Many people believe taxes are settled once a year, in April. For anyone with income that has no tax withheld, that isn't quite how it works. The IRS expects that tax to be paid during the year, in four installments, and the second one is due on Monday, June 15.
Let's walk through who needs to pay, how much, and how to stay clear of the penalty.
Who has to pay estimated tax
Estimated tax is how you pay tax on income that has no withholding: freelance and self-employment earnings, rent, interest, dividends, and similar income (IRS Form 1040-ES, 2026).
In most cases, you must pay estimated tax for 2026 if both of these are true:
- You expect to owe at least $1,000 for 2026 after subtracting your withholding and refundable credits.
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You expect your withholding and refundable credits to cover less than the smaller of:
- 90% of the tax on your 2026 return, or
- 100% of the tax on your 2025 return (which must cover all 12 months).
In plain English: if you'll owe a meaningful amount and you haven't had enough taken out along the way, the IRS wants some of it now, not all of it next April.
The 2026 calendar
| Payment | Due date |
|---|---|
| 1st | April 15, 2026 |
| 2nd | June 15, 2026 |
| 3rd | September 15, 2026 |
| 4th | January 15, 2027 |
You can skip the January payment if you file your 2026 return by February 1, 2027 and pay the full balance with it (Form 1040-ES).
Step by step: the "safe harbor" that protects you
The surest way to avoid an underpayment penalty is to pay enough to meet one of the safe harbors above. Here's a simple example with round numbers.
- Find last year's tax. Say your 2025 return showed $8,000 of total tax.
- Check your income. If your adjusted gross income for 2025 was $150,000 or less ($75,000 if married filing separately), the prior-year safe harbor is 100%. Above that line, it rises to 110% ( Form 1040-ES ).
- Spread it across the year. At 100%, you need $8,000 for the year from withholding plus estimated payments, roughly $2,000 a quarter.
- Subtract what's withheld. If a part-time job already withholds $3,000 a year, you'd still need about $5,000 in estimated payments, or $1,250 a quarter.
In plain English: pay at least what you owed last year, spread evenly, and the IRS generally won't penalize you, even if this year turns out bigger.
What it costs to fall short
The underpayment penalty works like interest on the amount you should have paid. For the quarter that began April 1, the IRS rate for individual underpayments, including estimated tax, is 6% a year (Revenue Ruling 2026-5). The form also notes you can owe this penalty even if you end up getting a refund when you file.
Easier options
- If you also have a paycheck, you can ask your employer to withhold more by filing a new Form W-4. Withholding counts as if it were paid evenly through the year, which can cover side income without separate quarterly payments.
- Pay online. IRS Direct Pay, your IRS online account, or the IRS2Go app let you pay without mailing anything ( IRS Publication 509 ).
Who should look closest
- Freelancers, gig workers and anyone newly self-employed.
- Landlords and people with significant interest or dividend income.
- Retirees whose pension or IRA withdrawals have little or no tax withheld.
The long view: quarterly payments feel like a chore, but they turn one large April bill into four manageable ones. Set the dates in your calendar once, and next spring will be calmer for it.
Sources
- IRS, Form 1040-ES (2026), Estimated Tax for Individuals , created February 12, 2026
- IRS, Revenue Ruling 2026-5, Internal Revenue Bulletin 2026-08 , February 17, 2026
- IRS, Publication 509 (2026), Tax Calendars
This article is for education only. It is not tax, legal or investment advice. Tax rules depend on your situation; consult a licensed tax professional.