Estimate only, not tax advice. Check IRS.gov or a tax professional before you pay.
If you don't pay enough tax during the year, or you pay late, the IRS can charge a penalty for underpaying estimated tax. That can happen even if you end up getting a refund.
You generally avoid the penalty if either of these is true:
If your adjusted gross income for 2025 was more than $150,000 ($75,000 if you're married filing separately for 2026), the prior-year option becomes 110% of your 2025 tax instead of 100%. Your 2025 return must cover a full 12 months to use the prior-year option.
You already know last year's tax, so paying a quarter of 100% (or 110%) of it on each due date protects you from the penalty even if your income jumps this year. You may still owe tax when you file. The penalty only stops applying.
The IRS works it out from how much you underpaid, how long each underpayment was outstanding, and its published quarterly interest rate for underpayments. It's applied to each installment separately, so paying the full amount late in the year doesn't erase a penalty for missing earlier dates.
If most of your income came late in the year, the annualized income installment method (Form 2210, Schedule AI) may lower or remove the penalty. The IRS can also waive it for a casualty, disaster or other unusual circumstance, or if you retired after age 62 or became disabled and had reasonable cause.
Estimate only, not tax advice. Figures are for tax year 2026 from IRS sources (Form 1040-ES, Rev. Proc. 2025-32 and the pages listed under Sources) and the SSA. Confirm with IRS.gov or a tax professional.
Sources: IRS Form 1040-ES (2026) · IRS: Underpayment of estimated tax penalty · IRS: Estimated taxes
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