When you work for someone else, tax comes out of every paycheck. When you work for yourself, nobody does that for you, and the IRS still expects to be paid as you earn, not in one lump sum next April. That is what quarterly estimated taxes are for.
The good news for our Kingwood and Lake Houston clients is that Texas has no state personal income tax, so estimated payments are a federal matter only. Here is how they work.
Who has to pay quarterly estimated taxes?
Under IRS rules, you generally need to make estimated payments if you expect to owe $1,000 or more when you file your return, after subtracting withholding and refundable credits. This usually applies to:
- Sole proprietors and single-member LLC owners
- Partners in a partnership or multi-member LLC
- S corporation shareholders whose salary withholding does not cover their share of the profits
- Anyone with significant rental, investment or side income that has no tax withheld
Estimated payments cover both income tax and self-employment tax (Social Security and Medicare for the self-employed), which is often the part that catches new business owners off guard.
2026 due dates
For the 2026 tax year, the IRS due dates are:
If you file your 2026 return by February 1, 2027 and pay the full balance with it, you can skip the January payment. Despite the name, the “quarters” are not equal: the second covers only two months, and the fourth covers four.
Reading this in the fall? The April, June and September 2026 payments have already passed, so the next one due is the fourth payment on January 15, 2027. If you missed an earlier payment, see the section on missed payments below.
How much should you pay? The safe harbor rules
You do not need to predict your income perfectly. The IRS generally will not charge an underpayment penalty if, through withholding and on-time estimated payments, you pay at least the smaller of:
- 90% of the tax on your 2026 return, or
- 100% of the tax shown on your 2025 return (this must have been a full 12-month return).
Higher-income taxpayers: if your 2025 adjusted gross income was more than $150,000 ($75,000 if married filing separately), the prior-year figure rises to 110%.
For many business owners, the prior-year safe harbor is the simplest approach: take last year’s total tax, divide by four and pay that amount on each due date. If your income is growing quickly, it protects you from the penalty, although you will still owe the difference when you file.
A simple example
Say your total tax on your 2025 return was $20,000 and your 2025 adjusted gross income was under $150,000. Using the prior-year safe harbor, you would pay $5,000 on each of the four due dates, for $20,000 in total. If your 2025 AGI was over $150,000, the target becomes 110%, or $22,000, which is $5,500 per payment.
If your 2026 profit turns out higher, you pay the difference when you file, but you will not face an underpayment penalty. If your profit drops sharply, the 90% current-year rule may let you pay less, and this is where an up-to-date profit and loss statement really helps.
Want to run your own numbers? Try our free 2026 Estimated Tax Calculator to estimate your federal income tax, self-employment tax and quarterly payment in a minute.
How to pay
The IRS offers several ways to pay, including IRS Direct Pay (straight from your bank account), the Electronic Federal Tax Payment System (EFTPS) and your IRS Online Account. You can also mail a check with a Form 1040-ES voucher. Electronic payment gives you an immediate confirmation, which is worth having if a question ever comes up.
Common estimated tax mistakes
- Forgetting self-employment tax. On top of income tax, self-employed people generally pay 15.3% on net self-employment earnings (12.4% Social Security, up to the annual wage base, plus 2.9% Medicare).
- Missing the June payment. It comes just two months after April, so it is the one most often forgotten.
- Not adjusting when income changes. A big contract or a slow season should change what you pay for the rest of the year.
- Assuming an extension helps. An extension gives you more time to file, not more time to pay.
What if you missed a payment?
Make the payment as soon as you can. The underpayment penalty is calculated on how much was short and for how long, so paying late is better than not paying at all. The penalty is worked out on Form 2210, and in some cases the IRS can waive it, for example after a casualty or disaster, or in certain situations after retirement or disability.
Frequently asked questions
Do I need to pay Texas state estimated taxes?
No. Texas has no personal income tax, so there are no state estimated payments for individuals. Businesses may still have Texas obligations, such as the annual franchise tax report and sales tax filings, which our tax preparation and compliance team can handle.
My income is uneven through the year. Do I have to pay four equal amounts?
Not necessarily. If most of your income arrives later in the year, the annualized income installment method (Form 2210, Schedule AI) may reduce or remove a penalty for earlier quarters.
I own an S corporation. Is there another option?
Yes. Tax withheld from your salary is generally treated as paid evenly through the year, so increasing your W-2 withholding late in the year can help cover a shortfall. This is part of the owner pay planning we cover in our advisory services.
I have a W-2 job and a side business. Do I still need estimated payments?
Possibly not. You can ask your employer to withhold more tax by giving them a new Form W-4. Because withholding is generally treated as paid evenly through the year, this can be an easier way to cover the tax on your business income.
Plan ahead, not at year end
Estimated taxes are much easier to manage when your books are up to date. With clean monthly bookkeeping, we can check your actual profit each quarter and adjust your payments before there is a surprise in April. Keeping the right paperwork matters too, and our guide on how long to keep business tax records explains what to hold on to and for how long.
If you would like help working out your 2026 payments or setting up a plan for next year, our team is here to help.
Sources
- IRS Publication 505, Tax Withholding and Estimated Tax
- IRS Form 1040-ES, Estimated Tax for Individuals
- IRS: Estimated taxes
- IRS: Self-employment tax
This article is general information and not tax advice for your specific situation. Please speak to a tax professional before acting on it.
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