Do You Have to Make Estimated Tax Payments?

You have to make estimated tax payments to the IRS if you expect to owe at least $1,000 in federal income tax for the year after subtracting your withholding and refundable credits.¹ Federal income tax works on a pay-as-you-go basis, so income that arrives without withholding — self-employment pay, investment gains, rental profits, prizes — has to be settled up in four installments across the year rather than in one payment at filing time.

Who Has to Pay

The $1,000 trigger catches most people whose income isn’t run through an employer’s payroll system. That commonly includes:

Freelancers, independent contractors, sole proprietors, and partners with self-employment income
Investors receiving dividends, interest, or capital gains from stock sales
Landlords with net rental income
Recipients of alimony (for agreements finalized before 2019), prizes, or gambling winnings without adequate withholding

You can skip estimated payments this year if all three of these were true last year: your total tax was zero, your prior tax year covered a full 12 months, and you were a U.S. citizen or resident for the entire year.¹ Zero tax liability means the tax line on your return was zero, not simply that you got a refund back.

One other route out: if a spouse’s employer withholds enough tax to cover both of your liabilities, or if you increase withholding at your own W-2 job to make up for untaxed income, you can eliminate the need for quarterly payments. Withholding counts toward the same $1,000 test.

How Much to Pay

You calculate your estimated tax on the worksheet inside Form 1040-ES. You’ll project your adjusted gross income, taxable income, deductions, and credits for the year, using last year’s return as a starting reference.² Key 2026 standard deductions to plug in: $16,100 for single filers, $32,200 for married filing jointly, and $24,150 for heads of household.³

The Safe Harbor

You avoid an underpayment penalty if your payments plus withholding hit at least one of two benchmarks:

90% of your current-year tax, or
100% of your prior-year tax, provided that return covered a full 12 months²

You only need to meet the lower of the two. If your AGI last year was above $150,000 ($75,000 if married filing separately), the prior-year benchmark rises from 100% to 110%.² Paying based on last year’s known tax is often the simplest path: your income for the current year doesn’t have to be predicted accurately, only your obligation to the IRS.

Self-Employment Tax Is Included

If you work for yourself, your quarterly payment has to cover self-employment tax alongside income tax. The combined rate is 15.3%: 12.4% for Social Security on net earnings up to $184,500 in 2026, and 2.9% for Medicare on all net earnings with no cap.⁴ You can deduct half of your self-employment tax as an adjustment to income when you fill out the worksheet, which lowers your AGI and the income tax figure that flows from it.⁵

When Payments Are Due

Estimated tax deadlines don’t line up with calendar quarters. For the 2026 tax year:

Payment 1 covers January 1 through March 31, due April 15, 2026
Payment 2 covers April 1 through May 31, due June 15, 2026
Payment 3 covers June 1 through August 31, due September 15, 2026
Payment 4 covers September 1 through December 31, due January 15, 2027²

When a due date lands on a Saturday, Sunday, or legal holiday, the deadline slides to the next business day.⁶ Timeliness runs off the postmark for mailed payments and the timestamp for electronic ones.

How to Send the Payment

You can use a different method each quarter:

IRS Direct Pay pulls funds directly from your bank account. It’s free and requires no account registration.⁷
The Electronic Federal Tax Payment System (EFTPS) is a free Treasury service that lets you schedule payments up to 365 days ahead. Enrollment takes five to seven business days.⁸
Credit and debit card payments go through IRS-approved processors. The processors charge a convenience fee, typically around 2.5% of the payment for credit cards.
Check or money order can be mailed with the matching Form 1040-ES voucher.

Electronic payments generate a confirmation number on the spot. Save it with your worksheet so year-end reconciliation is easy.

If last year’s return produced a refund, you can direct some or all of it toward this year’s first estimated payment. You elect that on the return itself. The credited amount reduces what you owe in April, and it should not be included in the dollar figure on your April voucher because the IRS has already applied it to your account.²

Adjusting as the Year Goes On

Your first payment doesn’t lock in the other three. If your income shifts noticeably, complete a fresh 1040-ES worksheet and adjust the remaining installments. The IRS suggests refiguring each quarter to keep your payments close to your actual liability.⁹

If your income is bunched into one part of the year, dividing an annual estimate into four equal payments can overstate what you owed early on. The annualized income installment method lets you size each quarterly payment to the income actually received through that period. You report it on Schedule AI of Form 2210 when you file, and if you use the method for one quarter you have to use it for all four.¹⁰¹¹

What Happens If You Underpay

Come up short in any quarter and the IRS charges an underpayment penalty that functions like interest on the shortfall for each day it stayed unpaid. The rate resets quarterly at the federal short-term rate plus three points. For 2026, it’s 7% in the first quarter and 6% in the second.¹²

Each quarter is calculated on its own. Overpaying in September does not automatically erase a shortfall from April, and you can still owe a penalty on a return that produces an overall refund.¹³ The IRS computes the penalty on Form 2210 and adds it to your tax bill.

The penalty may be reduced or waived in specific situations:

You or your spouse (on a joint return) retired after age 62 or became disabled during the current or prior tax year, and the underpayment stemmed from reasonable cause rather than neglect¹³
You live in a federally declared disaster area, in which case deadlines may also be extended¹⁴
You served, or worked as a civilian, in a designated combat zone
Your withholding was concentrated in one part of the year; Form 2210 lets you show that payments were timely against income actually earned

For a retirement or disability waiver, attach documentation (retirement date and age, or the date disability began) with Form 2210 when you file.¹¹

State Payments Are Separate

Most states with an income tax run their own quarterly estimated payment system with its own thresholds, safe harbors, and penalties. Rules often mirror the federal structure but not always: some states use the same four dates, others don’t, and the dollar amount that triggers the requirement varies. If you owe federal estimates and live in a state with an income tax, check your state tax agency for its 1040-ES equivalent and schedule.

1
Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual To Pay Estimated Income Tax
2
Internal Revenue Service. Form 1040-ES, Estimated Tax for Individuals
3
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
4
Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
5
Internal Revenue Service. Topic No. 554, Self-Employment Tax
6
Internal Revenue Service. When Are Quarterly Estimated Tax Payments Due – Individuals 2
7
Internal Revenue Service. Direct Pay With Bank Account
8
Internal Revenue Service. EFTPS – The Electronic Federal Tax Payment System
9
Internal Revenue Service. Estimated Taxes
10
Internal Revenue Service. Publication 505 (2025), Tax Withholding and Estimated Tax
11
Internal Revenue Service. Instructions for Form 2210
12
Internal Revenue Service. Internal Revenue Bulletin 2026-08
13
Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
14
Internal Revenue Service. Penalty Relief Due to Statutory Exception