The short answer
- Pay estimated tax if you expect to owe $1,000 or more for 2026 after withholding and credits.
- Due dates: April 15, June 15 and September 15, 2026, and January 15, 2027.
- No penalty if you pay in the smaller of 90% of your 2026 tax and 100% of your 2025 tax (110% if your 2025 AGI was over $150,000).
- The penalty is interest, charged at 6% to 7% a year in 2026 on each late or short payment.
Who has to pay estimated tax
Anyone whose withholding won’t cover their tax: freelancers and 1099 contractors, gig workers, small business owners, landlords, investors with large dividends or gains, retirees whose pensions or IRA withdrawals have little tax taken, and employees with big side income. The test is the $1,000 line: if what you will owe when you file, after withholding and refundable credits, is under $1,000, there is no penalty and no need for estimated payments.
If self-employment is your main income, the self-employment tax calculator breaks down the 15.3% self-employment tax that makes up a large part of the bill. This calculator takes any mix of income and focuses on the schedule.
The 2026 due dates
- April 15, 2026Payment 1
For income from January 1 to March 31.
- June 15, 2026Payment 2
For April and May: only two months.
- September 15, 2026Payment 3
For June to August.
- January 15, 2027Payment 4
For September to December.
- April 15, 2027Return and balance due
Anything left, with Form 1040.
The “quarters” are not equal: the second covers two months and the fourth four. The penalty, though, assumes a quarter of the required amount at each date.
The safe harbors
You avoid the penalty if withholding plus estimated payments, paid on time, reach the smallest of:
| Rule | Pay in | Best when |
|---|---|---|
| Current year | 90% of your 2026 tax | Income is falling, or you had no 2025 return |
| Prior year | 100% of your 2025 tax | Income is rising: a fixed, known target |
| Prior year, higher income | 110% of your 2025 tax if 2025 AGI was over $150,000 ($75,000 married filing separately) | Income is rising and high |
Each installment needs a quarter of that target by its due date.
Example: a freelancer with no prior-year figure
- Self-employment tax$8,478
- Income tax after the standard and QBI deductions$3,559
- 2026 tax$12,037
- 90% safe harbor$10,833
- Each quarterly payment$2,708
Paying $2,708 on each date keeps the penalty at zero. To cover the whole bill instead, pay $3,009 a quarter and owe nothing in April.
Using last year's tax
The prior-year rule is the one most self-employed people use, because you know the number in advance: line 24 of your 2025 Form 1040, less refundable credits. If the same freelancer had a 2025 tax of $8,000 and AGI of $55,000, the target is $8,000, or $2,000 a quarter.
- Target
- $10,833
- Each payment
- $2,708
- Due in April 2027
- $1,204
- Target
- $8,000
- Each payment
- $2,000
- Due in April 2027
- $4,037
The smaller safe harbor wins, but it only moves the tax to April. Put the difference aside, or the April bill will be a shock. If you didn’t file for 2025, or your 2025 tax year was shorter than 12 months, only the 90% rule applies.
The 110% rule for higher incomes
If your 2025 AGI was over $150,000 ($75,000 married filing separately), the prior-year safe harbor rises to 110%. A married couple with $150,000 of self-employment profit, a 2025 tax of $30,000 and 2025 AGI of $180,000 would need $33,000 under that rule. Their 2026 tax is $30,990, so 90% of it, $27,891, is lower: $6,973 a quarter.
Example: a W-2 job plus a side gig
- 2026 tax (including $2,826 self-employment tax)$12,667
- Safe harbor: 100% of the 2025 tax$7,500
- Less withholding−$7,000
- Still to pay in estimates$500
Withholding covers almost all of the safe harbor, so $125 a quarter is enough to avoid a penalty, but about $5,167 will still be due in April 2027. Raising withholding with the W-4 withholding calculator spreads that over your paychecks instead.
Withholding counts as paid evenly
Estimated payments count on the date you make them, but withholding is treated as paid in four equal parts on the due dates, however late in the year it was taken. So if you are behind in October, extra withholding from your last paychecks of 2026 is worth more than an estimated payment: it fixes earlier quarters too.
Example
A target of $8,000 met entirely by withholding in November and December carries no penalty at all. The same $8,000 paid as a single estimated payment on January 15, 2027 costs about $229 in penalty.
How the penalty is worked out
The underpayment penalty works like interest. For each installment, the IRS compares a quarter of your required payment with what you had paid by its due date. A shortfall accrues at the IRS underpayment rate from the due date until it is paid (later payments go to the oldest shortfall first), or until April 15, 2027.
| Quarter | Rate a year |
|---|---|
| January to March 2026 | 7% |
| April to June 2026 | 6% |
| July to September 2026 | 7% |
| October to December 2026 | 7% |
The rate is the federal short-term rate plus 3 points, reset each quarter. The calculator assumes 7% continues into 2027.
Penalty examples
| What happened | Penalty |
|---|---|
| All four paid on time | $0 |
| April payment skipped, $4,000 paid in June | $20 |
| Three paid, January payment skipped | $35 |
| Nothing paid until January 15, 2027, then $8,000 | $229 |
| Nothing paid until the April 15, 2027 deadline | $367 |
The penalty is modest next to the tax itself, but it grows with every day and every dollar, and it is not deductible.
Catching up after a missed payment
If you missed earlier payments, the calculator spreads what is still needed over the remaining due dates and shows the penalty that has already built up. Paying sooner always helps: the penalty stops running on each dollar the day it arrives. You don’t need to wait for a due date; you can pay as often as you like.
Freelancers whose income has jumped may find the 90% target hard to reach late in the year. In that case, meet the prior-year safe harbor first, which is fixed, and set aside the rest for April.
Uneven income: the annualized method
If most of your income arrives late in the year (a December contract, a big capital gain in the fall), equal payments overstate what you owed earlier. Form 2210’s Schedule AI, the annualized income installment method, works out each installment from the income you had actually received by the end of each period. It can lower or remove the penalty for earlier quarters. You claim it when you file; this calculator uses the regular method, so with very uneven income its penalty figure may be too high.
Retirees and investors
- 2026 tax after the senior deduction$2,250
- Safe harbor: 90% of 2026$2,025
- Withheld from the pension$3,000
Withholding already covers the bill, and they get $750 back. Retirees can ask for withholding on pensions (Form W-4P), IRA withdrawals and even Social Security (Form W-4V) instead of making quarterly payments, and it counts as paid evenly through the year.
What the payments cover
Estimated tax covers all federal taxes on your Form 1040: income tax, self-employment tax, the 3.8% net investment income tax, the 0.9% additional Medicare tax and household employment taxes for a nanny or housekeeper. Refundable credits, such as the refundable part of the child tax credit, reduce what you need to pay.
How to pay
- IRS Direct Pay: free, from a bank account, no sign-up. Choose “Estimated tax”, Form 1040-ES and tax year 2026.
- Your IRS online account: lets you see past payments, useful when you file.
- EFTPS: free, schedules payments in advance; needs enrollment.
- Card or digital wallet: through IRS-approved processors, for a fee.
- Check: with a Form 1040-ES voucher, mailed by the due date.
Keep confirmation numbers. Married couples paying jointly should use the same names and order they will file with.
Skipping the January payment
You don’t need to make the January 15, 2027 payment if you file your 2026 return and pay all the tax due by the end of January 2027 (February 1, 2027, since January 31 falls on a Sunday). That suits people who have their paperwork early.
Exceptions and waivers
- No penalty if you had no tax liability for 2025, were a US citizen or resident all year, and the 2025 tax year was a full 12 months.
- Farmers and fishers need to pay only 66⅔% of the current year’s tax, in one payment by January 15, 2027.
- The IRS can waive the penalty after a casualty, disaster or other unusual circumstance, or if you retired after age 62 or became disabled and had reasonable cause.
- Federally declared disaster areas often get postponed due dates.
State estimated tax
Most states with an income tax have their own estimated payments, usually on the same dates, with their own safe harbors. A freelancer in a high-tax state can owe several thousand dollars of state tax on top of the federal figures here. The state income tax calculator compares the states.
Common mistakes
- Forgetting self-employment tax, which is often the larger part of a freelancer’s bill.
- Paying the safe harbor and spending the rest, then facing a large April bill.
- Using 100% of last year’s tax when 110% applies.
- Paying for the wrong tax year in Direct Pay (a January payment is for the previous year).
- Forgetting estimated payments when you file, which turns a refund into an apparent bill.