What Are Quarterly Taxes?
Quarterly taxes, officially called "estimated tax payments," are payments made to the IRS four times per year by individuals who don't have taxes automatically withheld from their income. Unlike traditional employees who have taxes deducted from each paycheck, self-employed individuals, freelancers, and business owners must calculate and pay their own taxes throughout the year.
These payments cover two main types of taxes:
- Self-Employment Tax (15.3%): This covers Social Security (12.4%) and Medicare (2.9%) taxes. As a self-employed individual, you pay both the employee and employer portions.
- Income Tax: Federal (and possibly state) income tax based on your tax bracket and total taxable income.
Who Needs to Pay Quarterly Taxes?
You generally need to make quarterly estimated tax payments if you expect to owe at least $1,000 in taxes when you file your return, after subtracting withholding and credits.
Common situations requiring quarterly payments:
- Freelancers & Contractors: Anyone receiving 1099 income instead of W-2 income
- Small Business Owners: Sole proprietors, LLC members, and S-corp shareholders
- Gig Economy Workers: Uber/Lyft drivers, DoorDash couriers, Airbnb hosts
- Investors: Those with significant capital gains, dividends, or rental income
- Retirees: Individuals with retirement income not subject to withholding
Quarterly Tax Payment Deadlines (2025)
Despite being called "quarterly" taxes, the payment periods aren't exactly three months each. Here are the 2025 deadlines:
| Quarter | Income Period | Due Date |
|---|---|---|
| Q1 | January 1 - March 31 | April 15, 2025 |
| Q2 | April 1 - May 31 | June 16, 2025 |
| Q3 | June 1 - August 31 | September 15, 2025 |
| Q4 | September 1 - December 31 | January 15, 2026 |
How to Calculate Quarterly Tax Payments
Calculating your quarterly tax payments involves several steps. Here's the complete process:
Step 1: Estimate Your Annual Income
Project your total self-employment income for the year. Look at:
- Last year's income as a baseline
- Current year trends and contracts
- Expected business growth or changes
- Any additional income sources (W-2, investments, etc.)
Step 2: Calculate Self-Employment Tax
SE Tax Deduction = Net SE Income × 92.35%
Self-Employment Tax = SE Tax Deduction × 15.3%
Example: If you earn $100,000 with $20,000 in expenses:
- Net SE Income: $80,000
- SE Tax Base: $80,000 × 0.9235 = $73,880
- Self-Employment Tax: $73,880 × 0.153 = $11,303.64
Step 3: Calculate Income Tax
Determine your taxable income and apply the appropriate tax brackets:
Taxable Income = AGI - Standard Deduction
Income Tax = Apply Tax Brackets to Taxable Income
2024 Standard Deductions:
- Single: $14,600
- Married Filing Jointly: $29,200
- Head of Household: $21,900
Step 4: Calculate Quarterly Payment
Less: Withholding and Credits
Amount Owed = Total Tax - Previous Payments
Quarterly Payment = Amount Owed ÷ 4
How to Pay Quarterly Taxes
The IRS offers several payment methods:
1. Online Payment (Recommended)
- IRS Direct Pay: Free, directly from your bank account at IRS.gov/payments
- EFTPS (Electronic Federal Tax Payment System): Free government system requiring enrollment at eftps.gov
- Credit/Debit Card: Through approved payment processors (fees apply, typically 1.85-1.99%)
2. Mail Payment with Voucher
Use Form 1040-ES payment vouchers (you can generate these with our calculator):
- Download and print Form 1040-ES vouchers
- Fill in your personal information and payment amount
- Write a check payable to "United States Treasury"
- Mail to the address for your state (listed in 1040-ES instructions)
3. Same-Day Wire Transfer
Contact your financial institution for same-day wire payments (fees may apply).
Avoiding Penalties
The IRS may charge an underpayment penalty if you don't pay enough tax throughout the year. Here's how to avoid it:
Safe Harbor Rules
You won't owe a penalty if you meet any of these conditions:
- Current Year: Pay at least 90% of your current year's tax liability
- Prior Year: Pay 100% of last year's tax liability (110% if AGI > $150,000)
- Small Balance: Owe less than $1,000 after withholding and credits
Adjusting Payments Mid-Year
Your income fluctuates? You can adjust quarterly payments as you go:
- Had a great Q1? Increase Q2 payment
- Slow summer? Reduce Q3 payment
- Recalculate each quarter based on actual YTD income
Common Mistakes to Avoid
1. Not Making Payments at All
The most expensive mistake. Even if you can't pay the full amount, pay something. The IRS charges penalties on underpayment, not late payment.
2. Using Last Year's Numbers
If your income increased significantly, last year's calculations won't be enough. Recalculate based on current income.
3. Forgetting Business Deductions
Track and deduct legitimate business expenses:
- Home office deduction
- Business mileage (67¢ per mile in 2024)
- Equipment and software
- Professional development and education
- Health insurance premiums (self-employed)
4. Missing Deadlines
Late payments accrue interest daily. Set up automatic payments or calendar reminders.
5. Not Planning for State Taxes
Most states also require quarterly estimated payments. Check your state's requirements and deadlines.
Quarterly Tax Checklist
Follow this checklist each quarter:
- ✅ Calculate or update your annual income projection
- ✅ Subtract deductible business expenses
- ✅ Calculate self-employment tax and income tax
- ✅ Determine quarterly payment amount
- ✅ Make payment by the deadline (online or mail)
- ✅ Save payment confirmation number
- ✅ Update your records and tax tracking spreadsheet
- ✅ Set reminder for next quarter's deadline
Helpful Resources
- IRS Form 1040-ES: Official Instructions
- IRS Publication 505: Tax Withholding and Estimated Tax
- Payment Portal: IRS.gov/payments
- EFTPS Enrollment: eftps.gov
Get Started Today
Don't let quarterly taxes stress you out. With the right tools and knowledge, managing estimated tax payments becomes a routine part of running your business. Our free calculator takes the guesswork out of the process.