You do not have to pay the IRS based on what you are earning right now. Pay in 100% of the tax shown on your 2025 return, or 110% of it if your 2025 adjusted gross income was more than $150,000 (IRS Form 1040-ES), and you owe no underpayment penalty for 2026, no matter how much better this year turns out to be.
That is the Safe Harbor rule. It is the difference between a September 15 payment you have to forecast and one you can look up.
Tax Disclaimer: This article provides educational information based on IRS Form 1040-ES and the Instructions for Form 2210, and is not tax advice. Consult a certified CPA or tax professional for individual advice.
Which Percentage Is Yours
There are three tests, and you only have to clear one. Form 1040-ES states you must pay estimated tax for 2026 if you expect to owe at least $1,000 after withholding and refundable credits, and your withholding and credits will come to less than the smaller of these (IRS Form 1040-ES):
| Test | You pay in | Best for |
|---|---|---|
| Current-year | 90% of your 2026 tax | A year that is flat or down on 2025 |
| Prior-year | 100% of the tax on your 2025 return | A year that is up, or unpredictable |
| Prior-year, higher income | 110% of the tax on your 2025 return | 2025 AGI above $150,000 (IRS Form 1040-ES) |
The $150,000 line is $75,000 if your 2026 filing status is married filing separately (IRS Form 1040-ES). It is not indexed to inflation, so it catches more people every year.
Notice what the prior-year tests do not ask about: 2026. Your income can double and the safe number does not move. You look at one line on a return you already filed, divide by four, and send that.
Withholding Counts as If You Paid It Evenly
Here is the part most people never hear, and it is worth real money if you are already behind.
The Instructions for Form 2210 state that for withheld federal income tax, “you are considered to have paid one-fourth of these amounts on each payment due date unless you can show otherwise” (IRS Instructions for Form 2210).
Read that again with a calendar in your hand. Tax withheld from a paycheck in December is treated as though one quarter of it arrived on April 15, one quarter on June 15, one quarter on September 15, and one quarter on January 15. Estimated tax payments get no such treatment. Those count on the day you send them.
So if you hold a W-2 job alongside the 1099 work, or your spouse does and you file jointly, raising withholding late in the year can retroactively fill a hole in Q1, Q2 and Q3. A missed September 15 estimated payment stays missed. A December W-4 change does not.
If it suits you better to have withholding counted on the dates it actually came out, you can elect that instead by checking box D in Part II of Form 2210 and attaching the form (IRS Instructions for Form 2210). That helps in the opposite case: income concentrated early in the year and withholding to match.
When Safe Harbor Will Not Save You
The prior-year tests need a prior year. Specifically, they need a 2025 return that covered a full 12 months (IRS Instructions for Form 2210). Three situations break it:
- 2026 is your first year with untaxed income. No 2025 self-employment income means no useful prior-year number, so you are on the 90% current-year test and you have to forecast.
- Your 2025 tax was unusually low. The prior-year test is generous when last year was good and punishing when last year was thin. Run both numbers before choosing.
- You are counting on it to lower what you owe. It does not. Safe Harbor stops the penalty, not the tax. A big 2026 on prior-year installments means a large balance due in April 2027, on time and penalty-free, but due all at once.
There is one clean exemption worth knowing: if you had no tax liability for 2025, you were a U.S. citizen or resident alien for the entire year, and your 2025 return covered a full 12 months, no penalty applies for 2026 at all (IRS Instructions for Form 2210).
What It Looks Like in Dollars
Round numbers, to show the shape of it. Say your 2025 return showed $18,000 of total tax and your 2025 AGI was $120,000, which is under the higher-income line. Your prior-year safe harbor for 2026 is 100% of $18,000, or $4,500 per quarter.
Now say 2026 is a breakout year and your actual liability will land near $31,000. The current-year test would want 90% of that, about $27,900, or $6,975 a quarter. The prior-year test still wants $4,500. You send $4,500 on September 15, owe no penalty, and keep the $2,475 difference working for another seven months.
Change one input: your 2025 AGI was $160,000 instead. Now the 110% version applies, and the same $18,000 of prior-year tax means $19,800 for the year, or $4,950 a quarter.
Those are arithmetic, not a determination about your return. The figure that matters is the total tax line on your own 2025 return, and the exact penalty computation for a shortfall lives on Form 2210, which applies each quarter’s rate to each installment separately — and most people who underpay never have to file that form at all.
The Bottom Line
Pull your 2025 return before September 15 and find the total tax line. Multiply by 100%, or 110% if your 2025 AGI cleared the $150,000 line (IRS Form 1040-ES), divide by four, and that is a number the IRS cannot penalise you for. If you are behind on earlier quarters and you have a paycheck in the picture, change the W-4 rather than scrambling for a lump sum. Withholding backdates itself; estimated payments do not. To see what your 2026 liability is actually shaping up to be, run it through the 1099 tax estimator, then compare it against the safe number and pay the smaller one. Which route you use to send it, and which timestamp the IRS treats as the payment date, is its own twenty minutes.
For who owes a Q3 payment in the first place and what a late one costs by the day, see the September 15 deadline breakdown.
If the safe harbor is unavailable to you because there is no 2025 return to read, or because this year is much smaller than last, the four-step projection is the other way to size the payment.
And if the reason you are reading this is a single large event in the summer rather than a steadily higher year, a Q3 windfall is a test of last year’s tax bill, not of the gain itself.
