The 10% tax bracket run from 0 to $14,600 for married filing jointly so the sweet spot of owing no federal taxes is totally dependent on your deductions. Standard deduction for married filing jointly is $10,000 for 2005. Personal exemptions at $3200 each so I put the sweet spot if you don't itemize at $16400.
The two types of retirement plans that work well for sole proprietorships to maximize contributions are Simple IRAs and Solo 401(k)s. Both allow "employee" contibutions up to a maximum of 100% of income. If I remember right the "employee" contribution for the Simple IRA is maxed out at $10,000 and the solo 401(k) at $14,000, plus any over 50 catch up contributions. There also is an employer contribution that can be made. Formulas get a bit complex. See this IRS fact sheet on Simple IRAs: http://www.irs.gov/retirement/articl...111420,00.html
Don't forget if you are self employed, will always have to pay the self employment tax.