The fastest defensible number for September 15 is on your 2025 tax return, not in your 2026 books. Take the total tax from Form 1040 line 24, multiply it by 100% (110% if your 2025 AGI was over $150,000), divide by four, and subtract everything you have already paid in for 2026.

That is the whole calculation for most people. The rest of this is for the cases where it gives the wrong answer.

Tax Disclaimer: This article explains the arithmetic in IRS Form 1040-ES and is not tax advice. Consult a certified CPA or tax professional about your own return.

Why last year’s number is allowed to decide this year’s payment

The IRS gives you two ways to escape an underpayment penalty. Pay 90% of what you end up owing for 2026, which you cannot know in September. Or pay 100% of the tax shown on your 2025 return, which you can read today (IRS Form 1040-ES).

The second one is a fixed target. It does not move when your year gets better. If 2026 turns out to be the best year you have ever had, the prior-year route still holds, and the difference is settled in April without a penalty attached to it. The full shape of that rule, including the version that reaches backwards through payroll withholding, sits in the safe harbor piece.

One condition changes the multiplier. If your 2025 adjusted gross income was above $150,000, the percentage is 110% rather than 100% (IRS Form 1040-ES). Check the AGI line before you trust the multiplication.

The two situations where the shortcut fails you

It fails if there is no 2025 return to read. First full year of freelancing, first year filing at all, a year you were not required to file: there is no prior-year figure, so the projection below is the only route.

It fails differently if your income has fallen. The prior-year target is a ceiling on your penalty risk, not a floor on your bill. Paying 100% of a big 2025 in a much smaller 2026 hands the IRS an interest-free loan until April. That is not a penalty, it is just your own money parked somewhere useless for seven months.

So: shortcut if the year is flat or up, projection if the year is down or the return does not exist.

The projection, in four steps

Work with the full year, not the quarter. Every step here is about your 2026 total, and only the last line cuts it into an installment.

Step one: land on net profit. Revenue for the year, actual through August and estimated through December, minus business expenses. Two of those expenses are commonly left out and both are worth real money: the home office deduction and the mileage rate, which changed halfway through 2026.

Step two: self-employment tax, which is usually the bigger half. It applies to 92.35% of net profit at 15.3%, and the Social Security component stops at $184,500 of combined wage and self-employment income (Social Security Administration). 50% of what this produces comes back as an above-the-line deduction. The full mechanism, including why the base is not your profit, is worked through here.

Step three: income tax on what is left. Net profit, minus the deductible half of self-employment tax, gives AGI. Subtract the standard deduction ($16,100 single, $32,200 married filing jointly). Then apply the qualified business income deduction, up to 20%, which is limited by taxable income as well as by your QBI and changed in two ways for 2026. What survives all that meets the brackets: 10% up to $12,400; 12% over $12,400; 22% over $50,400; 24% over $105,700; 32% over $201,775; 35% over $256,225; 37% over $640,600 for a single filer.

Step four: divide and subtract. Add the two taxes, divide by four, then subtract the installments you have already sent and any federal income tax withheld from a W-2 job this year. What remains is the September 15 number.

Run it once with round figures. A single filer, no W-2 job, expects $90,000 of net profit for 2026.

  • Self-employment tax base: $90,000 × 92.35% = $83,115
  • Self-employment tax: $83,115 × 15.3% = about $12,717
  • Deductible half: about $6,358, so AGI is about $83,642
  • Less the $16,100 standard deduction: $67,542
  • QBI deduction, capped by 20% of that figure: about $13,508
  • Taxable income: about $54,034
  • Income tax at the 2026 single brackets: about $6,599
  • Total 2026 tax: about $19,316, so each installment is about $4,829

If April and June were paid at that level, September 15 is another $4,829. If they were not, the picture changes, because a bigger September payment does not repair April.

Those figures are a demonstration of the sequence, not a computation of your return. The IRS worksheet that does this properly is in Form 1040-ES, and our 1099 tax estimator runs the same chain on your own numbers.

The subtraction almost everyone gets wrong

Withholding counts. If you or a spouse holds a W-2 job, every dollar of federal income tax withheld from those paychecks is already an estimated tax payment, and it reduces what September 15 needs to be.

It also lands differently in time. Withholding is treated as paid evenly across the year regardless of when it actually came out, which is what makes a W-4 change in September able to fix a shortfall from April. A check written in September cannot do that. If you are behind on earlier quarters, the annualized income installment method and the withholding lever are the only two mechanisms that reach backwards.

Round up, not down

Getting the number slightly wrong is not symmetrical.

Pay too much and the excess sits with the IRS until your refund, earning you nothing. Pay too little and the shortfall accrues interest at 7%, charged per day against that specific installment (Internal Revenue Bulletin 2026-22), and the same rate applies for the quarter beginning October 1 (IRS).

One of those costs you float. The other costs you money and a form. When your estimate lands between two numbers, send the higher one.

And if the honest answer is that you cannot send the full figure on Tuesday the fifteenth, send part of it anyway. The interest is charged on the unpaid balance for the days it stays unpaid, so a partial payment on time is cheaper than a full payment in October, and both are cheaper than nothing.

The bottom line

Start with the shortcut. Read line 24 of your 2025 return, apply 100% or 110%, quarter it, subtract what you have paid, and stop. Only build the projection if the shortcut is unavailable or if it is obviously overcharging you for a year that shrank.

Then check that you owe anything at all. The requirement starts at $1,000 of expected tax after withholding and credits (IRS Form 1040-ES), and who is actually in scope on September 15 rules out more people than it catches.

When the number is settled, the last decision is mechanical and it has its own deadline inside the deadline: Direct Pay and EFTPS close their same-day windows on different evenings, and EFTPS enrolment takes about a week, which rules it out entirely if you are reading this in September. Get the figure today. Send it Tuesday.