Pay as you go, four times a year
Federal tax is pay-as-you-go. The IRS expects its money during the year you earn it, through paycheck withholding or quarterly estimated payments. If you're self-employed, a landlord, or an investor, estimated payments are usually how that happens.
Individual installments are due around April 15, June 15, September 15, and January 15, shifted for weekends and holidays. For 2026, the dates are April 15, June 15, and September 15, 2026, and January 15, 2027. Corporations have a similar schedule, but their fourth installment is due in December. Earlier years are in the deadline tables.
How the penalty is figured
The underpayment penalty isn't a flat fine. It works like interest. For each quarter, the IRS compares what you should have paid by that due date with what you actually paid. Any shortfall is charged simple interest at the IRS underpayment rate, from that quarter's due date until you pay it or until the April filing deadline, whichever comes first.
So every day counts. Paying a missed quarter now costs less than waiting until April. And since each quarter has its own penalty, the calculator shows each one separately.
Safe harbors and floors
You can owe a big balance in April and still owe no penalty, as long as you paid enough during the year. Your required annual payment is the smaller of:
- 90% of this year's tax, or
- 100% of last year's tax (110% if last year's AGI was over $150,000, or $75,000 if married filing separately).
There's no penalty at all if your balance after withholding is under $1,000, or if your tax last year was $0 and you were a U.S. citizen or resident for that full 12-month year. For corporations, there's no penalty if the year's tax is under $500. The safe harbor guide walks through each rule.
Uneven income? Try the annualized method
If your income arrived unevenly, say a big contract that paid out in the fall, look at Schedule AI on Form 2210. It's the annualized income installment method. It matches your required payments to when your income actually came in, which can lower the penalty. Check the annualized method box, and the calculator runs Schedule AI next to the standard method so you can compare.
Using the calculator
Enter your total tax for the year, your withholding, and last year's tax for the safe harbor check. Then add each estimated payment with the date you made it. Payments are applied the way Form 2210 applies them, to the earliest quarter that's still short.
Figuring a corporate penalty? Switch to C corporation at the top. Corporations use Form 2220 instead. Want to plan your payments instead of fixing a shortfall? The 2026 quarterly estimator figures the payment that keeps you penalty-free.
Questions people ask
I missed a quarterly payment. Should I wait until April?
No. The penalty works like daily interest on the shortfall, so every day you wait adds to it. Pay the missed amount as soon as you can.
Does the estimated tax penalty compound?
No. It's simple interest at the IRS underpayment rate on each quarter's shortfall. It stops at the April filing deadline, even if the shortfall is still unpaid.
Can first-time abatement remove this penalty?
No. First Time Abate covers late-filing and late-payment penalties, not the estimated tax penalty. Your best tools are the safe harbors, the withholding timing rule, and the annualized method. Waivers also exist for casualty, disaster, retirement, or disability situations.
How is the corporate penalty different?
Corporations use Form 2220. Their fourth installment is due in December, and there's no penalty if the year's tax is under $500. Their safe harbors are 100% of this year's tax or 100% of last year's, and the prior-year option only works if last year showed tax due. Large corporations face extra limits.