IRS Estimated Tax Payment Rules, Deadlines, and Penalties

If you earn income the IRS doesn’t see through a paycheck, you’re expected to send IRS estimated tax payments four times a year. The rule catches you when you’ll owe $1,000 or more after subtracting withholding and refundable credits, and your withholding won’t cover the smaller of 90% of this year’s tax or 100% of last year’s.¹ Miss the payments or underpay them, and the IRS charges interest on each shortfall until you catch up.²

Who Owes Estimated Payments

Sole proprietors, partners, S-corporation shareholders, landlords, freelancers, and people with meaningful dividend or capital-gains income are the usual candidates.¹ The trigger is expecting to owe $1,000 or more for the year after subtracting withholding and credits.

There’s a second condition that’s easy to miss. You only owe estimated payments if your withholding and credits will also fall short of one of the safe harbors below. So if you have a W-2 job and enough is coming out of your paycheck to cover the tax on your side income, you don’t have to send anything extra.

The Two Safe Harbors

You don’t have to guess your tax bill exactly. Hit either target through withholding, estimated payments, or a combination, and no underpayment penalty applies no matter what you actually owe at filing:

Pay at least 90% of the tax shown on your 2026 return, or
Pay at least 100% of the tax shown on your 2025 return (the return must cover 12 months).³

The prior-year method is usually the easier target because the number is already sitting on your last return. Divide it by four and pay equal installments.

If your adjusted gross income on last year’s return was above $150,000 ($75,000 if married filing separately), the prior-year figure goes up to 110% of that tax.⁴ The 90% current-year option doesn’t change.

If you didn’t file a return last year, or last year covered fewer than 12 months, the prior-year safe harbor isn’t available and you’re stuck with the 90% current-year target.⁴ First-year self-employment is the hardest case for that reason. Overpay a little; you’ll get it back.

If your income arrives unevenly, say from a seasonal business or a large stock sale in the fall, you can use the annualized installment method to match payments to the quarters when the income actually came in, so early installments aren’t penalized. That calculation goes on Schedule AI of Form 2210.⁵

Payment Deadlines

The year is split into four unequal periods, each with its own due date. For 2026:¹

January 1 through March 31 income: due April 15, 2026
April 1 through May 31 income: due June 15, 2026
June 1 through August 31 income: due September 15, 2026
September 1 through December 31 income: due January 15, 2027

These aren’t calendar quarters. The second period is only two months long, so the gap between the April and June payments is shorter than people expect. When a due date lands on a weekend or federal holiday, the next business day counts as timely.

You can skip the January 15 payment entirely if you file your full 2026 return and pay any balance by February 1, 2027.¹ Filing the return is the requirement, not just sending the money.

When the President declares a federal disaster, the IRS pushes estimated tax deadlines back for people in the covered area, and the relief is automatic if you live or run a business there. Relief workers and taxpayers whose records are inside the zone qualify too but have to call the IRS disaster hotline at 866-562-5227.⁶

Working Out What to Pay

The worksheet inside Form 1040-ES walks through the math.⁷ Estimate this year’s income, deductions, and credits, subtract expected withholding, and divide the result by four.

For a simpler path, take last year’s total tax (or 110% of it if you were above the AGI threshold), subtract your expected withholding, and split the remainder into four equal payments. That locks in the prior-year safe harbor without needing to forecast this year at all.

How to Send the Money

IRS Direct Pay pulls funds from your bank account through the IRS website for free, with no registration.⁸
EFTPS requires a one-time enrollment but lets you schedule payments up to 365 days ahead, so you can set all four installments at once.⁹
Debit or credit card payments go through IRS-authorized processors. Debit fees are about $2.10 to $2.15 per transaction; credit fees run 1.75% to 1.85% of the payment.¹⁰
The IRS2Go app is a shortcut to Direct Pay and the card processors, not a separate payment channel.¹¹
Checks and money orders go with the payment voucher from Form 1040-ES, made out to “U.S. Treasury.” Write your name, address, Social Security number, daytime phone number, the tax year, and the form number on the check.¹²

If you also have a W-2 job, you can raise your paycheck withholding instead of sending separate estimated payments. Give your employer a new Form W-4 asking for extra withholding.¹³ Withholding is treated as if it were paid evenly across the year even when it isn’t, which makes W-4 adjustments a useful catch-up if you realize late in the year that you’ve underpaid.

When you file, you can also send all or part of a refund forward as a credit against next year’s first installment, with any leftover carrying to later installments.

Adjusting Mid-Year

Income rarely holds steady across four payments. If yours changes materially, redo the Form 1040-ES worksheet and change your remaining installments.⁷ There’s no form to notify the IRS. Just send a different amount next quarter.

Overestimated early? Cut the later installments so you’re not lending the IRS money at zero interest. A big contract in the third quarter? Raise the September and January payments to stay inside a safe harbor. The trap is waiting until filing season to notice.

What the Underpayment Penalty Costs

The penalty is essentially interest on whatever you underpaid, running from each installment’s due date until you pay it or until the filing deadline, whichever comes first.⁴ The rate resets each quarter at the federal short-term rate plus three percentage points. It’s 7% for the first quarter of 2026¹⁴ and drops to 6% starting in the second quarter.¹⁵

Each installment is scored separately, so an April shortfall costs more than a September one because interest runs longer. In most cases the IRS does the math and sends a bill; you don’t file Form 2210 unless you’re using the annualized method or asking for a waiver.¹⁶

No penalty applies if you end up owing less than $1,000 after withholding and credits.⁴ States with income taxes run their own separate underpayment penalties on top of the federal one.

When the IRS Will Waive the Penalty

Waivers are limited. You can ask for one if you retired after reaching 62 during 2025 or 2026 and the underpayment came from reasonable cause rather than neglect, or if you became disabled during those years. A waiver is also available when a casualty, disaster, or other unusual circumstance makes the penalty inequitable.⁶ In federally declared disaster areas the relief usually just happens; the IRS identifies affected counties and postpones deadlines without you doing anything.

Farmers and Fishermen Follow a Different Schedule

If at least two-thirds of your gross income comes from farming or fishing (measured against either the current or prior year), the four quarterly deadlines don’t apply. You either pay the whole 2026 estimated tax in one payment by January 15, 2027, or you file your 2026 return by March 1, 2027 and pay the full balance with it, in which case no estimated payment is needed at all.¹⁷ Any penalty computation for farmers and fishermen goes on Form 2210-F rather than Form 2210.¹⁶

1
Internal Revenue Service. Form 1040-ES – Estimated Tax for Individuals
2
Internal Revenue Service. Topic No. 306 – Penalty for Underpayment of Estimated Tax
3
Internal Revenue Service. Estimated Tax
4
Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax
5
Internal Revenue Service. Instructions for Form 2210
6
Internal Revenue Service. Instructions for Form 2210
7
Internal Revenue Service. Estimated Taxes
8
Internal Revenue Service. Direct Pay with Bank Account
9
EFTPS. Financial Institution Handbook
10
Internal Revenue Service. Pay Your Taxes by Debit or Credit Card or Digital Wallet
11
Internal Revenue Service. IRS2Go Mobile App
12
Internal Revenue Service. Pay by Check or Money Order
13
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
14
Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026
15
Internal Revenue Service. Internal Revenue Bulletin 2026-8
16
Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
17
Internal Revenue Service. Farming and Fishing Income