Short answer: If you expect to owe $1,000 or more in federal tax for the year after withholding and refundable credits, you have to send the IRS money four times a year instead of once. The safest number to pay is usually 100% of last year's total tax (110% if your prior-year AGI was over $150,000), split into four installments. Pay that, on time, and you cannot be penalized for underpayment no matter how much you end up earning.
Who actually has to pay
Two things have to be true before estimated payments are required:
- You expect to owe $1,000 or more in federal tax for the year after withholding and refundable credits, and
- Your withholding falls short of the required annual payment.
That second test is where most articles get it wrong. The required annual payment is the smaller of:
- 90% of your current-year total tax, or
- 100% of your prior-year total tax (110% if prior-year AGI exceeded $150,000, or $75,000 if married filing separately).
So withholding that covers only 60% of this year's bill can still be enough — if it meets the prior-year figure, you owe no estimated payments at all. Don't send the IRS money you don't owe.
In practice this catches sole proprietors, single-member LLCs with Schedule C income, freelancers and contractors, partners, S-corp shareholders receiving K-1 income, landlords, and people with meaningful 1099 or investment income. Separately, anyone with net self-employment earnings over $400 must file and pay self-employment tax, regardless of the estimated-tax rules.
One more thing nobody tells you: the safe harbor is computed on total tax, not income tax. That includes self-employment tax, the 0.9% Additional Medicare Tax, and net investment income tax. Budget against an income-tax-only projection and you will under-reserve every year.
The 2026 deadlines
| Payment | Income earned | Due date |
|---|---|---|
| 1st | Jan 1 – Mar 31 | April 15, 2026 |
| 2nd | Apr 1 – May 31 | June 15, 2026 |
| 3rd | Jun 1 – Aug 31 | September 15, 2026 |
| 4th | Sep 1 – Dec 31 | January 15, 2027 |
June 15, 2026 is a Monday, so the weekend rollover rule doesn't apply. It is June 15, not June 16.
Note the periods are uneven. The second payment covers only April and May — two months, not six. Owners routinely treat the June payment as a "halfway" payment and underfund it.
Safe harbors: pick your number
| Method | Per-installment target | Best for | Catch |
|---|---|---|---|
| Prior-year 100% | 25% of last year's total tax | Steady income, prior-year AGI $150K or less | Unavailable if you didn't file, or your prior year was under 12 months |
| Prior-year 110% | 27.5% of last year's total tax | Prior-year AGI over $150K | Higher cash outlay when income is flat |
| Current-year 90% | 22.5% of projected total tax | Income dropped sharply | Guess low and the penalty applies |
| Annualized income (Schedule AI) | Cumulative 22.5% / 45% / 67.5% / 90% | Lumpy, seasonal, project-based income | Must file Form 2210 with Schedule AI |
The annualized method is widely described wrong. It does not let you pay 25% of the tax on income earned so far. It annualizes each period using prescribed factors — 4, 2.4, 1.5, and 1 for periods ending March 31, May 31, August 31, and December 31 — and then requires cumulative payments of 22.5%, 45%, 67.5%, and 90% of that annualized tax. Do not annualize by dividing by months and multiplying by 12; that only matches the IRS factors by coincidence.
For the prior-year number, don't just grab the "total tax" line on your 1040. Form 2210 requires prior-year total tax reduced by refundable credits (earned income credit, additional child tax credit, refundable American opportunity credit, premium tax credit), with specified Schedule 2 adjustments. If you claimed any of those, the raw total-tax line overstates your baseline.
What you're paying: income tax plus SE tax
Self-employment tax runs 15.3% on 92.35% of net self-employment income, up to the Social Security wage base — $184,500 for 2026. Above that ceiling, the Social Security half stops and only the 2.9% Medicare portion continues, with no cap. An additional 0.9% Medicare tax applies above $200,000 (single), $250,000 (married filing jointly), or $125,000 (married filing separately). You deduct half of your SE tax when computing AGI.
On the income tax side, the qualified business income deduction is 20% — not 23%. The One Big Beautiful Bill Act made the 20% deduction permanent, widened the phase-in ranges, and added an inflation-adjusted minimum deduction for taxpayers with a small amount of active QBI. It did not raise the rate. If you have been computing 23%, you are understating your tax.
Worked example: $100,000 net profit, single filer, Florida
Illustrative only. Your numbers depend on filing status, deductions, and other income.
- Self-employment tax: $92,350 × 15.3% = $14,130
- Deduction for half of SE tax: $7,065
- QBI deduction: 20% × ($100,000 − $7,065) = $18,590
- Taxable income: $100,000 − $7,065 − $16,100 standard deduction − $18,590 = $58,245
- Income tax (2026 single brackets: 10% to $12,400, 12% to $50,400, 22% above): $7,530
- Total: about $21,660, or roughly $5,415 per quarter
How to pay without missing the cutoff
Forget "11:59 p.m. on the due date." That advice will make you late.
- IRS Direct Pay (irs.gov/payments) — free, no registration, straight from your bank account. Payments submitted after 8 p.m. ET generally post the next business day, and the system is offline from 11:45 p.m. to midnight ET. Initiate by 8 p.m. ET on the due date at the very latest. Select "Estimated Tax" and the correct year.
- EFTPS (eftps.gov) — free, and it lets you schedule all four installments in one sitting. Stricter cutoff: schedule by 8 p.m. ET the day before the due date. Enrollment requires a PIN mailed to you, so allow several days.
- Card or IRS2Go — processing fees apply.
- Check — mail with the Form 1040-ES voucher, postmarked by the due date.
Save the confirmation number, date, and amount every time.
If you miss one
The underpayment charge is the federal short-term rate plus 3 percentage points, computed daily and set quarterly. Through 2026 it has moved between 6% and 7%, so treat it as a floating rate, not a fixed annual figure.
Penalties are calculated separately for each period. Overpaying in September does not undo a shortfall from April. A $5,000 first-quarter payment left unpaid until the return due date in April 2027 costs roughly $335 to $350. And that charge is the interest-equivalent for the period — there is no separate interest stacked on top of the estimated tax shortfall through the return due date.
You usually do not file Form 2210. The IRS computes the penalty and bills you. File it only to request a waiver, to use the annualized income method, or to treat withholding as paid when actually withheld. Waiver grounds are narrow: retirement after age 62 or disability, or a casualty, disaster, or other unusual circumstance where the penalty would be inequitable. For a federally declared disaster, don't file — the IRS applies relief automatically by county.
The catch-up move most people miss
Withholding is treated as paid evenly across all four periods, no matter when it was actually withheld. Estimated payments are credited when made.
That asymmetry is your friend. If you've already blown Q1 and Q2, increasing a spouse's W-2 withholding — or withholding from a retirement distribution — in the back half of the year can retroactively cure the earlier shortfalls. An extra estimated payment in September cannot. This is the single most useful repair tool available, and it disappears on December 31.
Florida specifics
No personal income tax. Estimated tax for individuals and pass-through owners is a federal-only obligation. There's no parallel Tallahassee schedule.
But entity-level filings still exist. Florida imposes a 5.5% corporate income tax. C-corporations file Form F-1120 and make their own estimated payments on a separate schedule. An S-corporation must file F-1120 if it owes federal tax at the entity level (built-in gains, LIFO recapture, or excess net passive income). Partnerships doing business in Florida file the F-1065 information return. And a single-member LLC owned by a corporation is treated as a branch of its owner and pulled into that owner's Florida return. "Pass-throughs are exempt" is too broad.
Sales tax is a different track. Florida sales tax plus your county's discretionary surtax — Orange, Duval, and Miami-Dade all set their own, and the rates change — is filed with the Florida Department of Revenue on its own calendar. It has nothing to do with federal estimated tax. Check the DOR's current surtax table rather than relying on a rate you remember.
Hurricane season matters here. After a federally declared disaster, the IRS routinely postpones filing and payment deadlines for affected counties, applied automatically based on your address of record. If a September storm hits Orlando or Jacksonville, check for relief before assuming you're late.
Living in Florida doesn't make you state-tax-free. If you have clients, employees, or property in another state, you may owe that state's income tax and its estimated payments.
Non-resident founders and first-year companies
Two points the standard guides skip.
No prior year, no safe harbor. The prior-year method requires a filed return covering a full 12 months. If your first U.S. tax year was a stub year, or you haven't filed one yet, that option doesn't exist. You're stuck with the 90% current-year test, which means your projection has to be right.
Non-resident aliens generally do not pay self-employment tax. Absent a totalization agreement, SE tax doesn't apply — so every 15.3% calculation above may be irrelevant to you. Non-residents use Form 1040-ES(NR), and the installment rules differ. If you're a foreign founder who has been paying SE tax on U.S. business income, get that reviewed.
If you own a U.S. C-corporation, the corporation calculates and deposits its own estimated tax electronically, on the 15th day of the 4th, 6th, 9th, and 12th months of its tax year. That's a separate regime from anything above.
Two strategies worth modeling (and their catches)
S-corporation election. Paying yourself a reasonable salary and taking the rest as distributions can cut self-employment tax. The catch nobody mentions: above the section 199A taxable income thresholds, the QBI deduction is limited by W-2 wages. Cutting your salary to save SE tax shrinks the QBI deduction at exactly the income levels where the S-corp looks most attractive. Model both together, not separately.
Retirement contributions. A SEP-IRA lets you contribute up to 25% of compensation — which for a self-employed person works out to roughly 20% of net self-employment income after the SE tax adjustment — subject to an annual dollar cap ($72,000 for 2026, indexed). Solo 401(k)s allow an employee deferral on top. Both reduce the base your estimated payments are built on. Self-employed health insurance premiums are also deductible from gross income.
What to do next
- Pull last year's return and compute your prior-year total tax, reduced by refundable credits. Divide by four.
- Check whether prior-year AGI exceeded $150,000. If so, multiply by 1.10 first.
- Project this year's total tax — income tax plus SE tax and any additional Medicare or NIIT — and take 90% of it. Pay the lower of the two numbers.
- Subtract what you've already paid this year to get the current installment.
- Set up EFTPS now, allow several days for the PIN, then schedule all four payments in one session. Build in a two-day buffer.
- Open a separate tax savings account and move 25–30% of every deposit into it.
- If your income is seasonal, look at the annualized method before assuming equal installments are your only option.
- Re-project in late July using January–June actuals and adjust the last two installments.
Accounting BOSS works with owners in Orlando, Jacksonville, and Miami — and with non-resident founders running U.S. entities — on safe harbor calculations, quarterly systems, and full-year projections. Don't wait until April 14 to figure this out.
This article is general information, not tax advice for your situation. Rates, thresholds, and inflation-adjusted limits change; verify current figures before you file.
This is general information, not tax advice for your situation, and reading it does not make you a client. Rules and figures change — verify anything time-sensitive before you act on it. We'll talk it through with you free.
Common questions
June 15, 2026. It falls on a Monday, so the weekend and holiday rollover rule doesn't apply and there's no shift to the 16th. If you pay on the 16th you are one day late and the underpayment charge starts running on that installment.
Two things. First, pay it now — the charge accrues daily, so every week you wait costs more, and paying late is much better than waiting until you file. Second, and more powerfully: withholding is credited evenly across all four periods regardless of when it was actually withheld. If you or your spouse have W-2 income or take retirement distributions, increasing withholding later in the year can retroactively cure an earlier-period shortfall in a way an extra estimated payment cannot. That option closes on December 31.
As an individual or pass-through owner, no. Florida has no personal income tax, so there's no state estimated-tax schedule for you. Entity-level filings are a different matter: C-corporations pay Florida's 5.5% corporate income tax and make their own estimated payments; an S-corporation must file Form F-1120 if it owes federal tax at the entity level; and partnerships doing business in Florida file the F-1065 information return. Sales tax and your county's discretionary surtax are a completely separate track with the Florida Department of Revenue.
Only if you filed a return covering a full 12-month prior year. If you didn't file, or your first tax year was a short stub period, the prior-year safe harbor isn't available to you and you have to use the 90%-of-current-year test. That puts real pressure on your projection, because guessing low means a penalty. This catches a lot of newly formed entities and first-year founders.
No. Meeting the prior-year safe harbor blocks the underpayment penalty entirely, no matter how much your income grows. You will owe the difference when you file, so set the cash aside — but you won't be charged for underpaying during the year. If your prior-year AGI was over $150,000, the target is 110% of prior-year tax rather than 100%.
Some of it, but not the self-employment tax. Non-resident aliens are generally not subject to SE tax absent a totalization agreement, so the 15.3% calculations don't apply to you. Non-residents making estimated payments use Form 1040-ES(NR), and the installment rules differ. If your U.S. entity is a C-corporation, the corporation makes its own estimated deposits electronically on the 15th day of the 4th, 6th, 9th, and 12th months of its tax year. If you've been paying SE tax on U.S. business income as a non-resident, get it reviewed.