Quarterly taxes for a business are the four estimated tax payments the IRS expects you to make throughout the year on income that isn’t subject to withholding. Because federal tax works on a pay-as-you-go basis, you owe these payments if you expect to end the year owing at least $1,000 in federal tax as an individual business owner, or $500 as a C corporation.1Internal Revenue Service. Estimated Taxes Each payment bundles income tax and, for most self-employed people, self-employment tax into a single check or transfer to the IRS.
Who Has to Pay
Sole proprietors, partners, and S corporation shareholders generally owe estimated payments once their expected federal tax bill for the year clears $1,000 after subtracting withholding and credits. The same rule catches anyone with substantial income from dividends, interest, or rental property. C corporations hit the requirement at just $500 of expected liability.1Internal Revenue Service. Estimated Taxes
If you also collect a W-2 paycheck from a regular job, you can sometimes skip estimated payments by having your employer withhold extra using a new Form W-4. That extra withholding counts toward your total tax and can absorb what you’d otherwise owe on your business income.
You are not required to make estimated payments for the current year if all three of these are true: your tax for the prior year was zero, you were a U.S. citizen or resident alien for that whole year, and that year covered a full 12 months.1Internal Revenue Service. Estimated Taxes This mainly helps people who launched a business after a year of no income.
What Each Payment Covers
Federal income tax on your business profit is the visible piece, but self-employment tax is where most first-timers under-budget. Because you’re both the employer and the employee, you pay both halves of Social Security and Medicare: 12.4 percent for Social Security and 2.9 percent for Medicare, or 15.3 percent of your net earnings.2Internal Revenue Service. Topic No. 554, Self-Employment Tax The Social Security portion applies only on the first $184,500 of earnings in 2026; the Medicare portion has no cap.3Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
Half of the self-employment tax you pay is deductible when you calculate adjusted gross income, which lowers the income subject to income tax though not the SE tax itself.2Internal Revenue Service. Topic No. 554, Self-Employment Tax Missing that deduction on your estimating worksheet is a common way people overpay early in the year.
Higher earners have one more layer. An Additional Medicare Tax of 0.9 percent applies on net self-employment income above $200,000 for single filers or $250,000 for married filing jointly.4Internal Revenue Service. Questions and Answers for the Additional Medicare Tax If you expect to clear that line, build it into your estimated payments.
2026 Due Dates
The IRS divides the year into four uneven payment periods. The second one runs only two months, which is where the calendar tends to catch people:
- First payment (Jan 1–Mar 31): April 15, 2026
- Second payment (Apr 1–May 31): June 15, 2026
- Third payment (Jun 1–Aug 31): September 15, 2026
- Fourth payment (Sep 1–Dec 31): January 15, 2027
When a deadline lands on a weekend or legal holiday, it rolls to the next business day.5Internal Revenue Service. When Are Quarterly Estimated Tax Payments Due – Individuals 2 You can also skip the January 15 installment if you file your full 2026 return and pay the balance owed by February 1, 2027.6Internal Revenue Service. Form 1040-ES, Estimated Tax for Individuals
One point that surprises business owners every year: filing Form 4868 to extend your annual return does not push back any estimated tax deadline. The extension covers paperwork, not payment. Your April 15 first-quarter payment for 2026 is still due on April 15 even if your 2025 return is on extension.7Internal Revenue Service. Get an Extension to File Your Tax Return
Figuring Out What You Owe Each Quarter
The worksheet in Form 1040-ES walks you through estimating your annual income, deductions, credits, and self-employment tax, and produces a total figure you divide by four.8Internal Revenue Service. About Form 1040-ES, Estimated Tax for Individuals Corporations use a similar worksheet in the Form 1120 instructions.
The practical shortcut most business owners use is a safe harbor. You avoid an underpayment penalty if your payments cover the lesser of 90 percent of what you actually owe for the current year, or 100 percent of the total tax on last year’s return. If your adjusted gross income was over $150,000 last year ($75,000 if married filing separately), the prior-year figure rises to 110 percent.9Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax
The prior-year method is popular because the number is already known. Take last year’s total tax, divide by four, pay that amount each quarter, and you’re protected from penalties even if your income jumps. The 90-percent-of-current-year method takes more forecasting but produces smaller payments if you expect to earn less this year.
If your income is seasonal, the annualized income installment method lets you size each payment to what you actually earned during that period rather than paying in equal quarters. It requires cleaner bookkeeping and Schedule AI (Form 2210), but it keeps you from writing a large check during a slow stretch.
How to Send the Payment
IRS Direct Pay moves funds from your checking or savings account with no registration; you can schedule up to 30 days ahead, and any cancellation has to happen at least two business days before the scheduled date.10Internal Revenue Service. Direct Pay with Bank Account
The Electronic Federal Tax Payment System (EFTPS) lets you schedule payments up to 365 days out, which suits business owners who like to queue all four quarterly payments at the start of the year. Enrollment takes time, though: the IRS mails your PIN in five to seven business days, so sign up well before your first deadline.11Electronic Federal Tax Payment System. Welcome to EFTPS Online
Credit and debit card payments run through IRS-approved third-party processors and carry a processing fee.12Internal Revenue Service. Pay Your Taxes by Debit or Credit Card or Digital Wallet Unless the rewards outweigh the fee, this is usually the priciest route.
Mail is still accepted. Send the payment voucher from Form 1040-ES with a check or money order to the address listed for your state in the form instructions. As long as the envelope is postmarked by the deadline, the payment counts as on time.
What Happens If You Underpay
The IRS charges a penalty on any underpaid installment, running from the date that installment was due until you pay it or until April 15 of the following year, whichever comes first.9Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax The charge is essentially interest, computed at the IRS underpayment rate (the federal short-term rate plus three points), which resets quarterly. For the first quarter of 2026, that rate is 7 percent per year, compounded daily.13Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026
The penalty is calculated per quarter. If your first three payments were on target and you fell short on the fourth, only that fourth period is penalized. The IRS figures it automatically when you file, and you can also work it out yourself on Form 2210. A detail that surprises people: this penalty can hit even when you’re getting a refund overall, because it’s measured quarter by quarter rather than against your final annual balance.
C corporations face a parallel penalty under Internal Revenue Code Section 6655, using the same interest-based calculation and the stricter $500 threshold.14Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
Two Boundaries Worth Knowing
Farmers and fishermen play by a different calendar. If at least two-thirds of your gross income comes from farming or fishing, you can make one estimated payment by January 15, 2027, for the 2026 tax year, or skip estimated payments entirely by filing your return and paying the full balance by March 1, 2027.15Internal Revenue Service. Farmers and Fishermen
Federal estimated taxes are only half the picture in most states. Most states with an income tax also require quarterly estimated payments, and their deadlines, safe harbor percentages, and thresholds don’t always match the federal rules. Check your state revenue agency for its own schedule, because state penalties run separately from federal ones.