Quarterly Taxes Explained: Who Has To Pay, How Much You Owe and 2026 Deadlines

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Quarterly estimated taxes are required when you earn income that doesn’t have taxes automatically withheld. This most commonly affects self-employed workers, freelancers, and people who earn money from investments or rental property. Instead of paying all at once at tax time, you make four estimated payments during the year based on IRS “quarterly” periods. Paying on schedule helps you stay compliant and avoid penalties and interest later.

What Are Quarterly Taxes?

Quarterly taxes — also called estimated taxes — are advance payments you make to the Internal Revenue Service when your income isn’t subject to regular payroll withholding. This typically applies to self-employed workers, freelancers, and people who earn income from investments, rental properties, or side gigs.

The IRS requires these payments as part of the federal pay-as-you-go tax system. Instead of letting taxes pile up until April, the system collects tax as income is earned, helping taxpayers avoid large year-end bills and ensuring steady revenue throughout the year.

Estimated taxes are due four times a year, rather than evenly spaced three-month intervals, which is why the deadlines can sometimes feel confusing.

Do You Need To Pay Quarterly Taxes?

Quarterly taxes aren’t just for business owners — they apply anytime you earn income that doesn’t have taxes automatically taken out. If the IRS isn’t withholding taxes along the way, it generally expects you to pay as you go through estimated quarterly payments.

A quick way to tell? Quarterly taxes often apply if you:

• Are self-employed
• Do freelance or contract work
• Earn income in the gig economy
• Own rental property
• Earn interest, dividends, or other investment income
• Receive pension or retirement income without tax withholding
• Run a small business
• Have multiple income streams without W-2 withholding

Pro Tip

If none of your income has taxes withheld upfront, you’ll likely need to make quarterly estimated tax payments to stay on track and avoid surprises at tax time.

When Are Quarterly Taxes Due?

If you’re responsible for paying taxes as you go, timing matters. Estimated tax payments are due four times a year, and missing a deadline can lead to penalties — even if you eventually pay everything you owe.

One thing that often catches people off guard: IRS “quarters” aren’t evenly spaced. The second quarter covers just two months, while the final quarter stretches across four. This setup reflects federal cash-flow needs, not a tidy calendar — and it’s a common source of confusion for first-time estimated tax filers.

Knowing the dates ahead of time makes budgeting easier and helps you avoid last-minute scrambles or underpayment penalties.

For the 2026 tax year, the IRS follows the schedule below.

How To Estimate Your Quarterly Tax Payments

Estimating quarterly taxes doesn’t have to be complicated. It’s essentially a matter of forecasting your year and breaking the total into manageable pieces. Here’s a simple step-by-step way to do it:

• Estimate your total income for the year. Include all sources — freelance work, self-employment income, rental income, investments, or side gigs.
• Subtract expected deductions and credits. Factor in business expenses, retirement contributions, and any tax credits you reasonably expect to claim.
• Account for any tax withholding. If some income does have taxes withheld (like a part-time W-2 job or retirement income), subtract that amount.
• Estimate your total tax owed. Use current tax rates to calculate what you’ll owe for the year after deductions and withholding.
• Divide by four — or adjust for uneven income. If your income is steady, split the total into four payments. If it fluctuates, you can pay more in high-earning quarters and less in slower ones.

What Quarterly Taxes Look Like in a Real-Life Example

Here’s a straightforward example to show how quarterly taxes might work in real life.

Say you’re a self-employed freelancer who expects to earn $80,000 this year and plans to claim $20,000 in business deductions.

• Estimated taxable income: $60,000
• Tax bracket: 22% marginal rate, with most income taxed at lower brackets (10% and 12%)
• Estimated total tax owed: About $8,000
• Estimated quarterly payments: $2,000 per quarter

This example assumes steady income throughout the year and no tax withholding from another job. In practice, your numbers may look different depending on credits, self-employment taxes, and how your income fluctuates.

To calculate your own payments more precisely, the IRS recommends using Form 1040-ES and its accompanying estimated tax worksheets.

Safe Harbor Rules That Help You Avoid Penalties

The IRS offers “safe harbor” rules that can protect you from underpayment penalties — even if your income changes or your estimates aren’t perfect. These rules give you clear targets to hit so you’re not guessing how much is “enough.”

You generally avoid penalties if you pay:

• At least 90% of your current year’s tax bill, or
• 100% of last year’s total tax (110% if you’re a higher-income taxpayer)

Safe harbor rules are especially helpful if your income fluctuates throughout the year. Instead of trying to predict exactly what you’ll earn, you can base your quarterly payments on last year’s tax bill and stay compliant — without the stress of constant recalculations.

What Happens If You Pay Quarterly Taxes Late or Underpay?

If you don’t pay enough in quarterly taxes — or miss a payment entirely — the IRS may charge an underpayment penalty. This isn’t a flat fee; it’s essentially interest on the amount you should have paid, and it continues to accrue until the balance is settled.

One thing that surprises many taxpayers: you can owe a penalty even if you end up getting a refund. That’s because the IRS looks at each quarter separately. Falling short in one quarter can trigger a penalty, even if you overpaid during other parts of the year.

If you’re short on cash, it’s still better to pay something rather than skip a payment altogether. Penalties are based on how much you underpaid and how long the balance goes unpaid — so partial payments can help limit the damage.

How To Pay Quarterly Taxes

Paying quarterly taxes is fairly straightforward, and the IRS offers several convenient ways to submit your payments. You can choose the option that works best for you — online, by phone, or by mail.

Common IRS payment options include:

• IRS Direct Pay (pay directly from your bank account)
• Electronic Federal Tax Payment System (EFTPS)
• Paying through your IRS online account
• Paying by check or mail
• Scheduling recurring or future payments

No matter which method you use, always save your payment confirmation. Keep receipts, confirmation numbers, and any verification emails or letters — they’re your proof of payment if questions ever come up.

How Refunds and Deductions Affect Quarterly Taxes

When planning quarterly tax payments, it’s just as important to think about overpaying as it is underpaying. Just like too much withholding from a paycheck can lead to a refund, paying more than necessary in estimated taxes can do the same.

While refunds often feel like a win, they usually mean you paid the IRS more than you needed to throughout the year — money you could have used for savings, investing, or day-to-day cash flow instead.

One of the most common reasons people overpay is missing deductions. Commonly overlooked deductions include:

• Business expenses, such as supplies, software, and equipment
• Home office costs, if you qualify
• Education expenses, including eligible courses and certifications
• Charitable contributions

Claiming all eligible deductions can help you set more accurate quarterly payments and avoid tying up cash unnecessarily.

How Self-Employment Taxes Affect Quarterly Payments

If you’re a sole proprietor, freelancer, or independent contractor, self-employment taxes play a major role in how much you owe each quarter.

Self-employment tax is based on the Federal Insurance Contributions Act (FICA), which funds Social Security and Medicare. The total tax rate is 15.3%. Employees typically split this cost with their employer, but self-employed workers pay both portions themselves.

Because of this, self-employment tax can significantly increase quarterly payment amounts. However, part of this tax is deductible, which can help reduce your overall tax liability when estimating payments.

Other Income That Can Change Your Quarterly Tax Bill

Quarterly tax payments aren’t just about regular income. If you earn money from investments or work for yourself, those income sources can increase what you owe — and they need to be included when estimating payments.

How Investment Gains Show Up in Quarterly Taxes

Selling investments for a profit can raise your quarterly tax bill. If you sell assets such as stocks or other investments for more than you paid for them, those gains are taxable and should be included in your estimated payments.

How they’re taxed depends on how long you held the asset:

• Short-term gains (assets held for less than one year) are taxed as ordinary income.
• Long-term gains (assets held for more than one year) are taxed at lower rates — 0%, 15%, or 20%, depending on your income.

If you sell investments at a loss, those losses can work in your favor. Capital losses can offset capital gains and reduce up to $3,000 of earned income per year, which may lower your quarterly tax payments.

Why Self-Employment Taxes Matter for Quarterly Payments

If you’re self-employed, quarterly taxes also need to cover self-employment tax, which funds Social Security and Medicare through the Federal Insurance Contributions Act (FICA).

The total FICA tax rate is 15.3%. Employees usually split this cost with an employer, but freelancers, contractors, and sole proprietors pay the full amount themselves. This added tax can significantly increase quarterly payments.

The good news is that part of the self-employment tax is deductible, which can help reduce your overall tax bill when estimating payments.

Smart Habits That Make Quarterly Taxes Easier

A little planning throughout the year can make quarterly taxes much less stressful and help you avoid penalties or overpaying. These habits can make a big difference:

• Track income and expenses consistently
• Set aside money for taxes from each payment
• Update estimates when income changes
• Use reminders for quarterly deadlines
• Increase withholding on other income, if possible
• Work with a tax professional when you’re unsure

Staying on Track With Federal and State Quarterly Taxes

Depending on where you live, you may also need to make state estimated tax payments. Many states follow a schedule similar to the IRS, but rules, income thresholds, and deadlines can vary. States without an income tax don’t require estimated payments at all, while others have their own forms and timing.

Because state requirements aren’t one-size-fits-all, it’s important to check with your state tax agency to understand exactly what’s expected and when payments are due.

For taxpayers who are required to pay quarterly taxes, the process can feel intimidating at first — but it’s manageable with the right approach. Knowing who needs to pay, how much to set aside, and when payments are due helps reduce stress and avoid costly mistakes.

Using IRS payment tools, staying aware of safe-harbor rules, and adjusting payments as income changes can go a long way toward avoiding penalties and surprises. A little planning throughout the year makes tax season far easier to handle.

Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.

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