Most self-employed individuals, freelancers, contractors, and many small businesses are required to make them. Understanding who must pay, how to calculate payments, and when deadlines occur can help reduce penalties and simplify tax season.
Starting a business comes with many responsibilities, and one of the most common questions new business owners ask is: "Do I need to pay quarterly taxes, and how do they work?"
This guide provides a straightforward explanation of quarterly taxes for small business owners, including who must pay them, how to calculate estimated payments, key deadlines, and ways to avoid penalties.
While managing taxes can seem complicated, understanding your estimated tax obligations early can help you stay compliant, avoid unexpected bills, and improve financial planning throughout the year.
What are quarterly taxes?
Quarterly taxes are estimated tax payments made throughout the year before you file your annual tax return. Rather than paying your entire tax bill at the end of the tax year, the federal tax system requires certain taxpayers to pay taxes as income is earned.
Each quarterly payment represents an estimate of your total tax liability for the year, including income taxes and, when applicable, self-employment taxes.
Quick overview of quarterly taxes
What are they? | Tax payments made four times per year. |
Who is typically required to pay these? | Self-employed individuals and many small businesses |
When are quarterly taxes due? | In 2026, quarterly taxes are due on: April 15, 2026 June 15, 2026 September 15, 2026 January 15, 2026 |
Which taxes are included? | Income tax and self-employment tax |
Are there benefits to paying taxes this way? | Aside from the fact that for certain businesses paying quarterly taxes is required, it also helps the taxpayer avoid underpayment penalties |
Who needs to pay quarterly taxes?
Generally, taxpayers who expect to owe taxes that are not automatically withheld may need to make estimated tax payments.
Common examples include:
Corporations
Freelancers and independent contractors
Brass tacks: if a business owner expects to owe at least $1,000 in taxes after credits and withholding, estimated tax payments are often required.
Who does not need to pay quarterly taxes?
Many employees do not need to make estimated payments because taxes are automatically withheld from each paycheck.
Individuals may not need quarterly payments if:
They expect to owe less than $1,000 after withholding and credits
Their employer withholds enough tax throughout the year
They have already satisfied safe harbor payment requirements
Corporations may not need estimated tax payments if they expect to owe less than $500 for the year.
Business owners who receive both W2 income and self-employment income may be able to increase paycheck withholding instead of making separate quarterly payments by adjusting their W4. If you’re interested in doing this, talk to your accountant.
How do you calculate quarterly taxes?
The most accurate method is to estimate your total annual income and projected tax liability. Here are the steps to calculate your estimated quarterly taxes:
Estimate total annual income.
Subtract eligible deductions.
Calculate adjusted gross income (AGI).
Estimate federal income tax.
Estimate self-employment taxes, if applicable.
Add both amounts together.
Divide the total by four.
Example calculation
Estimated annual income - $80,000
Estimated deductions - $10,000
Taxable income - $70,000 (How did we get this number? We took the estimated annual income of $80,000 and subtracted the estimated deductions of $10,000)
Estimated total tax rate - 18% (this number is illustrative; it’s very possible your tax rate will be different)
Estimated annual tax - $12,600 (How did we get this number? 18% of $70,000 = $12,600
Quarterly payments - $31,500 ($12,600 / 4 = $31,500)
Individuals can use Form 1040 ES to estimate payments. Corporations generally use guidance contained in Publication 542 to determine required installments.
Quarterly tax FAQs
How accurate do quarterly tax estimates need to be?
Quarterly tax payments are estimates, not exact figures. Businesses can update future payments if income increases or decreases during the year.
What are the estimated quarterly tax deadlines?
The IRS generally follows the same estimated tax schedule each year.
Payment Period | Due Date |
January 1 through March 31 | April 15 |
April 1 through May 31 | June 15 |
June 1 through August 31 | September 15 |
September 1 through December 31 | January 15 of the following year |
If a deadline falls on a weekend or holiday, payment is typically due on the next business day.
Corporate estimated tax deadlines
Corporations generally pay estimated taxes on the fifteenth day of the fourth, sixth, ninth, and twelfth months of their fiscal year.
For calendar year corporations:
April 15
June 15
September 15
December 15
Can I file for an extension for quarterly taxes?
A common misconception is that a tax extension also extends payment deadlines.
In most situations, an extension only provides additional time to file paperwork, not additional time to pay taxes owed.
Individual taxpayers typically use Form 4868 to request an extension for filing a tax return. Businesses and corporations generally use Form 7004.
Quarterly tax payment deadlines usually cannot be extended except in rare circumstances when the IRS provides broad relief due to extraordinary events.
Does a tax extension eliminate penalties?
No. Interest and penalties may still apply if required tax payments are not made on time, even when a filing extension has been approved.
What happens if I miss a quarterly estimated tax payment?
If you miss a payment, the best approach is usually to submit it as soon as possible.
Late estimated payments may result in:
Underpayment penalties
Interest charges
Additional tax due when filing
Waiting until the end of the tax year to make up missed payments may increase the amount of penalties assessed.
Can I skip an estimated tax payment?
You may not need a payment if previous estimated payments and withholdings already cover your expected tax obligation.
Situations where additional payments may not be necessary include:
Expected balance due is less than $1,000
Prior payments satisfy IRS safe harbor rules
Income decreased significantly during the year
Because every tax situation is different, reviewing payment requirements periodically can help prevent underpayment issues.
What is the estimated tax penalty for not paying on time?
The IRS may assess an underpayment penalty when taxpayers fail to pay enough tax throughout the year.
The penalty rate can change periodically because it is tied to interest rates.
The exact penalty depends on factors such as the amount underpaid, the length of the delay, and current IRS rates.
How can I make quarterly tax payments easier?
Quarterly tax payments become much more manageable when incorporated into regular financial planning.
Consider these best practices:
Maintain accurate bookkeeping records
Review income regularly
Set aside a percentage of revenue for taxes
Use EFTPS for electronic payments
Work with a tax professional when needed
Quarterly tax checklist for small business owners:
Task | Recommended Frequency |
Review income | Monthly |
Update tax estimates | Quarterly |
Make estimated payment | Quarterly |
Reconcile bookkeeping records | Monthly |
Prepare annual documents | Year end |
What is the easiest way to stay compliant with quarterly taxes?
Many small business owners find success by combining consistent bookkeeping, automated tax savings, and scheduled quarterly payments. Professional tax guidance can also help reduce errors and minimize penalties.
