How Quarterly Estimated Taxes Work

The U.S. tax system operates on a pay-as-you-go basis. Employees have taxes withheld from each paycheck, but if you have self-employment, freelance, rental, or investment income, you typically need to make quarterly estimated payments directly to the IRS.

Who Needs to Pay

You generally need to make quarterly estimated payments if you expect to owe at least $1,000 in federal tax after subtracting withholding and credits. This typically applies to:

• Self-employed individuals, freelancers, and independent contractors
• Business owners (sole proprietors, partners, S-corp shareholders)
• Investors with significant capital gains, dividends, or interest
• Anyone whose employer doesn't withhold enough tax

Self-Employment Tax

Self-employed individuals pay both the employee and employer share of Social Security and Medicare taxes — a combined 15.3% rate (12.4% SS + 2.9% Medicare) on 92.35% of net SE income. The good news: you can deduct half of your SE tax from your gross income, which reduces your federal income tax.

Safe Harbor — Avoid Underpayment Penalties

Even if your estimate isn't perfect, you can avoid IRS underpayment penalties by paying under the "safe harbor" rule:

• 100% of last year's tax — pay at least as much as your total 2025 federal tax liability
• 110% rule — if your 2025 AGI exceeded $150,000 ($75,000 MFS), pay 110% of your 2025 tax
• 90% of this year's tax — pay at least 90% of your actual 2026 liability

You're protected if you meet either the 90% current-year or the 100%/110% prior-year method.

2026 Quarterly Due Dates

• Q1 — January 1 – March 31  →  April 15, 2026
• Q2 — April 1 – May 31  →  June 16, 2026
• Q3 — June 1 – August 31  →  September 15, 2026
• Q4 — September 1 – December 31  →  January 15, 2027

Pay using IRS Direct Pay at irs.gov/payments or by mailing Form 1040-ES with a check.