Quarterly Estimated Tax Payments: A Complete Guide for Small Business Owners
Everything self-employed and small business owners need to know about Form 1040-ES — calculation, deadlines, safe harbor rules, and how to avoid the underpayment penalty.
Accountaxed Editorial
Tax & Accounting Team
The US tax system is pay-as-you-go. If you're an employee, withholding handles it. If you're self-employed, an LLC owner, or an S-Corp shareholder, you have to send the money in yourself — four times a year. Skip a quarter and the IRS adds an underpayment penalty.
Who must pay estimated taxes?
You're required to make estimated payments if you'll owe $1,000+ in federal tax for the year (after withholding). This covers:
- Sole proprietors and single-member LLCs
- Partners in a partnership / multi-member LLC
- S-Corp shareholders (on K-1 distributions)
- Independent contractors with no W-2 backup
- Anyone with significant investment income, rental income, or capital gains
2026 deadlines (for tax year 2026)
| Quarter | Income Period | Payment Due |
|---|---|---|
| Q1 | Jan 1 – Mar 31 | Apr 15, 2026 |
| Q2 | Apr 1 – May 31 | Jun 15, 2026 |
| Q3 | Jun 1 – Aug 31 | Sep 15, 2026 |
| Q4 | Sep 1 – Dec 31 | Jan 15, 2027 |
If a deadline falls on a weekend or holiday, it shifts to the next business day. Per IRS Form 1040-ES.
How to calculate
Two safe-harbor approaches per IRS Pub 505:
Option A — 100% of last year's tax (110% if AGI > $150K)
Take last year's total tax liability, divide by 4. This is the simplest and lowest-risk if your income is steady or growing.
Option B — 90% of current year's tax
Estimate your current-year tax liability, pay 22.5% per quarter. More accurate if your income is dropping, but riskier if you underestimate.
You can mix-and-match — pay 100% of last year's tax (safe harbor) and you're protected even if you owe more.
What to include in the calculation
- Federal income tax at your marginal bracket
- Self-employment tax (15.3% on 92.35% of net SE earnings)
- Additional Medicare tax if income > $200K single / $250K MFJ
- Net Investment Income Tax if applicable
- Subtract any expected withholding (from a W-2 spouse or your own part-time wages)
How to pay
- IRS Direct Pay — free, from a bank account, no signup
- EFTPS — federal payment system, requires enrollment
- IRS2Go mobile app
- Credit/debit card via authorized processors (1.85% fee)
The underpayment penalty
If you don't meet the safe harbor, the IRS charges interest on the shortfall — currently around 7-8% annualized. The penalty is computed via Form 2210. It's not catastrophic, but it's avoidable.
State estimated taxes
Most states with an income tax (CA, NY, MA, etc.) also require quarterly estimates. Deadlines often mirror federal but check your state revenue department:
- California FTB
- New York DTF
- Texas Comptroller (no personal income tax, but franchise tax applies to entities)
How Accountaxed automates this
Accountaxed projects your quarterly tax liability based on YTD income from your linked bank accounts, applies SE tax + QBI deduction, and tells you exactly what to send each quarter. You stay safe-harbored without spreadsheet work.
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