Guide·Updated October 20, 2026

Quarterly Estimated Taxes: Pay the IRS on Schedule, Not in April

No employer is withholding for you. Here is how the four 2026 payments work, which safe harbor ends the penalty risk, and how much of every invoice is already spoken for.

How Estimated Taxes Work

The US tax system is pay-as-you-go. A W-2 employee pays through withholding on every paycheck; a freelancer, consultant or founder paid on invoices has to send the money in themselves. The IRS says you generally must make estimated payments if you expect to owe $1,000 or more when you file. Miss them and the penalty is not a flat fine: it is interest on each late quarter, charged at the IRS underpayment rate, which the IRS held at 7% a year, compounded daily, for the fourth quarter of 2026. The problem is rarely the penalty itself. It is the April bill for a full year of tax on money that was spent months ago.

The 2026 Due Dates

Per the 2026 Form 1040-ES, the four payments for tax year 2026 are due April 15, 2026, June 15, 2026, September 15, 2026 and January 15, 2027. The "quarters" are not equal: the June payment covers only April and May income, and the January payment covers September through December. Two details catch people out. First, the dates move to the next business day when they land on a weekend or federal holiday, so confirm them each year. Second, you can skip the January 15, 2027 payment entirely if you file your 2026 return by February 1, 2027 and pay the full balance with it, a useful option if your books close early.

Safe Harbor: The 100% / 110% Rule

You avoid the underpayment penalty if your payments cover the smaller of 90% of this year's tax or 100% of last year's tax. If your prior-year AGI was above $150,000 ($75,000 married filing separately), the prior-year figure becomes 110%. The prior-year route is the one to build on, because you know the number in January. Say your total 2025 tax was $20,000 on AGI under $150,000: four payments of $5,000 make you penalty-proof for 2026 no matter how good the year turns out. With AGI over $150,000 the target is $22,000, or $5,500 a quarter. You may still owe a balance in April, but no penalty on it.

The 90% Current-Year Option

Safe harbor is built for growing businesses. When income falls, paying 100% of a bigger prior year over-funds the IRS, so the 90% route wins: pay at least 90% of what you will actually owe for 2026. The catch is that you have to estimate it, and an estimate that comes in low exposes you to the penalty. If your income is lumpy, with most of it landing late in the year, the annualized income installment method on Form 2210 Schedule AI lets you match each payment to the income you had actually earned by that date instead of paying four equal installments. It takes more paperwork, but it stops you from paying tax in April on revenue that only arrived in November.

Self-Employment Tax: The 15.3% Most People Forget

Income tax is only half of it. Self-employment tax is 15.3%: 12.4% for Social Security and 2.9% for Medicare, applied to 92.35% of your net profit. The 12.4% portion stops at the Social Security wage base, which is $184,500 for 2026; the 2.9% has no cap, and a further 0.9% Additional Medicare Tax applies above $200,000 for single filers. On $100,000 of Schedule C profit, net earnings are $92,350 and SE tax is $14,129.55, before a dollar of income tax. You deduct half of it, $7,064.78, from income. Put the total in a separate account as each invoice is paid; payments then come out of money that was never yours to spend.

Put This Into Practice

Apply what you've learned using the WealthWise tool built for this exact purpose.

Try the Quarterly Tax Tracker

Frequently Asked Questions

What happens if I miss a quarterly estimated tax payment?

The IRS charges an underpayment penalty that works like interest on the amount and number of days you were short. At the 7% annual rate the IRS set for the fourth quarter of 2026, being $5,000 short for 90 days costs about $87. Pay as soon as you can; the charge stops building once the shortfall is paid.

Do I have to pay estimated taxes in my first year of freelancing?

Form 1040-ES says you do not owe 2026 estimated tax if you had no tax liability for a full 12-month 2025 tax year and were a US citizen or resident alien for all of 2025. Otherwise, if you expect to owe $1,000 or more, start paying in the quarter your freelance income begins.

Is it better to use 100% of last year's tax or 90% of this year's?

Use the prior-year figure (110% if your AGI was above $150,000) when income is rising or hard to predict. It is a fixed number you know in January, and it guarantees no penalty. Use 90% of the current year only when you are confident income is falling, because underestimating it brings the penalty back.

Does the safe harbor mean I won't owe anything in April?

No. Safe harbor protects you from the penalty, not from the tax. If your 2026 income is well above 2025, you will still owe the difference when you file, which is why you should keep setting money aside from every payment even after the safe-harbor amount is covered.

How much should I set aside from each payment?

Start with self-employment tax (roughly 14.1% of profit below the wage base, which is 15.3% of 92.35%) plus your federal and state income tax rate on the next dollar earned. The Quarterly Tax Tracker works this out from your actual income and expenses, so the reserve follows the year as it happens.

Sources

Limits and thresholds change every year. Confirm against the current publication.