Who Must Pay Quarterly Estimated Taxes?
You are generally required to pay estimated taxes if you expect to owe at least $1,000 in federal tax for the year after subtracting withholding and credits, AND your withholding covers less than 90% of this year's liability (or 100% of last year's tax).
This typically applies to:
- Freelancers and independent contractors with 1099 income
- Self-employed business owners (sole proprietors, LLC members)
- Investors with significant dividend, interest, or capital gains income
- Landlords with net rental income
- W-2 employees with substantial side income not covered by paycheck withholding
2026 Quarterly Estimated Tax Deadlines
| Payment Period | Deadline |
|---|---|
| January 1 – March 31 | April 15, 2026 |
| April 1 – May 31 | June 16, 2026 |
| June 1 – August 31 | September 15, 2026 |
| September 1 – December 31 | January 15, 2027 |
Missing a deadline does not result in a penalty if you pay by the next deadline — but the underpayment penalty accrues on the missed amount.
How to Calculate Your Quarterly Payment
Method 1 — Safe Harbor (Simplest)
Pay 100% of last year's total tax liability (110% if your AGI exceeded $150,000) divided by four. This eliminates the underpayment penalty regardless of what you ultimately owe.
If your 2025 tax return showed $8,000 owed: pay $2,000 per quarter.
Method 2 — 90% of Current Year Estimate
Project your current year income and calculate 90% of the expected tax. Divide by four. This is more precise but requires more forecasting.
Method 3 — Annualised Income Instalment
Useful if income is uneven (e.g., a consultant who earns heavily in Q4). The IRS allows you to pay based on actual income earned each quarter rather than equal instalments. Requires Form 2210 Schedule AI.
How to Pay
IRS Direct Pay (irs.gov/payments) — free, bank account withdrawal, same-day posting.
EFTPS (Electronic Federal Tax Payment System) — recommended for businesses; allows scheduling future payments.
IRS2Go App — mobile payment via debit card or bank transfer.
Mail — Form 1040-ES voucher with a check payable to "United States Treasury." Allow 5–7 business days.
Underpayment Penalty: What It Costs
The IRS charges interest on underpaid estimated taxes based on the federal short-term rate + 3 percentage points (approximately 7–8% annualised in 2026). On a $2,000 underpayment for one quarter, that is roughly $35–$40.
The penalty is waived if:
- Total tax liability is below $1,000
- You paid at least 90% of the current year's tax
- You paid 100% of last year's tax (safe harbour)
State Estimated Taxes
Most states with income tax also require quarterly estimated payments — often on the same deadlines as federal. California, New York, and Illinois have their own payment portals and thresholds. Check your state revenue department's website for state-specific rules.
Use our Self-Employed Tax Calculator to estimate your combined federal + self-employment tax and determine your safe-harbour quarterly amount.