The first year an owner makes real profit usually ends the same way: a large April bill plus a penalty for not having paid it earlier. The penalty is small in percentage terms but it stings because it was avoidable with one calculation in April of the previous year.
Who has to pay
Anyone expecting to owe $1,000 or more in federal tax after withholding. In practice: sole proprietors, single-member LLC owners, partners and S-corp owners with distributions, and anyone with meaningful income that is not taxed at source.
The 2026 dates
| Payment | Due | Covers |
|---|---|---|
| Q1 | April 15, 2026 | January to March |
| Q2 | June 15, 2026 | April to May |
| Q3 | September 15, 2026 | June to August |
| Q4 | January 15, 2027 | September to December |
Uneven periods, deliberately. State estimates usually follow the same dates with their own forms.
How to calculate one
- Estimate net profit for the year.
- Self-employment tax: profit × 0.9235 × 15.3% (up to the $184,500 wage base; 2.9% above).
- Income tax: profit plus other income, minus half the self-employment tax, minus the 20% qualified business income deduction, minus the standard deduction ($16,100 single, $32,200 joint), through the 2026 brackets.
- Add state income tax at your state's rate if it has one.
- Subtract any withholding from a job or a spouse's job.
- Divide by four.
The calculator on our tools page does this in ten seconds. It ignores credits and phase-outs, which is fine for a working estimate.
The safe harbour
Pay at least 100% of last year's total tax (110% if last year's adjusted gross income was over $150,000), in four equal instalments, and there is no underpayment penalty regardless of how much you actually owe in April. Growing businesses use this deliberately: pay last year's number, keep the surplus earning interest, settle in April. Shrinking businesses should calculate instead, because the safe harbour overpays.
The S-corp shortcut
Withholding on wages is treated as paid evenly through the year, whenever it actually happened. An S-corp owner can set December's payroll withholding high enough to cover the whole year's tax and make no estimates at all. Legitimate, and one of the quieter advantages of the election.
If you miss one
Pay it as soon as possible; the penalty is calculated per day of shortfall at roughly 7% a year. Form 2210 at year-end works out the amount, or lets you use the annualised income method if your income was concentrated in later quarters.
The check: add up what you paid in estimates last year and compare it with the total tax on the return. If the estimates were under 90% of the tax, a penalty was charged, and the safe harbour would have avoided it.