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Self-employed individuals and small business owners must pay quarterly estimated taxes if they expect to owe $1,000 or more in federal income tax for the year. The 2026 due dates are April 15, June 16, September 15, and January 15, 2027. To calculate your payment: estimate your annual net self-employment income, calculate the tax owed (income tax + self-employment tax), and pay 25% each quarter — or use the prior year safe harbor (pay 100% of last year’s tax liability in equal quarterly installments).
Key Takeaways
- The underpayment penalty is currently 8% per year — the IRS charges interest and a penalty on underpaid quarterly taxes; in 2026, the underpayment rate is 8% per year (subject to IRS adjustment), making it financially worthwhile to pay estimated taxes on time even if you’d prefer to invest the cash.
- Self-employment tax (15.3%) is often the largest component of quarterly payments — many new business owners underestimate their quarterly payments because they calculate income tax but forget self-employment tax (Social Security + Medicare); both must be included in your estimated payment calculation.
- The prior year safe harbor eliminates underpayment risk — if you pay at least 100% of last year’s total tax liability (110% if your prior year AGI exceeded $150,000) in equal quarterly installments, you won’t owe an underpayment penalty regardless of what your actual tax liability turns out to be.
- EFTPS is the easiest way to pay federal estimated taxes — the IRS Electronic Federal Tax Payment System (EFTPS) allows you to schedule payments in advance, view payment history, and pay by ACH debit from your bank account at no cost; IRS Direct Pay is also available for one-time payments without registration.
Quarterly estimated taxes are one of the biggest financial adjustments new business owners face. Unlike employees who have taxes withheld from each paycheck, self-employed individuals must proactively send estimated tax payments to the IRS four times per year. Missing or underpaying these quarterly payments results in penalties that compound over time.
2026 Quarterly Estimated Tax Due Dates
| Quarter | Income Period Covered | Payment Due Date |
|---|---|---|
| Q1 2026 | January 1 – March 31 | April 15, 2026 |
| Q2 2026 | April 1 – May 31 | June 16, 2026 |
| Q3 2026 | June 1 – August 31 | September 15, 2026 |
| Q4 2026 | September 1 – December 31 | January 15, 2027 |
How to Calculate Your Quarterly Estimated Tax Payment
Method 1: Current Year Estimation
Step 1: Estimate your net self-employment income for the year (gross business income minus deductible business expenses). Step 2: Calculate self-employment tax: multiply net SE income by 0.9235 (accounts for the deductible half of SE tax), then multiply by 15.3%. Step 3: Subtract the deductible half of SE tax from net income to get adjusted income. Step 4: Apply your income tax bracket rates to the adjusted income and subtract any available deductions (standard deduction, QBI deduction, retirement contributions). Step 5: Add income tax + SE tax = total estimated annual tax. Step 6: Divide by 4 for your quarterly payment amount.
Method 2: Prior Year Safe Harbor (Recommended for Predictability)
The safest approach for most business owners is the prior year safe harbor: pay at least 100% of last year’s total federal tax liability in four equal quarterly installments (or 110% if your prior year adjusted gross income exceeded $150,000). This method guarantees no underpayment penalty regardless of how your current year income differs from your estimate. It’s particularly valuable for businesses with volatile income where accurate current-year estimation is difficult.
For example: if your 2025 tax return showed $12,000 in total federal tax, pay $3,000 per quarter in 2026. If you end up earning significantly more in 2026, you may owe additional tax when you file your 2026 return in April 2027, but you won’t owe an underpayment penalty.
How to Pay Federal Estimated Taxes
The IRS offers three payment methods for estimated taxes: EFTPS (Electronic Federal Tax Payment System) — register at eftps.gov to schedule payments in advance and view payment history; IRS Direct Pay — no registration required, pay directly from a bank account for free at irs.gov/payments; IRS2Go app — mobile payment via the IRS’s official app. Credit card payment is also available through IRS-authorized payment processors, but 1.82–1.98% processing fees apply, making it cost-effective only when using a rewards card that generates comparable value.
State Estimated Tax Payments
Most states with income tax require self-employed individuals to make state estimated tax payments on a similar quarterly schedule. State due dates often align with federal dates but may vary — check your state tax authority’s website for your state’s specific estimated tax requirements. States without income tax (Texas, Florida, Nevada, Washington, Wyoming, South Dakota, Alaska) have no state estimated tax requirement. High-income states like California require particularly careful estimated tax management, as California charges a significant penalty (often 5%+ annually) on underpayments.
Recommended Resources
TurboTax Home & Business 2025 — TurboTax Self-Employed includes an estimated tax calculator that models your current-year tax liability based on year-to-date income and generates the quarterly payment amounts for both federal and state estimated taxes. This eliminates the manual calculation described above and reduces the risk of over or underpaying.
Frequently Asked Questions
What happens if I miss a quarterly estimated tax payment?
Missing or underpaying a quarterly estimated tax payment results in an underpayment penalty calculated as a percentage of the underpaid amount for the period it was underpaid. The 2026 underpayment rate is 8% per year. The penalty is calculated per quarter — meaning a missed Q1 payment accrues penalty from April 15 to your filing date, not just for the quarter. The IRS calculates the penalty automatically and includes it with your tax bill when you file. If you miss a quarterly payment, pay as much as you can as soon as possible to minimize the penalty period, and catch up in the next quarter.