Estimated Tax
Quarterly payments toward income and self-employment tax on income that has no withholding, due April 15, June 15, September 15 and January 15.
Estimated tax is how self-employed people, landlords and investors pay tax during the year on income nobody withholds from. The IRS expects four payments, and you generally need to make them if you expect to owe $1,000 or more after withholding and credits.
The underpayment penalty is avoided by paying at least the smaller of 90% of the current year’s tax or 100% of the prior year’s tax (110% if prior-year adjusted gross income was above $150,000). The safe harbor decides the penalty, not the tax: whatever remains is still due when you file.
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Open the calculator →Who has to pay estimated tax
The IRS expects tax to be paid as income is earned. An employee's employer withholds it from each paycheck. If nobody withholds on part of your income, you make quarterly payments yourself.
As an individual, you generally need to make estimated payments if you expect to owe $1,000 or more when you file your return, after subtracting withholding and credits. The usual reasons are self-employment income, freelance or 1099 work, rental income, interest, dividends, capital gains, and a spouse's or a second job's income with too little withholding. Corporations use a $500 threshold.
You don't always need to make estimated payments. If you also have a W-2 job, you can raise your withholding with a new Form W-4 instead, and the IRS treats withholding as paid evenly through the year even if you raise it in December. Farmers and fishers follow different rules described in IRS Publication 505.
2026 estimated tax due dates
There are four installments a year, but the periods are not equal quarters. The second covers only two months and the last covers four.
| Income earned | Payment due |
|---|---|
| Jan 1 to Mar 31 | April 15, 2026 |
| Apr 1 to May 31 | June 15, 2026 |
| Jun 1 to Aug 31 | September 15, 2026 |
| Sep 1 to Dec 31 | January 15, 2027 |
If a date falls on a weekend or holiday, it moves to the next business day. You can skip the January payment if you file your full return by January 31 and pay the balance in full with it. State estimated tax has its own schedule, so check your state separately.
How much to pay: the safe harbor rules
You avoid the underpayment penalty if your payments and withholding for the year reach the smaller of two amounts:
- 90% of this year’s tax, which requires you to forecast this year accurately, or
- 100% of last year’s tax, or 110% if last year's adjusted gross income was above $150,000 ($75,000 if married filing separately).
The prior-year option is the one most self-employed people use, because the number is known. It also covers you when income jumps: a large sale or a strong year doesn't create a penalty as long as you paid the safe harbor amount. You still owe the difference when you file.
Example 1. A freelancer's 2025 tax was $18,000 and her 2026 tax is heading for $30,000, with 2025 AGI of $95,000. Ninety percent of 2026 is $27,000, and 100% of 2025 is $18,000. The smaller is $18,000, so she needs to pay $4,500 on each due date. She'll owe about $12,000 more with her return, and no penalty applies.
Example 2. Another taxpayer had $180,000 of AGI and $40,000 of tax in 2025, so the prior-year rule is 110%, or $44,000. He expects $60,000 of tax for 2026, and 90% of that is $54,000. The smaller number is $44,000, so his installments are $11,000, and the remaining $16,000 is due when he files.
Building your own estimate
When you use the current-year method, or you need a number to set money aside, three pieces make up the estimate: self-employment tax, federal income tax, and state tax.
Self-employment tax is 15.3% on 92.35% of net profit: 12.4% for Social Security (up to the annual wage base) and 2.9% for Medicare. On $80,000 of net profit, $80,000 × 0.9235 = $73,880 is subject to tax. Social Security is $9,161.12 and Medicare is $2,142.52, for $11,303.64. Half of that amount is deductible when you compute income tax.
Income tax depends on your filing status, deductions and any other income, so it needs a full calculation rather than a rule of thumb. The quarterly estimated tax calculator runs both taxes with the 2026 rules, and our freelancer tax set-aside guide explains how to hold money back each time a client pays you. Use the self-employment tax calculator if you want the SE piece by itself.
Uneven income: the annualized income method
Equal payments over-collect early from anyone whose income arrives late, such as a seasonal business or a freelancer with a big fourth quarter. The annualized income method, computed on Form 2210 Schedule AI, lets each installment match the income you actually had by then.
It works by scaling year-to-date profit up to a full year using factors of 4, 2.4, 1.5 and 1 for the periods ending March 31, May 31, August 31 and December 31. The tax on that annualized figure is then multiplied by 22.5%, 45%, 67.5% and 90% to get the amount required by each date.
An illustration with a flat 20% tax rate: a business earns only $5,000 by March 31. Annualized, that is $5,000 × 4 = $20,000, and 20% tax is $4,000. Multiply by 22.5% and the April 15 requirement is $900, instead of the $6,000 that an even schedule would demand on $24,000 of annual tax. The method requires records of income by period, which is the price of the lower early payments.
How the underpayment penalty works
The penalty is interest on each shortfall. For every installment you underpay, the IRS charges its underpayment rate from the due date until you pay it or until the return due date, whichever comes first. The rate is set every quarter; it was 7% for July to September 2026, and the IRS kept it at 7% for October to December.
Suppose the $4,500 September 15 payment is missed entirely and stays unpaid until April 15, 2027, which is 212 days. At a constant 7%, the penalty is about $4,500 × 0.07 × 212 ÷ 365 ≈ $183. The dollar cost is small compared with the tax, and it grows with the size of the miss and the time it stays open. Form 2210 is the official calculation. See the underpayment penalty entry for the details, and the IRS penalty and interest calculator to model your own numbers.
Common mistakes
- Waiting until the return to pay. The tax is due as the income is earned, so paying it all in April produces a penalty even when you pay in full then.
- Forgetting self-employment tax. Many first-year freelancers set aside only income tax. In the $80,000 example, SE tax alone is over $11,000.
- Using the wrong prior-year percentage. Above $150,000 of prior-year AGI, 100% no longer protects you. Use 110%.
- Treating the four dates as quarter-ends. The second period is two months, and January 15 belongs to the previous year's income.
- Ignoring state tax. Federal safe harbor does nothing for a state's own estimated payments.
- Paying the same amount every quarter despite a big change. A sharp rise in income calls for a fresh estimate. Rework the amount when something material changes, not once a year.
What this page can't tell you
These are federal rules for individuals. Corporations, trusts, estates, farmers and fishers, and some high-income filers follow variations, and states differ. The figures here illustrate the mechanics, so check them against your own return, the IRS instructions for Form 1040-ES, or a tax professional before you rely on them. Also see Section 179 and bonus depreciation if a big deduction changes your projected tax.
Frequently asked questions
Estimated tax is the tax you pay in installments during the year on income that has no withholding, such as self-employment profit, interest, dividends, rent and gains. The IRS expects payment as income is earned rather than all at once when you file.
Generally anyone who expects to owe $1,000 or more when filing, after withholding and credits. Self-employed people, freelancers and landlords are the most common. If you have a W-2 job, you can raise your withholding instead.
April 15, June 15, and September 15, 2026, and January 15, 2027. The periods are Jan 1 to Mar 31, Apr 1 to May 31, Jun 1 to Aug 31, and Sep 1 to Dec 31. You can skip the January payment by filing by January 31 and paying in full.
The smaller of 90% of this year's tax or 100% of last year's tax. If last year's AGI was above $150,000 ($75,000 if married filing separately), the prior-year figure is 110%. Paying that amount in four equal installments protects you from the penalty.
You are charged interest at the IRS underpayment rate on the shortfall from the due date until you pay or until the filing deadline. It is a penalty, not a fine on the whole tax bill, so paying late is usually cheaper than not paying. Pay as soon as you notice.
Yes. The annualized income method on Form 2210 Schedule AI lets you pay less early in the year when income arrived late. You need records showing your income for each period.