Quarterly Estimated Taxes Explained
If you expect to owe $1,000+ in federal tax, the IRS requires quarterly payments. Here are the deadlines, the safe-harbor rules, and the math.
If you expect to owe $1,000+in federal tax that isn't covered by withholding, you must make estimated payments four times a year. Hit one of the two safe harbors and you avoid the underpayment penalty regardless of what you owe in April.
Who needs to pay quarterly
You probably owe estimated tax if you're…
- A sole prop, single-member LLC, or partner taking owner draws
- An S-Corp owner taking distributions on top of salary
- A freelancer or contractor with 1099 income
- A landlord with net rental income
- Anyone with significant investment income (dividends, capital gains, interest)
You can usually skip if…
- You only have W-2 income and your withholding covers your tax bill
- Your prior year tax liability was $0 and you were a US citizen all year
- You expect to owe less than $1,000 after withholdings and credits
The four deadlines
They're not evenly spaced. Mark your calendar — or have Pixelbase do it.
Income from Jan 1 – Mar 31
Income from Apr 1 – May 31 (note: 2-month quarter)
Income from Jun 1 – Aug 31
Income from Sep 1 – Dec 31 (paid in the next year)
The two safe harbors
Hit either and the IRS won't penalize you, no matter how much you owe come April.
Prior-year rule
Pay 100% of last year's total tax (110% if your prior-year AGI was over $150K). Easy to calculate, no projections needed.
Quarterly = $5,000 × 4 = $20,000 total
Current-year rule
Pay 90% of this year's actual tax. Best if your income is much lower than last year — no point overpaying.
90% = $10,800 / 4 = $2,700 per quarter
How to calculate your payment
The simple method (use prior-year safe harbor)
- Pull last year's federal tax return.
- Find line 24 on Form 1040 — your "Total tax."
- If your AGI was over $150K, multiply by 1.10. Otherwise use the same number.
- Divide by 4. That's your quarterly payment.
- Subtract any expected withholding (W-2 paycheck withholding from a side job, for example) before dividing.
For the more accurate current-year method, use IRS Form 1040-ES — it walks you through projecting income, deductions, credits, SE tax, and AMT.
How to actually pay
IRS Direct Pay
irs.gov/payments — bank transfer, no fee. Schedule up to 365 days in advance.
EFTPS
Free electronic federal tax payment system. Requires enrollment (~7 days). Best for ongoing use.
Card or check
Card payments via approved processors (1.75%–2% fee). Check via Form 1040-ES voucher mailed to the IRS.
Don't forget state estimated taxes
Most states with income tax also require quarterly estimates on the same (or similar) schedule. CA, NY, NJ, MA, IL — all have separate payment portals. 9 states have no income tax and skip this entirely (AK, FL, NV, NH, SD, TN, TX, WA, WY).
What happens if you miss a payment
The IRS underpayment penalty
The penalty is the short-term federal interest rate plus 3%, applied to the underpayment for the period it was late. For 2024–2025, that's about 8% annually. It compounds quarter-over-quarter, so missing Q1 and Q2 hurts much more than missing just Q4.
- Missed Q1 ($5,000) + Q2 ($5,000) by April 15 of next year = ~$600 penalty
- State penalties apply on top (typically 5%–10% annualized)
- The penalty is non-deductible — it's real money out the door
Common misconceptions
"I'll just pay everything in April."
You'll owe the underpayment penalty plus interest. The IRS prefers being paid quarterly to match cash needs.
"Estimated tax only covers income tax."
It also covers self-employment tax (15.3%) — which is often the bigger chunk for solopreneurs.
"If I overpay quarterly, that's wasted money."
Overpayments become a refund (or applied to next year's estimates). Slightly worse cash flow, no penalty.
Quarterly taxes, on autopilot.
Pixelbase tracks your income in real time, calculates safe-harbor estimates, schedules federal + state payments before each deadline, and shows you exactly how much to set aside. No spreadsheets. No surprises.