Investment Coordination for Stylists in Austin

The short answer: yes, our firm handles investment coordination for Austin stylists, and the details below explain how.

For most self-employed stylists the Solo 401k is the strongest option, because it lets you contribute in two roles where a SEP only lets you contribute in one. As the employee you can defer up to $24,500 in 2026, plus an $8,000 catch-up if you are 50 or older, and then as the employer you can add a profit-sharing contribution on top, with the combined total reaching $72,000 in 2026, or $80,000 with the catch-up. A SEP IRA, by contrast, only allows an employer contribution of up to 25 percent of compensation, so at the same net profit it usually permits a smaller deduction than the Solo 401k, which has the separate employee deferral. The SEP wins on simplicity, it is easier to open and has no annual filing until the balance is large, so a stylist who values low paperwork over the maximum contribution may still prefer it. For a stylist clearing $90,000 of net profit, a Solo 401k might allow a contribution near $40,000, taking that amount off taxable income, while a SEP on the same profit would land lower. We compare both against your actual numbers and your appetite for paperwork before recommending one.

In 2026 a Solo 401k lets you contribute as both employee and employer. The employee elective deferral is up to $24,500, and if you are 50 or older you add a catch-up of $8,000, raising the employee side to $32,500. On top of that, as the employer, you can make a profit-sharing contribution, and the combined total across both roles can reach $72,000, or $80,000 once the age-50 catch-up is included. How much of that you can actually use depends on your net profit, because the employer profit-sharing piece is limited to a percentage of your self-employment earnings, so a stylist with modest profit will not reach the $72,000 ceiling even though the room exists. The advantage over a SEP is the employee deferral, which lets you contribute a large amount even at moderate profit. For a stylist with $90,000 of net profit, the full $24,500 deferral plus an employer contribution might total around $40,000, all deductible against federal income. Because Texas has no personal income tax, the deduction is purely federal, but at a marginal rate in the low-to-mid twenties it still saves several thousand dollars in the contribution year. We size the exact number from your profit.

This is an important distinction. Your SEP IRA or Solo 401k contribution is deductible against income tax, but it does not reduce the 15.3 percent self-employment tax. The self-employment tax is figured on your net profit before the retirement contribution, so putting money into a Solo 401k lowers the income your federal income tax is calculated on, but the Social Security and Medicare portion is already set by your business profit. That still leaves a substantial benefit, because for most stylists the income tax saving on a large contribution outweighs what any plan could do on the SE tax side, and the SE tax itself carries a separate above-the-line deduction for half of it that you get regardless. So the retirement contribution is best understood as an income-tax planning tool, not a self-employment-tax one. For a stylist deferring $24,500 into a Solo 401k at a marginal income tax rate in the low twenties, that is roughly $5,000 off the current-year income tax, while the money stays invested. Texas adds nothing here because it has no income tax, so the whole benefit is federal. We coordinate the contribution with the rest of your tax plan so the income-tax deduction lands where it helps most.

One of the advantages of a self-employed retirement plan is that you generally do not have to fund it during the year, you can wait until you know your numbers. For a SEP IRA, you can make the contribution up to your tax filing deadline, including extensions, so a SEP for 2026 can be funded as late as the fall of 2027 if you extend. A Solo 401k has a wrinkle, the plan itself must be established by December 31 of the year you want the contribution to count for, but once it exists the employer profit-sharing contribution can be funded up to the filing deadline, and recent rules give more flexibility on the employee deferral timing as well. For a stylist whose income arrives unevenly, this is valuable, because you can size the contribution after the busy season is counted rather than guessing in January. We watch the deadlines so the plan is opened in time and funded by the right date, and we coordinate the funding with your estimated payments, the 2026 dates being April 15, June 15, September 15, and January 15, 2027, so the cash is there for both. We confirm the exact deadline for your plan type each year.

Living in Austin changes the shape of the saving rather than the contribution limits, which are set federally and are the same in every state. The difference Texas makes is that there is no state income tax, so a stylist in a high-tax state gets a state-plus-federal deduction on a retirement contribution while an Austin stylist gets a federal deduction only, because there is no state tax for the contribution to reduce. That sounds like a disadvantage, but it usually is not, because the Austin stylist was never paying the state income tax in the first place, so the total tax bill is lower to begin with. The contribution still produces a full federal income-tax deduction, and for a stylist deferring $24,500 into a Solo 401k that is roughly $5,000 off the federal bill at a low-twenties marginal rate, the same federal saving a stylist anywhere would get. What an Austin stylist does not have is a parallel state estimate to fund or a state return to coordinate the deduction against, which simplifies the planning. The 2026 federal estimate dates are April 15, June 15, September 15, and January 15, 2027, and that is the only schedule we coordinate the contribution with. We build the plan around the federal picture, which is the whole picture here.