Quarterly Estimated Taxes Explained
Quick Answer
Quarterly estimated taxes are payments that self-employed workers, freelancers, and others without sufficient tax withholding make four times per year to the IRS. These payments cover both federal income tax and self-employment tax. The due dates are April 15, June 15, September 15, and January 15. If you expect to owe $1,000 or more when you file, you are generally required to make estimated payments or face penalties.
Who Needs to Pay Quarterly
You likely need to make estimated payments if:
- You are self-employed or a freelancer
- You are an independent contractor receiving 1099 income
- You have significant side hustle income
- You receive investment income, rental income, or alimony
- You do not have enough withholding from a W-2 job to cover other income
2025 Quarterly Due Dates
| Quarter | Income Period | Due Date |
|---|---|---|
| Q1 | January 1 - March 31 | April 15, 2025 |
| Q2 | April 1 - May 31 | June 15, 2025 |
| Q3 | June 1 - August 31 | September 15, 2025 |
| Q4 | September 1 - December 31 | January 15, 2026 |
Note that the quarters are not evenly split — Q2 covers only two months while Q3 covers three.
How to Calculate Your Quarterly Payments
There are two safe harbor methods to avoid underpayment penalties:
Method 1: Pay 100% of Last Year's Tax
Divide last year's total tax liability by four and pay that amount each quarter. This guarantees no penalty regardless of how much you earn this year. If your AGI exceeded $150,000 last year, you must pay 110% of last year's tax.
Method 2: Pay 90% of This Year's Tax
Estimate your current year's income and pay at least 90% of the total tax owed in equal quarterly installments.
Real Example With Actual Numbers
Samantha is a freelance writer in Florida who expects to earn $95,000 in net self-employment income this year (after business expenses).
| Tax Component | Annual Estimate |
|---|---|
| Self-employment tax (15.3% on $87,724) | $13,422 |
| Federal income tax (after SE deduction) | $10,200 |
| Total estimated tax | $23,622 |
| Quarterly payment | $5,905.50 |
Samantha sends $5,905.50 to the IRS four times per year. She also needs to check if Florida has any applicable state payments (it does not, since Florida has no income tax). Use the freelance calculator to estimate your quarterly amount.
How to Pay
You can make quarterly estimated payments through:
- IRS Direct Pay (irs.gov/directpay) — Free bank transfer
- EFTPS (Electronic Federal Tax Payment System) — For regular scheduled payments
- IRS2Go mobile app — Pay via phone
- Credit/debit card — Through approved processors (fees apply)
- Mail — Send check with Form 1040-ES voucher
For state estimated taxes, check your state's tax agency website. Most states with income tax require their own quarterly payments.
Avoiding Underpayment Penalties
The IRS charges a penalty if you:
- Owe $1,000+ when you file, AND
- Paid less than 90% of this year's tax through estimates/withholding, AND
- Paid less than 100% of last year's tax (110% if AGI exceeded $150,000)
Penalty Avoidance Strategies
- Use the safe harbor: Pay 100% (or 110%) of last year's total tax divided into four payments
- Increase W-2 withholding: If you have a day job, increase withholding on your W-4 to cover side income instead of making quarterly payments
- Adjust throughout the year: If income varies, use the annualized income installment method
- Overpay slightly: It is better to overpay and get a small refund than to underpay and face penalties
Quarterly Taxes for Side Hustlers
If you have a W-2 job and side hustle income, you do not necessarily need to file quarterly payments. You can instead increase your withholding at your W-2 job by updating your W-4 (Step 4c — extra withholding). This is simpler than making four separate payments.
Estimate your quarterly tax amount at the freelance calculator or see how side income affects your total tax at the SalaryHog calculator.