Am I Required to Make Estimated Tax Payments?

You are required to make estimated tax payments if you expect to owe at least $1,000 in federal tax for the year after subtracting your withholding and refundable credits, and your withholding plus credits won’t cover the smaller of 90% of your current-year tax or 100% of last year’s tax.¹ Both parts have to be true. If you’re a freelancer, landlord, investor, retiree, or anyone else receiving income without tax already taken out, you’re the kind of taxpayer this rule was written for.²

The Two Conditions That Have to Both Apply

The IRS uses a two-part test. First, you have to expect a balance due of $1,000 or more after withholding and refundable credits. Second, that withholding and those credits have to fall short of a safe harbor: either 90% of what you’ll owe this year, or 100% of what you owed last year, whichever number is smaller.¹ Clear the safe harbor and you’re fine even if you write a check at filing time. Miss the safe harbor and cross the $1,000 threshold, and estimated payments are on you.

There’s a stricter version for higher earners. If your adjusted gross income last year was more than $150,000 (or $75,000 if you file married filing separately), the prior-year safe harbor rises from 100% to 110%.¹ This is the rule that surprises people the year after a big income jump.

Situations That Commonly Trigger the Requirement

Estimated payments most often come up when income arrives without withholding. That includes self-employment earnings, interest, dividends, rental income, capital gains, and taxable Social Security benefits.³ Independent contractors, partners in a business, and S-corporation shareholders taking distributions are usually in the estimated-payment routine year after year.

W-2 Employees With Side Income

Having a paycheck doesn’t automatically get you out of this. If your employer withholds from your salary but you also freelance, rent out property, or earn meaningful investment income, your withholding may not be enough. When the shortfall clears both parts of the test, you either make estimated payments on the extra income or increase your W-2 withholding to cover it.

Household Employers

If you pay a nanny, housekeeper, or other household worker $3,000 or more in cash wages during 2026, you owe the employer’s share of Social Security and Medicare taxes on those wages.⁴ Those taxes flow through Schedule H onto your personal return. Nothing gets withheld from your own income to cover them, so the added liability can push you past the $1,000 line.

Corporations

Corporations sit under a lower threshold. Any corporation that expects to owe $500 or more when it files generally has to make estimated payments.⁵

When You’re Not Required to Pay

You can skip estimated payments for the current year if you had zero tax liability for all of last year and you were a U.S. citizen or resident for that full year.² Zero liability means you actually owed nothing. Getting a refund after withholding doesn’t count; that just means you overpaid a liability you did have.

You’re also off the hook whenever your withholding alone covers a safe harbor. A retiree with enough tax withheld from pension or Social Security payments to hit 100% (or 110%) of last year’s tax doesn’t need to send quarterly checks, even with substantial investment income on top.

How Much You Need to Pay

Once you know you’re in, the question is how much. The two safe harbor numbers give you a choice:

90% of your current-year tax, which requires projecting income, deductions, and credits for a year that isn’t over yet.
100% of your prior-year tax (110% if last year’s AGI cleared the high-income threshold), which is easier because the number is already sitting on last year’s return. The prior-year return has to cover a full 12 months.

For most people the prior-year figure is the simpler target. Look at last year’s total tax, divide by four, send that amount each quarter, and true up any difference when you file. If your income has dropped significantly this year, the 90% projection may let you pay less, but it puts the risk of the estimate on you.

Form 1040-ES and its worksheet walk through the calculation and produce four installments.²

The 2026 Quarterly Deadlines

The IRS splits the year into four uneven payment periods.⁶

April 15, 2026, for income earned January 1 through March 31.
June 15, 2026, for income earned April 1 through May 31.
September 15, 2026, for income earned June 1 through August 31.
January 15, 2027, for income earned September 1 through December 31.

Weekend and holiday dates roll to the next business day, but all four 2026 dates land on weekdays. You can skip the January 15 payment entirely if you file your full return and pay any remaining tax by January 31.

Ways to Pay

Payments can go through your IRS online account, IRS Direct Pay (free bank transfer), or debit or credit card through an approved processor that charges a fee.⁷ The IRS2Go app handles payments too. If you’d rather mail a check, use the payment voucher from Form 1040-ES. Businesses generally use the Electronic Federal Tax Payment System, which requires enrollment in advance. Keep the confirmation number or receipt from every payment; that record is your only proof of on-time payment if a question comes up later.

Increasing Withholding as an Alternative

If you have a job that already withholds, you can often skip quarterly payments altogether by asking your employer to withhold more. Submit a new Form W-4 with additional withholding, and those dollars count toward your total tax the same way estimated payments would.⁸

There’s a real advantage here. Withholding is treated as paid evenly across the year no matter when it was actually taken from your check, so a late-year withholding bump can cover an earlier-quarter shortfall. Estimated payments only count for the quarter you send them. The IRS Tax Withholding Estimator on its website can help you land on the right amount.

What Happens if You Don’t Pay Enough

If your total payments come up short and you owe $1,000 or more at filing, the IRS charges an underpayment penalty, calculated quarter by quarter.⁹ A first-quarter shortfall accrues its own charge even if you overpay later. The rate is the federal short-term rate plus three points, reset each quarter and compounded daily.¹⁰ For the first quarter of 2026, that comes to 7%.¹¹

The IRS usually calculates the penalty and bills you, so most taxpayers don’t file Form 2210 themselves. You do file it if you want to claim a waiver or use the annualized income installment method for uneven income.¹² Waivers exist for underpayments caused by casualty, disaster, or other unusual circumstances where the penalty would be unfair, and for people who retired after age 62 or became disabled during the tax year or the preceding one, provided the shortfall was due to reasonable cause rather than neglect.¹³ Farmers and fishermen (at least two-thirds of gross income from those activities) can make a single January 15 payment or file by March 1 with full payment instead of following the four-quarter schedule.¹⁴

State Estimated Payments Are Separate

Most states with an income tax run their own estimated payment system, with their own thresholds, deadlines, and forms. Some track the federal schedule; some don’t. Meeting your federal obligation says nothing about your state one, and missing state payments generates its own penalties. Check your state tax agency’s rules if you live somewhere that taxes income.

1
Internal Revenue Service. Estimated Tax for Individuals
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Internal Revenue Service. Form 1040-ES – Estimated Tax for Individuals
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Internal Revenue Service. About Form 1040-ES, Estimated Tax for Individuals
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Internal Revenue Service. 2026 Publication 926
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Internal Revenue Service. Underpayment of Estimated Tax by Corporations Penalty
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Internal Revenue Service. Individuals 2 – When to Pay Estimated Tax
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Internal Revenue Service. Estimated Taxes
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Internal Revenue Service. Pay as You Go, So You Won’t Owe: A Guide to Withholding, Estimated Taxes and Ways to Avoid the Estimated Tax Penalty
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Internal Revenue Service. Instructions for Form 2210 – Underpayment of Estimated Tax by Individuals, Estates, and Trusts
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Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax
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Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026
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Internal Revenue Service. Instructions for Form 2210
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Internal Revenue Service. Topic No. 306, Penalty for Underpayment of Estimated Tax
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Internal Revenue Service. Topic No. 416, Farming and Fishing Income