To pay estimated taxes, send four quarterly payments to the IRS using Direct Pay, the Electronic Federal Tax Payment System (EFTPS), your IRS online account, a debit or credit card through an authorized processor, or a check mailed with a Form 1040-ES voucher. Most people who owe $1,000 or more in federal tax beyond what payroll withholding covers need to do this, with the first installment due April 15. The underpayment penalty rate is 7% for the first quarter of 2026 and 6% for the second, so getting the amounts and timing right is worth the attention.
Do You Actually Need to Make Estimated Payments
You need to make estimated payments if you expect to owe at least $1,000 in federal income tax after subtracting your withholding and refundable credits, and your withholding plus credits will be less than the smaller of 90% of your current year’s tax or 100% of last year’s tax. If your adjusted gross income last year exceeded $150,000 ($75,000 if married filing separately), that second figure rises to 110% of last year’s tax.1Internal Revenue Service. How Do I Know if I Have To Make Quarterly Individual Estimated Tax Payments
Both conditions have to be true. If you expect to owe $1,200 but withholding already covers 92% of this year’s tax, no estimated payments are required. The income that usually triggers the rule is freelance or contract work, rental income, investment gains, dividends, and interest. Retirees often hit it through taxable Social Security and retirement account withdrawals without enough tax held back.
One clean exception: if you had zero tax liability for the entire prior year, you were a U.S. citizen or resident all year, and that year covered a full 12 months, you owe nothing in estimated payments this year no matter what your income looks like.2Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual To Pay Estimated Income Tax
How Much to Send Each Quarter
Form 1040-ES includes a worksheet to project your full-year income, deductions, credits, and withholding, then divide the result into four installments.3Internal Revenue Service. Form 1040-ES Estimated Tax for Individuals (2026) You don’t file the worksheet; it’s just a calculation tool.
Most people skip the projection and use the safe harbor: pay 100% of last year’s total tax (110% if last year’s AGI exceeded $150,000), split into four equal payments, and no underpayment penalty applies regardless of what happens this year.4Internal Revenue Service. Estimated Taxes Paying 90% of what you actually end up owing this year also works. The safe harbor protects you from a penalty, but if your income jumped, you’ll still owe a balance in April.
Quarterly Deadlines
The four due dates don’t split the year evenly:
- April 15, covering income from January 1 through March 31
- June 15, covering April 1 through May 31
- September 15, covering June 1 through August 31
- January 15 of the following year, covering September 1 through December 31
Q2 is only two months and Q3 is three, so the June payment comes up faster than most people expect. When a due date falls on a weekend or federal holiday, it moves to the next business day.5Internal Revenue Service. When Are Quarterly Estimated Tax Payments Due
Payment Methods
The IRS accepts estimated tax through several channels. Electronic methods post fastest and give you immediate confirmation, which matters when you’re paying close to a deadline.
IRS Direct Pay
Direct Pay pulls funds straight from a checking or savings account with no fee and no registration. You enter your bank routing and account number, Social Security number, and filing status each time. Payments can be scheduled up to 365 days ahead, so you can set up all four quarters in one sitting. Select “Estimated Tax” and the correct tax year when you set up the payment.6Internal Revenue Service. Direct Pay Help
Electronic Federal Tax Payment System
EFTPS is a free Treasury system that handles individual and business tax payments.7Bureau of the Fiscal Service, U.S. Department of the Treasury. Electronic Federal Tax Payment System Enrollment takes up to five business days because the system mails you a PIN.8Internal Revenue Service. EFTPS – The Electronic Federal Tax Payment System Once you’re in, you can schedule payments up to a year ahead or pay by phone.
Timing detail worth memorizing: EFTPS payments must be submitted by 8:00 p.m. ET at least one day before the due date to count as timely.9EFTPS. Welcome to EFTPS Online For a September 15 deadline, initiate the payment by 8:00 p.m. ET on September 14.
Your IRS Online Account
An IRS online account lets you make estimated payments, review your payment history, and see any scheduled future payments in one place.10Internal Revenue Service. Payments Setting one up requires identity verification. Once active, it’s the easiest way to confirm the IRS actually credited a payment to the right year.
Debit Card, Credit Card, or Digital Wallet
Card payments go through authorized third-party processors and carry a fee. Credit cards run roughly 1.75% to 1.85% of the payment (minimum $2.50); debit cards are a flat $2.10 to $2.15.11Internal Revenue Service. Pay Your Taxes by Debit or Credit Card or Digital Wallet The fee goes to the processor, not the IRS. On a $5,000 payment, a 1.75% credit card fee adds $87.50, which only pencils out if your rewards return more than that. Debit or bank transfer is usually the better call.
Check or Money Order by Mail
You can still pay by check using the vouchers in the Form 1040-ES package. Detach the voucher for the correct quarter, make the check payable to “United States Treasury,” and write your Social Security number, the tax year, and “Form 1040-ES” on the check. Mail it to the IRS address listed in the 1040-ES instructions for your state; the address varies by state, so check each year. A payment postmarked on or before the due date counts as timely.
Withhold More From a Paycheck Instead
If you also have wages, you can skip estimated payments by asking your employer to withhold extra. The W-4 has a line for an additional dollar amount to hold from each paycheck.4Internal Revenue Service. Estimated Taxes Withholding carries a real advantage: it’s treated as paid evenly across the year regardless of when it actually came out, so extra tax taken from a December paycheck counts as if it had been spread over all four quarters. That can rescue a year where you didn’t make quarterly payments and would otherwise owe a penalty.
Adjusting Payments Through the Year
If your income drops after you’ve started paying, recalculate using the amended estimated tax worksheet in Publication 505 and lower your remaining payments.12Internal Revenue Service. Publication 505, Tax Withholding and Estimated Tax Spread the revised balance across whatever deadlines are left.
The reverse also applies. Land a big contract in Q3 and you should raise your remaining payments. The IRS looks at each quarter separately, so paying more later doesn’t erase a shortfall from an earlier quarter.
Applying Last Year’s Refund
When you overpay last year, you can apply part or all of the refund to this year’s estimated tax rather than getting it back as a check. You make that election on your return.13Internal Revenue Service. Amounts Applied From Previous Year The applied amount counts toward Q1, and any excess carries forward to later quarters.
The Annualized Income Method
Freelancers, seasonal business owners, and anyone whose income comes in uneven chunks can use the annualized income installment method. It calculates each quarter’s required payment based only on income received through that quarter’s cutoff, so a small Q1 and a large Q3 line up with a small first payment and a large third one.14Internal Revenue Service. Instructions for Form 2210 (2025)
The cost is paperwork. You complete Schedule AI on Form 2210 and attach it to your return, and if you use the method for one quarter you must use it for all four.15Internal Revenue Service. Instructions for Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts Most tax software handles the math, but you need dated records of when income arrived and expenses were paid.
If You Underpay
The underpayment penalty is essentially interest on the shortfall for each quarter. The IRS applies the underpayment rate, which is the federal short-term rate plus three percentage points, to the amount you should have paid, running from the quarterly due date until you pay.16Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual To Pay Estimated Income Tax The rate is 7% for the first quarter of 2026 and 6% for the second, and it resets every three months.17Internal Revenue Service. Quarterly Interest Rates
Estimated tax penalties do not compound daily. Federal law exempts them from the daily compounding rule that applies to other tax interest.18United States Code. 26 USC 6622 – Interest Compounded Daily On a $2,000 quarterly shortfall at 7%, the charge works out to roughly $35 per quarter of lateness.
Beyond the safe harbor and the zero-prior-year exception, federal law lets the IRS waive the penalty in two situations.2Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual To Pay Estimated Income Tax The first is casualty, disaster, or unusual circumstances that made timely payment unreasonable, with federally declared disasters the clearest case. The second applies if you retired after reaching age 62 or became disabled during the tax year the payments were due (or the year before) and the underpayment was due to reasonable cause. To request either waiver, file Form 2210 with your return, calculate the penalty, show what you’re asking to have waived, and attach a written explanation.
State Taxes, Farmers, and Household Employers
Federal estimated payments cover only your federal bill. Most states with an income tax require their own estimated payments, with thresholds anywhere from $100 to $1,000 and rules that generally track the federal ones but not always. Check your state’s department of revenue for the forms and deadlines.
Farmers and fishermen get their own schedule. If at least two-thirds of your gross income comes from farming or fishing, you can make one estimated payment for the whole year by January 15 of the following year, or skip estimated payments entirely by filing your return and paying all tax owed by March 1.19Internal Revenue Service. Farmers and Fishermen
Household employers should also run the numbers. If you pay a nanny, housekeeper, or other household employee $3,000 or more in cash wages during 2026, you owe Social Security and Medicare taxes on those wages, reported on your personal return.20Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide Those employment taxes can push you across the $1,000 threshold that triggers the estimated payment requirement, so factor them into your quarterly math.