Estimated tax
Tax paid four times a year on income with no withholding, such as business profit, to avoid an underpayment penalty.
Nobody withholds tax from business profit, so you send it in yourself during the year. Under the 2026 Form 1040-ES, you generally have to if you expect to owe $1,000 or more once withholding and credits are counted.
Mark four dates: April 15, June 15 and September 15, 2026, then January 15, 2027. Each payment covers income tax and self-employment tax together.
No penalty if you pay whichever is smaller: 90% of this year's tax, or 100% of last year's. That 100% becomes 110% when last year's AGI topped $150,000 ($75,000 married filing separately). Fall short and Form 2210 charges what amounts to interest on the gap, for as long as it was open. For the fourth quarter of 2026 the IRS rate is 7% a year.
Corporations play by a different rule. A corporation pays if it expects to owe $500 or more, according to the IRS estimated taxes page and Publication 542, with installments due in the 4th, 6th, 9th and 12th months of its year.
An S corp owner can often skip much of this by having enough withheld from salary to cover the tax on the profit.