Quarterly estimated tax
If tax is not withheld from your income you have to pay it in four instalments, and the penalty for missing them is interest rather than a fine — which means it is avoidable. This computes the liability on the 2025 schedule and the safe harbour that keeps the estimates out of the penalty, whether you aim at 90% of this year or 100% of last year.
| Line | Amount | Note |
|---|---|---|
| Wages and other income | $95,000 | before adjustments |
| Self-employment profit | $25,000 | net of business expenses |
| Half of the SE tax | −$1,766 | deductible under §164(f) |
| Adjusted gross income | $118,234 | |
| Standard deduction | $15,000 | Single, 2025 |
| Taxable income | $103,234 | |
| Income tax | $17,625 | after credits |
| Self-employment tax | $3,532 | 12.4% + 2.9% + 0.9% |
| Total tax | $21,158 | the liability |
| 90% of this year | $19,042 | first safe harbour |
| Prior-year tax | $14,000 | 100% — prior AGI under $150,000 |
| Required annual payment | $14,000 | the lower of the two |
| Less withholding | −$9,000 | treated as paid evenly |
| Remaining to pay | $5,000 | across four instalments |
| Each quarter | $1,250 | 15 April · 15 June · 15 September · 15 January |
Withholding is deemed paid evenly through the year whatever the actual dates, so increasing a W-4 withholding is often the cheapest way to fix an underpayment — it can even cure a shortfall in an earlier quarter.
T = Σ (bracket slice × rate) · Progressive, applied bracket by bracket.
min(0.9·T_this, 1.0 or 1.1·T_prior) · IRC §6654(d); 110% above $150,000 AGI.
0.9235 × profit × (12.4% + 2.9%) · Social Security capped at the wage base.
(required − withholding) / 4 · Withholding counts as paid evenly.
A clear path from inputs to results.
If tax is not withheld from your income you have to pay it in four instalments, and the penalty for missing them is interest rather than a fine — which means it is avoidable. This computes the liability on the 2025 schedule and the safe harbour that keeps the estimates out of the penalty.
How to use
- Choose your filing status and enter your income, including self-employment profit.
- Add any itemised deductions and credits.
- Enter the federal tax already withheld and the prior year's total tax and AGI.
- Read the liability, the safe harbour and the four equal instalments.
The formula
Reference: IRC §6654(d) for the safe harbours; brackets and the standard deduction from Rev. Proc. 2024-40; self-employment tax under §1401.
Worked example
$95,000 of wages plus $25,000 of self-employment profit
- Single filer, $95,000 of wages and $25,000 of net self-employment profit.
- No itemised deductions or credits, $9,000 already withheld.
- Prior-year tax $14,000 and prior-year AGI $105,000.
- 1
Self-employment tax is 15.3% on 92.35% of the profit, or $3,532, and half of it ($1,766) is deductible.
- 2
Adjusted gross income is $95,000 + $25,000 − $1,766 = $118,234.
- 3
The standard deduction of $15,000 leaves $103,234 taxable.
- 4
Tax is $1,192.50 + $4,386 + 22% of the amount above $48,475, which comes to $17,625.
- 5
Total tax is $17,625 + $3,532 = $21,158, a 17.89% effective rate at a 22% marginal rate.
- 6
The two harbours are $19,042 (90% of this year) and $14,000 (100% of last year), so $14,000 is the target.
- 7
After $9,000 of withholding, $5,000 remains — $1,250 per quarter.
$21,158 total tax · $14,000 safe harbour · $1,250 per quarter.
Interpreting the result
The prior-year harbour is the one most people should aim at, because it is knowable in January. The trap is the 110% step: once prior-year AGI passes $150,000, the same harbour becomes 10% larger, and a taxpayer who paid exactly last year's tax then owes a penalty on the difference.
Assumptions & limitations
- Brackets, the standard deduction and the Social Security wage base are the 2025 figures.
- Self-employment tax is computed at 15.3% on 92.35% of net profit, with the Social Security portion capped at the wage base.
- Withholding is treated as paid evenly through the year, which is how §6654(g) treats it.
- State tax, the additional Medicare tax on wages and most credits are not modelled.
- The underpayment penalty is interest at the federal short-term rate plus three points, computed per quarter.
Frequently asked questions
When are the four payments due?
15 April, 15 June, 15 September and 15 January of the following year. If a date falls on a weekend or holiday it moves to the next business day. A missed quarter cannot be made up by paying more in the next one — each instalment is tested separately.
Do I owe estimates if I have a W-2 job?
Only if the withholding does not cover the safe harbour. The simplest fix is usually a new W-4 rather than a quarterly payment, because withholding is deemed paid evenly and can cure a shortfall that has already happened.
How is self-employment tax different from income tax?
It is a separate 15.3% charge on 92.35% of net profit, covering both the employee and employer halves of Social Security and Medicare. Half of it is deductible against income, which softens it slightly, but it arrives as a flat surcharge rather than a progressive one.
What happens if I pay too little?
The IRS charges interest on the shortfall at the federal short-term rate plus three points. It is not a penalty in the punitive sense and it is deductible, but it is avoidable, and the safe harbours exist precisely so that a taxpayer who aims at last year's liability never pays it.
Does the 110% harbour apply to me?
It applies when your prior-year AGI exceeded $150,000, or $75,000 for a married filing separately. Above that threshold the prior-year harbour is 110% of last year's tax rather than 100%.
Methodology last reviewed 2026-10-21. Results are informational and not financial or engineering advice — see our disclaimer.