Quarterly estimated taxes

Estimated tax is not a separate tax. It is the income tax and self-employment tax on income nobody withholds from: freelance and gig work, a small business, rental income, investment gains, alimony from older divorces. You send it to the IRS yourself, online through IRS Direct Pay or your IRS account, or with a Form 1040-ES voucher.

The four due dates

For the 2026 tax year the payments are due on:

• April 15, 2026, for income earned January to March;
• June 15, 2026, for April to May;
• September 15, 2026, for June to August;
• January 15, 2027, for September to December.

When a date falls on a weekend or a federal holiday, it moves to the next business day. You can skip the January payment if you file the full return and pay the balance by the end of that January.

The periods are uneven on purpose, to line the first payment up with the filing deadline. That makes the second payment, due only 2 months after the first, the one people most often miss.

Who has to pay

You generally need to make estimated payments if you expect to owe at least $1,000 when you file, after withholding and refundable credits. Below that, there is no penalty however you pay. Someone with a salary and a small side business may never need to, because withholding at the day job already covers most of the year.

The safe harbors

The penalty for underpaying is interest, charged for each period on the amount that was short, at the IRS underpayment rate. You avoid it entirely if your withholding and estimated payments, made on time, add up to at least the smaller of:

• 90% of this year’s tax, or
• 100% of last year’s tax, as shown on last year’s return.

If last year’s adjusted gross income was over $150,000 ($75,000 if married filing separately), the prior-year figure is 110% instead. For someone whose tax last year was $40,000, that means $44,000 of payments.

The prior-year rule is the useful one when income is rising or hard to predict. You know last year’s tax exactly, so you can pay a quarter of it each time and be safe, whatever happens this year. You still owe the full tax in April; the safe harbor removes the penalty, not the bill.

A freelancer’s year

A single freelance designer expects $80,000 of profit this year. Self-employment tax on it is $11,304, and federal income tax, after the standard deduction, the deduction for half the self-employment tax and the qualified business income deduction, is $5,344. The total is $16,647, or $4,162 a payment if spread evenly.

Last year, with $60,000 of profit, the total tax was $12,037. The two safe harbors are $14,983 (the current-year share) and $12,037 (all of last year’s tax). The smaller one, $12,037, is enough: four payments of $3,009 avoid any penalty. The other $4,610 is due when the return is filed. Setting it aside in a savings account each month keeps April from being a surprise.

A side business next to a salary

An employee earning $70,000 with $15,000 of profit from weekend work adds $4,573 to the year’s federal tax, including $2,119 of self-employment tax.

There are two ways to cover it. Quarterly payments work. So does extra withholding at the day job: adding $175.89 to Step 4(c) of the W-4, if paid every two weeks, covers the whole amount. Withholding has an advantage estimated payments do not: the IRS treats it as paid evenly through the year, whenever it was actually withheld. A large Step 4(c) amount in the last few paychecks of the year can fix an underpayment from the spring. The W-4 guide shows where it goes.

Uneven income

If most of your income arrives late in the year, equal payments can overpay early. The annualized income installment method on Form 2210, Schedule AI, lets each payment match the income actually earned by that point. It takes more paperwork, but it is the fair method for seasonal businesses, a large capital gain in the autumn, or a freelancer who lands a big contract mid-year.

State estimated taxes

Most states with an income tax have their own estimated payments, usually on the same dates and with similar safe harbors, though the percentages differ. California front-loads its schedule, asking for a larger share in the first and second payments. States without an income tax have none.

If you missed a payment

Pay as soon as you can. The penalty is interest, worked out day by day on each period’s shortfall, so a payment that is a few weeks late costs only a few weeks of interest on that amount. It does not reset the other periods, and a later overpayment is applied first to the earliest shortfall.

You do not usually have to work out the penalty yourself. File the return and the IRS sends a bill for it, or complete Form 2210 if you want to use the annualized method or ask for a waiver. Waivers are possible for casualties, disasters and other unusual circumstances, and for people who retired after reaching 62 or became disabled during the year or the year before, when the shortfall was due to reasonable cause.

Habits that work

• Pay from a separate account that receives a fixed share of every client payment.
• Use last year’s tax as the baseline, since the prior-year safe harbor needs no forecasting.
• Recheck in the autumn. If the year is going much better than last, the safe harbor still protects you from the penalty, but the April bill will be larger.
• Keep the confirmation numbers. Payments are matched to your Social Security number, and a typo there is the commonest cause of a missing payment.

Every figure on this page is computed by the same code as our calculators. How we calculate.