        households[f"h{i}"] = {"members": [name], "state_code": every_year("TX")}
+    return {"people": people, "tax_units": tax_units, "households": households}
+
+
+def column(people_inputs, variable):
+    return np.array([p.get(variable, 0) for p in people_inputs], dtype=float)
+
+
+def reference(sim, people_inputs, year):
+    amounts = PUBLISHED[year]
+    age = column(people_inputs, "age")
+    schedule_c = np.maximum(
+        column(people_inputs, "self_employment_income")
+        + column(people_inputs, "sstb_self_employment_income"),
+        0,
+    )
+    others = np.maximum(
+        column(people_inputs, "farm_operations_income"), 0
+    ) + np.maximum(column(people_inputs, "partnership_self_employment_net_earnings"), 0)
+    share = np.divide(
+        schedule_c,
+        schedule_c + others,
+        out=np.zeros_like(schedule_c),
+        where=schedule_c + others > 0,
+    )
+    # Schedule 1 line 15 from Schedule SE; step 2 is Schedule C's share.
+    net_profit = (
+        column(people_inputs, "self_employment_income")
+        + column(people_inputs, "sstb_self_employment_income")
+        + column(people_inputs, "farm_operations_income")
+        + column(people_inputs, "partnership_self_employment_net_earnings")
+    )
+    line_15 = schedule_se_deduction(
+        year, net_profit, column(people_inputs, "employment_income")
+    )
+    step_2 = line_15 * share
+    step_3 = np.maximum(schedule_c - step_2, 0)
+    # Section 402(g) room left by deferrals to an employer's plan, which use
+    # the regular limit first.
+    catch_up = catch_up_amount(year, age)
+    deferral_limit = amounts["deferral"] + catch_up
+    desired = column(people_inputs, "traditional_401k_contributions_desired") + column(
+        people_inputs, "roth_401k_contributions_desired"
+    )
+    room = deferral_limit - np.minimum(desired, deferral_limit)
+    catch_up_room = np.minimum(room, catch_up)
+    regular_room = room - catch_up_room
+    limit = worksheet_maximum(step_3, regular_room, catch_up_room, amounts)
+    return schedule_c, line_15, step_3, limit, catch_up
+
+
+def check(sim, people_inputs, years=YEARS):
+    desired = column(people_inputs, "self_employed_pension_contributions_desired")
+    schedule_c_only = np.array([p["schedule_c_only"] for p in people_inputs])
+    for year in years:
+        schedule_c, line_15, step_3, expected, catch_up = reference(
+            sim, people_inputs, year
+        )
+        earned_income = sim.calculate("self_employed_pension_earned_income", year)
+        limit = sim.calculate("self_employed_pension_contribution_limit", year)
+        deduction = sim.calculate("self_employed_pension_contribution_ald_person", year)
+        message = f"year {year}"
+        # 1. Schedule SE and the worksheet.
+        close(sim.calculate("self_employment_tax_ald_person", year), line_15, message)
+        close(earned_income, step_3, message)
+        close(limit, expected, message)
+        # 2. Bounds.
+        close(deduction, np.minimum(desired, limit), message)
+        assert np.all(deduction >= 0), message
+        assert at_most(deduction, earned_income), message
+        assert at_most(earned_income, schedule_c), message
+        cap = PUBLISHED[year]["annual_additions"] + catch_up
+        assert at_most(limit, cap), message
+        # 3. AGI from Schedule C alone.
+        agi = sim.calculate("adjusted_gross_income", year)
+        net_profit = column(people_inputs, "self_employment_income") + column(
+            people_inputs, "sstb_self_employment_income"
+        )
+        rows = schedule_c_only & (net_profit >= 0)
+        assert np.all(agi[rows] >= -TOLERANCE), (message, agi[rows])
+
+
+profits = st.one_of(
+    st.sampled_from([0, 400, 433, 434, 2_000, 20_000, 30_000, 200_000, 500_000]),
+    st.integers(-20_000, 600_000),
+)
+smaller = st.one_of(st.just(0), st.integers(-10_000, 150_000))
+contributions = st.one_of(st.sampled_from([0, 1_000_000]), st.integers(0, 100_000))
+person_strategy = st.fixed_dictionaries(
+    {
+        "schedule_c_only": st.booleans(),
+        "age": st.sampled_from([30, 49, 50, 55, 59, 60, 63, 64, 70]),
+        "self_employment_income": profits,
+        "sstb_self_employment_income": st.one_of(st.just(0), profits),
+        "farm_operations_income": smaller,
+        "partnership_self_employment_net_earnings": st.one_of(
+            st.just(0), st.integers(0, 150_000)
+        ),
+        "employment_income": st.one_of(st.just(0), st.integers(0, 250_000)),
+        "traditional_401k_contributions_desired": st.one_of(
+            st.just(0), st.integers(0, 40_000)
+        ),
+        "roth_401k_contributions_desired": st.one_of(
+            st.just(0), st.integers(0, 20_000)
+        ),
+        "self_employed_pension_contributions_desired": contributions,
+    }
+)
+
+
+def normalize(person):
+    person = dict(person)
+    if person["schedule_c_only"]:
+        for variable in (
+            "farm_operations_income",
+            "partnership_self_employment_net_earnings",
+            "employment_income",
+            "traditional_401k_contributions_desired",
+            "roth_401k_contributions_desired",
+        ):
+            person[variable] = 0
+    return person
+
+
+def simulation_inputs(people_inputs):
+    return [
+        {k: float(v) for k, v in p.items() if k != "schedule_c_only"}
+        for p in people_inputs
+    ]
+
+
+SETTINGS = dict(
+    max_examples=20,
+    deadline=None,
+    derandomize=True,
+    suppress_health_check=[HealthCheck.too_slow, HealthCheck.data_too_large],
+)
+
+
+@settings(**SETTINGS)
+@given(st.lists(person_strategy.map(normalize), min_size=4, max_size=15))
+def test_limit_matches_the_pub_560_worksheet(people_inputs):
+    sim = Simulation(situation=build_situation(simulation_inputs(people_inputs)))
+    check(sim, people_inputs)
+
+
+GRID_PROFITS = [
+    -1_000,
+    0,
+    434,
+    5_000,
+    20_000,
+    30_000,
+    60_000,
+    100_000,
+    200_000,
+    600_000,
+]
+GRID_DEFERRALS = [0, 10_000, 23_500, 40_000]
+
+
+@pytest.fixture(scope="module")
+def grid():
+    people_inputs = [
+        {
+            "schedule_c_only": False,
+            "age": 55,
+            "self_employment_income": profit,
+            "employment_income": 50_000,
+            "traditional_401k_contributions_desired": deferrals,
+            "self_employed_pension_contributions_desired": 1_000_000,
+        }
+        for deferrals, profit in itertools.product(GRID_DEFERRALS, GRID_PROFITS)
+    ]
+    sim = Simulation(situation=build_situation(simulation_inputs(people_inputs)))
+    return sim, people_inputs
+
+
+@pytest.mark.parametrize("year", YEARS)
+def test_grid_matches_the_worksheet_and_is_monotone(grid, year):
+    sim, people_inputs = grid
+    check(sim, people_inputs, [year])
+    limit = sim.calculate("self_employed_pension_contribution_limit", year).reshape(
+        len(GRID_DEFERRALS), len(GRID_PROFITS)
+    )
+    # The limit rises with Schedule C profit...
+    assert np.all(np.diff(limit, axis=1) >= -TOLERANCE)
+    # ...and falls as deferrals to an employer's plan use up the room.
+    assert np.all(np.diff(limit, axis=0) <= TOLERANCE)
+    # No room left: steps 7 and 8, the SEP and profit-sharing limit.
+    earned_income = sim.calculate("self_employed_pension_earned_income", year)
+    no_room = earned_income.reshape(limit.shape)[-1]
+    np.testing.assert_allclose(
+        limit[-1],
+        np.minimum(PUBLISHED[year]["annual_additions"], 0.2 * no_room),
+        atol=TOLERANCE,
+    )
diff --git a/policyengine_us/variables/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employed_pension_contribution_ald_person.py b/policyengine_us/variables/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employed_pension_contribution_ald_person.py
index 33b247938f7..acfc115e9a0 100644
--- a/policyengine_us/variables/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employed_pension_contribution_ald_person.py
+++ b/policyengine_us/variables/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employed_pension_contribution_ald_person.py
@@ -6,14 +6,22 @@ class self_employed_pension_contribution_ald_person(Variable):
     entity = Person
     label = "Self-employed pension contribution ALD for each person"
     unit = USD
-    documentation = "Personal above-the-line deduction for self-employed pension plan contributions."
+    documentation = (
+        "Personal above-the-line deduction for self-employed SEP, SIMPLE and "
+        "qualified plan contributions (Schedule 1 line 16), capped at the "
+        "Pub. 560 maximum deductible contribution."
+    )
     definition_period = YEAR
     reference = (
         "https://www.law.cornell.edu/uscode/text/26/62#a_6",
-        "https://www.law.cornell.edu/uscode/text/26/404",
+        "https://www.law.cornell.edu/uscode/text/26/404#a_8_C",
+        "https://www.irs.gov/pub/irs-prior/p560--2025.pdf#page=39",
     )
 
     def formula(person, period, parameters):
-        earnings = max_(0, person("total_self_employment_income", period))
         contributions = person("self_employed_pension_contributions", period)
-        return min_(earnings, contributions)
+        # The limit applies again here so the deduction stays within it when
+        # contributions are supplied directly rather than from desired
+        # contributions.
+        limit = person("self_employed_pension_contribution_limit", period)
+        return min_(contributions, limit)
diff --git a/policyengine_us/variables/household/expense/retirement/self_employed_pension_contribution_limit.py b/policyengine_us/variables/household/expense/retirement/self_employed_pension_contribution_limit.py
index 66a81e8e63d..ccaf664a5d7 100644
--- a/policyengine_us/variables/household/expense/retirement/self_employed_pension_contribution_limit.py
+++ b/policyengine_us/variables/household/expense/retirement/self_employed_pension_contribution_limit.py
@@ -4,18 +4,89 @@
 class self_employed_pension_contribution_limit(Variable):
     value_type = float
     entity = Person
-    label = "self-employed pension contribution annual additions limit"
+    label = "Self-employed retirement plan contribution limit"
     unit = USD
     documentation = (
-        "Section 415(c) annual additions limit for modeled self-employed "
-        "pension contributions. Regular IRA contributions are subject to "
-        "separate IRA limits, and employee 401(k)/403(b) deferrals are "
-        "capped separately by the elective deferral limit."
+        "Largest deduction for the person's own SEP, SIMPLE and qualified "
+        "defined contribution plan contributions (Schedule 1 line 16), from "
+        "the Pub. 560 Deduction Worksheet for Self-Employed. Plan "
+        "compensation for a self-employed person is earned income net of "
+        "the plan deduction itself, so the 25% employer rate becomes 20% of "
+        "earned income before that deduction, and the 100%-of-compensation "
+        "limit caps employer contributions at half of what is left of "
+        "earned income after elective deferrals (step 12). The modeled input "
+        "does not say which kind of plan the person has, so the limit is the "
+        "most a SEP or a qualified defined contribution plan allows: a "
+        "profit-sharing plan with a 401(k) arrangement into which the person "
+        "defers, before tax, all of the elective deferral room that "
+        "deferrals to other employers' 401(k) and 403(b) plans leave. With no "
+        "room left, it is the SEP and profit-sharing limit. Catch-up "
+        "contributions sit outside the dollar limit, and the total never "
+        "exceeds earned income. A SEP allows less, so the limit overstates "
+        "its deductions. A SIMPLE IRA usually allows less too, but the "
+        "contributions don't reduce its compensation, and section 415 "
+        "doesn't apply to it. So when deferrals to other employers' plans "
+        "leave elective deferral room close to earned income, a SIMPLE IRA "
+        "can allow slightly more. A self-employed minister's section "
+        "403(b)(9) account can also allow more, since section 404(a)(10) "
+        "limits it only by the section 402(g) or 415 limit. Defined "
+        "benefit plans are not modeled, so contributions to them above this "
+        "limit are cut."
     )
     definition_period = YEAR
-    reference = "https://www.law.cornell.edu/uscode/text/26/415#c"
+    reference = (
+        # Subsections (a)(3)(A)(i)(I), (a)(8)(C) and (D), (a)(10), (h)(1)(C)
+        # and (n).
+        "https://www.law.cornell.edu/uscode/text/26/404",
+        # Subsections (a)(2), (c)(1) and (c)(3)(B) and (D).
+        "https://www.law.cornell.edu/uscode/text/26/415",
+        # Subsections (v)(2)(A) and (v)(3)(A).
+        "https://www.law.cornell.edu/uscode/text/26/414#v",
+        # PDF pages 15, 39: SIMPLE IRA compensation and the worksheet.
+        "https://www.irs.gov/pub/irs-prior/p560--2025.pdf#page=15",
+        "https://www.irs.gov/pub/irs-prior/p560--2022.pdf#page=34",
+    )
 
     def formula(person, period, parameters):
-        p = parameters(period).gov.irs.gross_income.retirement_contributions
-        compensation = max_(0, person("total_self_employment_income", period))
-        return min_(p.limit.annual_additions, compensation)
+        p = parameters(period).gov.irs.gross_income.retirement_contributions.limit
+        # Step 3: earned income before the plan deduction.
+        earned_income = person("self_employed_pension_earned_income", period)
+        # Steps 4 and 5: the employer contribution rate, reduced because
+        # compensation is net of the contribution. Steps 6 and 7 cap the
+        # employer contribution at the plan rate times the section
+        # 401(a)(17) compensation limit. At current law that never binds the
+        # result, because 25% of the compensation limit is 1.25 times the
+        # step 8 dollar limit, so the model leaves it out; a reform that set
+        # the rate times that limit below the dollar limit would need it.
+        rate = p.profit_sharing_deduction_rate
+        employer_limit = earned_income * rate / (1 + rate)
+        # Step 9: elective deferrals, up to the section 402(g) room left
+        # after deferrals to other employers' plans, which use the regular
+        # limit before the catch-up amount.
+        other_deferrals = add(
+            person,
+            period,
+            [
+                "traditional_401k_contributions",
+                "roth_401k_contributions",
+                "traditional_403b_contributions",
+                "roth_403b_contributions",
+            ],
+        )
+        deferral_room = max_(
+            0, person("elective_deferral_limit", period) - other_deferrals
+        )
+        catch_up_room = min_(deferral_room, person("k401_catch_up_limit", period))
+        regular_deferral_room = deferral_room - catch_up_room
+        # Steps 10 to 15: employer contributions stay within step 7 and
+        # within half of what is left of earned income after the regular
+        # deferrals (step 12), because compensation also excludes the
+        # employer contribution. With the regular deferrals, they stay
+        # within the dollar limit (step 8).
+        annual_additions = min_(
+            min_(p.annual_additions, employer_limit + regular_deferral_room),
+            (earned_income + regular_deferral_room) / 2,
+        )
+        # Steps 16 to 19: catch-up contributions, outside the dollar limit.
+        # The total never exceeds earned income.
+        return min_(earned_income, annual_additions + catch_up_room)
diff --git a/policyengine_us/variables/household/expense/retirement/self_employed_pension_contributions.py b/policyengine_us/variables/household/expense/retirement/self_employed_pension_contributions.py
index 25f9a4b78e1..2efe7b18724 100644
--- a/policyengine_us/variables/household/expense/retirement/self_employed_pension_contributions.py
+++ b/policyengine_us/variables/household/expense/retirement/self_employed_pension_contributions.py
@@ -7,11 +7,15 @@ class self_employed_pension_contributions(Variable):
     label = "Self-employed pension contributions"
     unit = USD
     documentation = (
-        "Self-employed pension contributions after applying the section "
-        "415(c) annual additions limit."
+        "Self-employed SEP, SIMPLE and qualified plan contributions after "
+        "applying the Pub. 560 maximum deductible contribution, which "
+        "includes the section 415(c) annual additions limit."
     )
     definition_period = YEAR
-    reference = "https://www.law.cornell.edu/uscode/text/26/415#c"
+    reference = (
+        "https://www.law.cornell.edu/uscode/text/26/415#c",
+        "https://www.law.cornell.edu/uscode/text/26/404#a_8_C",
+    )
 
     def formula(person, period, parameters):
         contributions = person("self_employed_pension_contributions_desired", period)
diff --git a/policyengine_us/variables/household/expense/retirement/self_employed_pension_earned_income.py b/policyengine_us/variables/household/expense/retirement/self_employed_pension_earned_income.py
new file mode 100644
index 00000000000..ea530c07aa5
--- /dev/null
+++ b/policyengine_us/variables/household/expense/retirement/self_employed_pension_earned_income.py
@@ -0,0 +1,66 @@
+from policyengine_us.model_api import *
+
+
+class self_employed_pension_earned_income(Variable):
+    value_type = float
+    entity = Person
+    label = "Earned income for self-employed retirement plan limits"
+    unit = USD
+    documentation = (
+        "Earned income, within the meaning of 26 U.S.C. 401(c)(2), from the "
+        "business that maintains the self-employed SEP, SIMPLE or qualified "
+        "plan, determined without regard to the plan deduction itself: net "
+        "profit less the deductible part of self-employment tax (Pub. 560 "
+        "Deduction Worksheet for Self-Employed, step 3). The model treats the "
+        "person's Schedule C business as the plan's business. When the person "
+        "also has farm or partnership self-employment earnings, the deductible "
+        "part of self-employment tax is split by each business's share of the "
+        "net profits, as on Form 7206 lines 5 to 8; the worksheet's step 2 "
+        "enters all of Schedule 1 line 15. All Schedule C profit counts as "
+        "earned income: the model assumes the personal-services test of "
+        "section 401(c)(2)(A)(i) is met."
+    )
+    definition_period = YEAR
+    reference = (
+        "https://www.law.cornell.edu/uscode/text/26/401#c_2_A",
+        "https://www.law.cornell.edu/uscode/text/26/404#a_8_C",
+        # PDF pages 7, 39
+        "https://www.irs.gov/pub/irs-prior/p560--2025.pdf#page=7",
+        "https://www.irs.gov/pub/irs-prior/p560--2022.pdf#page=34",
+        "https://www.irs.gov/pub/irs-prior/f7206--2023.pdf#page=1",
+    )
+
+    def formula(person, period, parameters):
+        return pension_plan_earned_income(person, period)
+
+
+def pension_plan_earned_income(person, period, other_line_5_profits=0):
+    """Pub. 560 step 3 for the Schedule C plan business.
+
+    other_line_5_profits adds the profits of other businesses whose
+    self-employment tax is in Schedule 1 line 15, such as the owners' draw
+    reform's draw profits, so the plan business takes only its share.
+    """
+    # Step 1: net profit from the business with the plan.
+    plan_business_profit = max_(0, person("total_self_employment_income", period))
+    # Net profits of every business whose earnings are subject to
+    # self-employment tax, leaving out net losses.
+    other_business_profits = max_(0, person("farm_operations_income", period)) + max_(
+        0, person("partnership_self_employment_net_earnings", period)
+    )
+    all_business_profits = (
+        plan_business_profit + other_business_profits + other_line_5_profits
+    )
+    plan_business_share = np.divide(
+        plan_business_profit,
+        all_business_profits,
+        out=np.zeros_like(all_business_profits),
+        where=all_business_profits > 0,
+    )
+    # Step 2: the deductible part of self-employment tax (Schedule 1
+    # line 15) attributable to the plan's business.
+    self_employment_tax_deduction = (
+        person("self_employment_tax_ald_person", period) * plan_business_share
+    )
+    # Step 3.
+    return max_(0, plan_business_profit - self_employment_tax_deduction)
diff --git a/source_conflicts/candidates.yaml b/source_conflicts/candidates.yaml
index 6b1dbcbedc4..c8a862834bf 100644
--- a/source_conflicts/candidates.yaml
+++ b/source_conflicts/candidates.yaml
@@ -10762,6 +10762,48 @@ candidates:
     Credit Limit Worksheet B (ctc_credit_limit_worksheet_b_applies.py). The legacy aggregates still count as an exclusion.
     The EITC keeps the broader section 32(c)(1)(C) test in elects_section_911_exclusion. Register the entry and add
     the marker once #10297 is on main.
+- id: us:catch-up-deferrals-after-402g1c-repeal
+  program: income-tax
+  years:
+    from: 2024
+    type: tax
+  question: Are pre-tax catch-up contributions above the section 402(g)(1)(B) amount excluded from gross income, and
+    deductible in a self-employed plan, now that SECURE 2.0 section 603(b)(1) has struck section 402(g)(1)(C)?
+  sources:
+  - kind: statute
+    citation: 26 U.S.C. 402(g)(1) as amended by Pub. L. 117-328 section 603(b)(1) and (c); 414(v)(3)(A)(i)
+    url: https://www.law.cornell.edu/uscode/text/26/402#g_1
+  - kind: regulation
+    citation: 26 CFR 1.402(g)-2(a)
+    url: https://www.law.cornell.edu/cfr/text/26/1.402(g)-2
+  - kind: guidance
+    citation: Notice 2023-62, section III.A, PDF pages 4-5
+    url: https://www.irs.gov/pub/irs-drop/n-23-62.pdf#page=4
+  - kind: worksheet
+    citation: Publication 560 (2025), Deduction Worksheet for Self-Employed, steps 16-18
+    url: https://www.irs.gov/pub/irs-pdf/p560.pdf#page=39
+  readings:
+    statute: For taxable years beginning after 2023, section 402(g)(1)(A) includes elective deferrals above the
+      applicable dollar amount in gross income, except designated Roth contributions; the catch-up exclusion in former
+      subparagraph (C) is struck, and section 414(v)(3)(A)(i) does not list section 402(g).
+    other: Notice 2023-62 says non-Roth catch-up contributions are not includible under section 402(g)(1)(A), reading
+      section 414(v)(3)(A)(i); section 1.402(g)-2(a) still raises the 402(g)(1)(B) limit by the catch-up amount; and
+      Pub. 560 adds catch-up contributions to the self-employed maximum deductible contribution.
+  example: In 2025 a 55-year-old with $200,000 of Schedule C profit and $100,000 of desired contributions gets a
+    $68,280.73 plan limit, including the $7,500 catch-up. Including that $7,500 in gross income under the amended
+    section 402(g)(1)(A) would leave a net deduction of $60,780.73.
+  pe_us:
+    follows: conflicting-source
+    code:
+    - policyengine_us/variables/household/expense/retirement/elective_deferral_limit.py
+    - policyengine_us/variables/household/expense/retirement/self_employed_pension_contribution_limit.py
+    prs:
+    - https://github.com/PolicyEngine/policyengine-us/pull/10121
+  state: unreviewed
+  note: elective_deferral_limit adds k401_catch_up_limit to the section 402(g)(1)(B) amount in every year, and the
+    self-employed plan limit adds the same catch-up room to its maximum. The regulation binds unless it flatly
+    contradicts the amended statute, and the notice reads section 414(v)(3)(A)(i) to keep catch-ups excludable, so
+    the project lead should rule before any model change.
 - id: us:charitable-non-itemizer-2020-separate-cap
   program: income-tax
   years:
@@ -11268,6 +11310,41 @@ candidates:
   state: ruled
   note: Ruled October 2026; verify the worksheet version and whether claiming the rebate defeats the refund-only
     joint-return exception.
+- id: us:se-plan-step-2-multiple-businesses
+  program: income-tax
+  years:
+    from: 2022
+    type: tax
+  question: When a self-employed person has more than one business, does Pub. 560's step 2 subtract all of Schedule 1
+    line 15 from the plan business's net profit, or only the part attributable to that business?
+  sources:
+  - kind: statute
+    citation: 26 U.S.C. 401(c)(2)(A)(vi); 404(a)(8)(C)
+    url: https://www.law.cornell.edu/uscode/text/26/401#c_2_A
+  - kind: worksheet
+    citation: Publication 560 (2025), Deduction Worksheet for Self-Employed, step 2
+    url: https://www.irs.gov/pub/irs-pdf/p560.pdf#page=39
+  - kind: form
+    citation: Form 7206 (2023), lines 5-8
+    url: https://www.irs.gov/pub/irs-prior/f7206--2023.pdf#page=1
+  readings:
+    statute: Earned income is figured with regard to the section 164(f) deduction and only from the business that
+      has the plan; the statute does not say how to split the deduction among businesses.
+    other: Pub. 560's step 2 enters the deduction from Schedule 1 line 15; Form 7206 lines 5 to 8 split line 15 by
+      each business's share of the profitable businesses' net profits for the same section 401(c) earned income.
+  example: In 2025, Schedule C profit of $60,000 and farm profit of $40,000 give a Schedule 1 line 15 of $7,064.78.
+    Splitting it gives step 3 of $55,761.14 and a $34,652.23 limit; subtracting all of it gives $52,935.23 and
+    $34,087.05.
+  pe_us:
+    follows: gap-fill
+    code:
+    - policyengine_us/variables/household/expense/retirement/self_employed_pension_earned_income.py
+    prs:
+    - https://github.com/PolicyEngine/policyengine-us/pull/10121
+  state: unreviewed
+  note: 'The code follows Form 7206: the Schedule C business takes Schedule 1 line 15 in proportion to its share of
+    the positive net profits of Schedule C, Schedule F and K-1 box 14 code A, the split the self-employed health
+    insurance limit already uses for the same earned income. Code not yet on main: self_employed_pension_earned_income.'
 - id: us:separate-filer-zero-income-threshold
   program: income-tax
   years: