How quarterly estimated tax works
The United States collects income tax as you earn it. If withholding does not cover enough of the year's liability, the balance is paid in four installments with Form 1040-ES. This matters most for self-employed people, landlords, retirees and anyone with large investment income, because nothing is withheld from those receipts by default.
You do not have to predict the year perfectly. The rules provide a safe harbor: pay either the smaller share of the current year's tax or the full prior-year tax, and no underpayment penalty applies even if you end up owing more at filing. The prior-year test rises for taxpayers whose previous adjusted gross income was above a set threshold, which the calculator applies automatically. A small balance at filing is also excepted.
The percentages are set in statute and are shown on a 2026 basis; due dates shift when they fall on a weekend or holiday, so confirm the current dates and figures in the Form 1040-ES instructions. Increasing withholding late in the year is often simpler than catching up with estimates, because withholding is treated as paid evenly across the year.
This is a planning estimate, not a filing calculation. The annualized income method, uneven income, state estimated tax and credits can all change what you owe each quarter. Confirm with a CPA or enrolled agent.
Frequently asked questions
Then the current-year test is usually the smaller number, and you can pay on that basis instead of last year's tax. The annualized income method can reduce early installments further.
You can, but a penalty is charged for each installment period you underpaid. Meeting the safe harbor or keeping the final balance under the threshold avoids it.