Quarterly Estimated Taxes: Who Has to Pay and How to Calculate Them
If your income doesn't have taxes withheld from it, the IRS still wants its cut four times a year — not just in April. Here's who that applies to and how to figure out the number.
Direct answer: You generally must pay quarterly estimated taxes if you expect to owe $1,000 or more in tax for the year after subtracting withholding. That mainly means the self-employed, business owners, partners, S-corp shareholders, landlords, and investors. You calculate each payment by estimating your annual income, tax, and self-employment tax, then dividing by four — or by using last year's tax as a "safe harbor."
Who has to pay quarterly estimated taxes?
You likely owe estimated taxes if both of these are true:
- You expect to owe at least $1,000 in tax for 2026 after your withholding and refundable credits, and
- Your withholding and credits will be less than the smaller of 90% of this year's tax or 100% of last year's tax.
In practice, that captures most people with meaningful income that isn't subject to withholding:
- Sole proprietors and single-member LLC owners
- Partners and multi-member LLC members
- S-corporation shareholders (on income beyond their W-2 wages)
- Freelancers, consultants, and gig workers
- Landlords and investors with large capital gains, dividends, or interest
W-2 employees usually don't need to pay estimates, because their employer withholds throughout the year. But if you have a side business or a big one-time gain, you might.
How do I calculate quarterly estimated taxes?
There are two legitimate approaches. Most people use one or the other — or a blend.
Method 1: Estimate the current year
Project your full-year numbers and work down to the tax:
| Step | What you do |
|---|---|
| 1. Estimate net income | Projected revenue minus business expenses |
| 2. Self-employment tax | Net earnings × 92.35% × 15.3% (SE tax) |
| 3. Deduct half of SE tax | Adjustment to income |
| 4. Income tax | Apply your bracket to taxable income |
| 5. Total and divide | (Income tax + SE tax) ÷ 4 |
A note on self-employment tax: it's 15.3% — 12.4% for Social Security plus 2.9% for Medicare. For 2026, the 12.4% Social Security portion applies only to the first $184,500 of net earnings; the 2.9% Medicare portion has no cap. High earners also pay an extra 0.9% Medicare tax on wages/SE income above $200,000 (single) or $250,000 (married filing jointly).
Method 2: Safe harbor (the easy button)
You don't have to predict the future perfectly. The IRS gives you a safe harbor: you won't owe an underpayment penalty as long as you pay the smaller of:
- 90% of your current-year tax, or
- 100% of your prior-year tax — 110% if your prior-year adjusted gross income was over $150,000.
For many owners with steady or rising income, simply paying 100% (or 110%) of last year's tax in four equal installments is the simplest way to stay penalty-proof. You settle up any difference when you file.
How much should I set aside?
If you want a working rule of thumb before doing the full math: set aside roughly 25–30% of your net business profit for federal income tax and self-employment tax combined. Higher earners and those in high-tax states should lean toward the top of that range or above it.
The best habit is to move that percentage into a separate savings account every time you get paid. Then estimated-tax due dates become a transfer, not a scramble. (Planning your entity and income around these numbers is exactly what our tax planning service is built for.)
When are estimated taxes due in 2026?
Estimated taxes are paid in four installments — and the "quarters" aren't evenly spaced, which surprises people:
| Payment | Income period | Due date |
|---|---|---|
| 2025 Q4 | Sept–Dec 2025 | January 15, 2026 |
| 2026 Q1 | Jan–Mar 2026 | April 15, 2026 |
| 2026 Q2 | Apr–May 2026 | June 15, 2026 |
| 2026 Q3 | Jun–Aug 2026 | September 15, 2026 |
| 2026 Q4 | Sept–Dec 2026 | January 15, 2027 |
You can pay online through IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS). Don't forget your state estimates too — California, for example, has its own schedule and its own rules.
What happens if you underpay?
The IRS charges an underpayment penalty, which works like interest on each installment you missed, running from that quarter's due date until you pay. For 2026, that rate is roughly 6–7% per year (the IRS resets it quarterly). It's not a flat fine — pay late by a little and the penalty is small; skip payments entirely and it adds up.
The good news: hitting the safe harbor above makes the penalty disappear entirely, even if you end up owing more at filing.
The bottom line
Quarterly estimated taxes feel intimidating, but they come down to two decisions: how much to set aside, and whether to project the current year or lean on the safe harbor. Get those right and the due dates are just calendar reminders.
If your income swings a lot year to year — a common headache for business owners — a CPA can dial in your payments so you're not overpaying (and lending the IRS money interest-free) or underpaying (and eating a penalty). Book a consultation and we'll build you a payment plan that fits your actual cash flow.
This is general information, not tax advice. Estimated-tax situations vary widely — check with a CPA about your specific numbers.
Frequently asked questions
Who has to pay quarterly estimated taxes? Generally, anyone who expects to owe $1,000 or more in tax after withholding — including self-employed people, business owners, partners, S-corp shareholders, and investors with significant untaxed income.
How much should I set aside for estimated taxes? A common rule of thumb for self-employed people is to set aside 25–30% of net profit for federal income and self-employment tax. Your exact rate depends on your bracket, state, and deductions.
What are the 2026 estimated tax due dates? April 15, 2026 (Q1), June 15, 2026 (Q2), September 15, 2026 (Q3), and January 15, 2027 (Q4). The final 2025 payment is due January 15, 2026.
What is the estimated tax safe harbor? You avoid an underpayment penalty if you pay at least 90% of this year's tax or 100% of last year's tax (110% if your prior-year AGI exceeded $150,000), whichever is smaller.
What happens if I don't pay estimated taxes? The IRS charges an underpayment penalty, calculated like interest on each missed installment. In 2026 that rate is around 6–7% annually, applied from each quarterly due date until you pay.