The U.S. tax system is pay-as-you-go. If you're an employee, your employer handles that for you through withholding. But if you're self-employed, own a business, or have significant investment, rental or side income, the IRS expects you to pay during the year through estimated tax payments.
Miss them, and you could owe a penalty even if you pay everything you owe when you file. Here's how the rules work for tax year 2026.
Who has to pay estimated tax
For 2026, you generally must make estimated payments if both of these apply:
- You expect to owe at least $1,000 in tax for 2026 after subtracting your withholding and refundable credits, and
- You expect your withholding and refundable credits to be less than the smaller of:
- 90% of the tax shown on your 2026 return, or
- 100% of the tax shown on your 2025 return (the 2025 return must cover all 12 months).
Corporations follow a separate rule. They generally must make estimated payments if they expect to owe $500 or more.
The safe harbors, explained
The "smaller of" test above gives you two safe harbors. Meet either one and you generally avoid the underpayment penalty, even if you still owe money when you file.
| Safe harbor | Pay at least… | Good for |
|---|---|---|
| Current year | 90% of your 2026 tax | People whose income dropped or is easy to predict |
| Prior year | 100% of your 2025 tax | People whose income is rising or hard to predict |
| Prior year, higher income | 110% of your 2025 tax, if your 2025 AGI was more than $150,000 ($75,000 if married filing separately in 2026) | Higher earners using the prior-year method |
Here's an example. Say your total tax on your 2025 return was $12,000 and your 2025 AGI was under $150,000. If you pay $3,000 by each 2026 due date ($12,000 total), you've met the prior-year safe harbor, even if your 2026 tax ends up higher. You'd pay the difference when you file, without an underpayment penalty.
Farmers and fishermen have special rules. If at least two-thirds of your gross income is from farming or fishing, the 90% figure becomes 66⅔%, and the 110% rule doesn't apply.
2026 due dates
For estimated tax purposes, the year is split into four payment periods. For tax year 2026:
| Payment | Due date |
|---|---|
| 1st | April 15, 2026 |
| 2nd | June 15, 2026 |
| 3rd | September 15, 2026 |
| 4th | January 15, 2027 |
You can skip the January 15, 2027 payment if you file your 2026 return by February 1, 2027 and pay the full balance with it. If a due date falls on a weekend or legal holiday, the payment is on time if made the next business day.
Reading this in the fall? The first three 2026 deadlines have passed. If you're behind, making a payment now still reduces the penalty, because it's figured on each underpayment for the number of days it stays unpaid.
How to pay: Form 1040-ES
Form 1040-ES includes a worksheet to estimate your 2026 tax and figure your payments. You don't have to mail the vouchers. Paying online through IRS.gov is faster and gives you a confirmation. You can also make more than four payments if that fits your cash flow better, as long as each period's total is enough.
Uneven income? Consider the annualized method
The standard approach assumes four equal payments. That doesn't fit everyone. If most of your income arrives late in the year (from a big contract, a seasonal business, or a capital gain in November), the annualized income installment method lets you match payments to when you actually earned the income.
If you use it, you'll file Form 2210 with Schedule AI with your return to show the IRS why your payments were uneven. The worksheet is in IRS Publication 505. It takes more work, but it can reduce or remove a penalty that would otherwise apply.
The alternative: adjust your W-4 withholding
If you or your spouse also earn wages, you may be able to skip estimated payments altogether. File a new Form W-4 with your employer and ask for extra withholding to cover your other income. Retirees can do something similar with pension withholding on Form W-4P.
Withholding has a useful feature. By default, the IRS treats tax withheld as paid evenly across the four due dates, no matter when during the year it was actually withheld. So raising your withholding in the fall can help cover a shortfall from earlier quarters, which an estimated payment made today can't do. The IRS Tax Withholding Estimator at IRS.gov/W4App can help you pick an amount.
The underpayment penalty
The penalty applies when you didn't pay enough tax during the year, or didn't pay it on time. It's figured separately for each payment period, based on how much was short and for how long. You may be charged a penalty even if you're getting a refund when you file.
The IRS may waive the penalty if:
- You missed a payment because of a casualty, disaster or other unusual circumstance, and imposing the penalty would be unfair, or
- You retired after age 62 or became disabled during the tax year or the year before, and the underpayment was due to reasonable cause, not willful neglect.
When it's worth getting help
Estimated taxes get tricky when your income swings a lot, when you've just started a business, or when you have a mix of wages, self-employment and investment income. A tax professional can project your 2026 liability, pick the safe harbor that fits, and decide whether withholding or quarterly payments make more sense for you.
Our business tax solutions team can help you set a payment plan, and you can book an appointment anytime. If you earn through apps or freelancing, our gig economy tax tips may help too. This article is general information, not advice for your specific situation.
Sources
- IRS: 2026 Form 1040-ES, Estimated Tax for Individuals
- IRS: Estimated taxes
- IRS: Estimated tax FAQs
- IRS Topic No. 306: Penalty for underpayment of estimated tax
- IRS: Instructions for Form 2210
- IRS Publication 505: Tax Withholding and Estimated Tax
General information, not tax advice. Tax rules change and depend on your situation. Figures are for tax year 2026 unless noted; confirm current amounts at IRS.gov or talk to a Stellar Tax professional before acting.