For most salaried employees, tax time comes in April. But freelancers, small business owners and anyone else earning at least $1,000 in income that hasn't been subject to federal withholdings may have to submit quarterly payments.
Failure to comply can mean a balloon payment later, as well as stiff fees and penalties.
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What are quarterly taxes?
Self-employed individuals expecting to owe $1,000 or more in the current fiscal year are required to submit an estimated portion of their federal withholdings to the IRS every three months. These quarterly payments include federal tax on any profits or income and self-employment tax, which includes your contributions to both Social Security and Medicare.
Making payments each quarter reduces the strain on your finances, time and energy at the end of the tax year.
When are quarterly taxes due in 2025?
Quarterly tax payments are due four times a year. If the date falls on a weekend or holiday, the deadline is the next business day.
These are the quarterly payment dates for tax year 2025:
- April 15, 2025
- June 15, 2025
- Sept. 15, 2025
- Jan. 15, 2026
Who pays quarterly taxes?
Individuals, including sole proprietors, partners and S corporation shareholders, typically have to make estimated tax payments if they expect to owe at least $1,000 when they file. For corporations, the threshold is $500.
According to the IRS, you may also owe estimated tax payments if you received:
- self-employment income
- interest
- dividends
- alimony
- capital gains (from sales of stocks or other assets)
- prizes and awards
If you get a W-2, your employer is already withholding on your behalf. If you have no tax liability for the previous and current year, or you paid either 90% of your current year's tax liability or 100% of last year's tax liability, you're also exempt.
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How to estimate your quarterly taxes
If your income is fairly consistent, you could look at your tax bill from last year and submit a quarter of it to the IRS every three months. If your income varies, though, look at how much you earned in that time frame.
Step 1: Estimate your income for the year
Step 2: Subtract any above-the-line deductions you expect
Step 3: Subtract the standard deduction for your filing status
Step 4: Subtract 50% of your self-employment tax
Step 5: Multiply your adjusted gross income by your income tax rate (using the latest brackets)
Step 6: Multiply your estimated total income by 92.35%
Step 7: Multiply the result by 15.3% (the self-employment tax rate)
Step 8: Add your income tax and self-employment tax
Step 9: Divide by four to get the estimated quarterly payment that is currently due.
How to pay quarterly taxes
Filing quarterly estimated taxes is similar to filing an end-of-year return: Once you know the amount owed, you'll complete Form 1040-ES (for individuals) or Form 1120-W (for businesses).
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Once you've calculated your quarterly taxes, you can submit payment one of several ways:
- Pay online for free via the IRS website or the Electronic Federal Tax Payment System (EFTPS), which keeps track of your previous payment history. You can also submit payment via the IRS2Go mobile app.
- Pay by phone at 800-555-3453. Have your Social Security number (or EIN), PIN and credit card or bank account information handy, then press 1 and follow the prompts. There's no fee — and you might actually reach a human being — but it could take longer and you still have to submit your return by mail or online.
- With a same-day wire transfer, you can ensure immediate receipt by the IRS, but you'll probably have to pay a premium.
- You can mail the estimated payment with Form 1040-ES, via First-Class, Priority or Priority Mail Express service (consider certified or Registered Mail for additional security). The address depends on where you reside.
| If you live in: | Payment and return should be sent to: |
|---|---|
| Alabama, Arizona, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, South Carolina, Tennessee, Texas | Internal Revenue Service P.O. Box 1300 Charlotte, NC 28201-1300 |
| Alaska, California, Colorado, Idaho, Hawaii, Kansas, Michigan, Montana, Nebraska, Nevada, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Utah, Washington, Wyoming | Internal Revenue Service P.O. Box 802502 Cincinnati, OH 45280-2502 |
| Arkansas, Connecticut, Delaware, District of Columbia, Illinois, Indiana, Iowa, Kentucky, Maryland, Maine, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, Oklahoma, Rhode Island, Virginia, West Virginia, Vermont, Wisconsin | Internal Revenue Service P.O. Box 931100 Louisville, KY 40293-1100 |
| American Samoa, Puerto Rico, dual-status aliens or nonpermanent residents of Guam, the U.S. Virgin Islands and any foreign country | Internal Revenue Service P. O. Box 1303 Charlotte, NC 28201-1303 USA |
Be sure to retain a copy of all 1099s, 1040s and payment receipts for your records. When you file your yearly tax return, you'll pay anything that wasn't covered by your quarterly contributions.
If you made an overpayment, you can get a refund or apply all or part of it to your estimated taxes for the first quarter of next tax year.
Fees for late or delinquent payments
Ninety percent of your tax bill must be paid through quarterly estimated tax payments or you may be hit with penalties, whether you underpaid or expect a refund.
Fees start at 0.5% of the total liability and increase every month to a maximum penalty of 25%.
"The IRS may assess a penalty if you underpay your estimated quarterly taxes, even if you end up owing little or nothing in April," said Joe Bogardus, a financial services executive with Barnum Financial Group.
To avoid that, Bogardus recommends following the "safe harbor" rule: Paying at least 100% of last year's total tax liability (110% if your income was over $150,000) or 90% of your current year's projected taxes.
"This offers a clear and defensible target, especially for business owners with variable income," he added.
As with annual taxes, filing for an extension doesn't change when payment is due, only the deadline for the return itself. For more information, Bogardus recommends individuals and businesses consult qualified tax and accounting advisors as appropriate.
Overpaying quarterly taxes
Overpaying estimated taxes isn't penalized—you'll either get a refund when you file or can apply the surplus to next year's quarterly payments.
"That said, I caution clients against intentionally overpaying," Bogardus said. "It might feel like a forced savings plan [but] you're essentially giving the IRS an interest-free loan. And if the tables were turned, the IRS wouldn't offer you the same generosity."
How to avoid errors
It's not uncommon for quarterly filers to miss deadlines, make calculating errors or underpay (especially if their income flow is inconsistent). Any of these can result in serious penalties, so be sure to:
- Maintain detailed records of your income and expenses
- Use a top-rated tax program or a tax professional
- Make a notation of each quarterly deadline and set automated reminders.
How to file an extension
You can file for an extension on your quarterly taxes, using IRS Form 4868 for individual returns and Form 7004 for business returns.
As with traditional extension, however, it only grants you more time to submit your return, not to pay any taxes due.
Quarterly taxes FAQs
Who pays quarterly taxes?
Most people who pay quarterly taxes are independent contractors, sole proprietors or members of a partnership. You can consult with the IRS website to see if you fall into one of these or other categories of taxpayers who need to make quarterly installments.
What is the self-employment tax rate?
The self-employment tax rate is 15.3%. It has two parts: 12.4% for Social Security and 2.9% for Medicare.
What happens if you miss a quarterly estimated tax payment?
If you don't pay your estimated taxes on time or underpay, the IRS can charge a fee that grows over time. The failure to pay penalty is 0.5% of the unpaid taxes for each month or part of a month you fail to pay, up to 25% of your unpaid taxes. Even worse, the IRS charges interest on those penalties, which increases how much you owe.
If you're self-employed or receive other income that requires quarterly tax payments, the best way to stay on top of your obligations is by working with a tax professional or using a tax software program to figure out how much you owe and when payment is due.
What if I overpay my quarterly taxes?
There's no penalty if you overpay your quarterly taxes. You can get a refund when you file or apply the extra funds toward next year's quarterly payments. You're essentially giving the federal government an interest-free loan, though, so it's best to have an accurate accounting of your tax liability throughout the year.
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Meet our experts
At CNBC Select, we work with experts with specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Joseph Bogardus, a financial services executive with Barnum Financial Group.
Based in Connecticut, Bogardus is a designated Special Care Planner and college funding consultant, as well as a certified financial planner and an accredited investment fiduciary.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every tax guide is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of tax software products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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