Most people who go self-employed spend months thinking about their business, the services they'll offer, how they'll find clients, and what they'll charge. Very few of them spend even one hour thinking about what will happen on April 15th. Or June 15th. Or September 15th. Or January 15th.
That blind spot is expensive, not just financially but emotionally. One of the biggest shocks of self-employment isn't the workload or the uncertainty; it's realizing you're now responsible for something your employer used to handle quietly on your behalf. Every paycheck you ever received from a job came with taxes already taken out. You never had to calculate anything. You never had to set anything aside. It just happened, and now…it doesn't. Figuring out how much to pay, and when, and based on what is entirely up to you.
This doesn't have to feel like a guessing game. Once you understand the actual math behind quarterly tax payments, the whole process gets a lot less scary.
Understanding What You're Actually Paying
When you're self-employed, you're on the hook for two separate taxes: federal income tax and self-employment tax.
Both factor into your estimated taxes, and this is where most people get tripped up. They think about income tax but forget the second entirely.
Self-employment tax covers Social Security and Medicare. It runs at a combined 15% of your net self-employment income, and unlike income tax, it applies from the very first dollar you earn. There's no bracket system, no threshold to clear first. It's just there, every time.
For example, let's say you earn $50,000 in gross income and your business expenses are $20,000. Your net income (the number that actually matters for tax purposes) is $30,000. On that $30,000, your self-employment tax is 15%, which works out to $4,500.
Now, the IRS does offer a small cushion, and you're allowed to deduct half of your self-employment tax as an "above-the-line" deduction. In this scenario, it reduces your taxable income by $2,250. Think of it like a partial rebate. It doesn't eliminate the tax, but it lowers the income on which your income tax is then calculated.
On top of SE tax, you'll owe income tax based on your applicable bracket. These are two separate calculations, and knowing that changes everything about how you plan.
Note: Rates are always subject to change, so verify current brackets directly with the IRS.
If you've been trying to piece together how self-employment taxes actually work without a clear starting point, Self-Employed 101 breaks down exactly how your income gets taxed from every angle, step by step, so nothing catches you off guard.
When Are Quarterly Tax Payments Due?
The IRS requires estimated tax payments four times a year: April 15, June 15, September 15, and January 15 of the following year. So if you're making quarterly tax payments for 2026, you're paying on April 15, 2026, June 15, 2026, September 15, 2026, and January 15, 2027.
Those payments are your way of staying current throughout the year so that when you file your annual return in April, you're not blindsided by a massive bill or a penalty on top of it. The IRS requires estimated tax payments if you expect to owe at least $1,000 in taxes after accounting for any withholdings and refundable credits. If you're fully self-employed with no other withholding, it's safe to assume this threshold applies to you.
Three Ways to Calculate What You Owe
There's more than one method for figuring out your quarterly payment amounts, and which one works best depends on how predictable your income is.
The first is the 90% rule. If your income and expenses are fairly consistent month to month, you can project out your full-year net income, calculate your estimated total tax liability, and pay at least 90% of that amount spread across four equal payments. It's the most straightforward approach, and it works well when your cash flow is steady and predictable.
The second is the 100% / 110% safe harbor rule. This one is a favorite for people who find it hard to predict their earnings in a given year. The idea is that if you pay at least 100% of what you owed in taxes last year, you won't be penalized for underpaying, even if you end up owing more when you file.
One note for higher earners: if your Adjusted Gross Income exceeded $150,000 in the prior year ($75,000 if married filing separately), you're required to pay 110% of your prior year's tax liability instead of 100%. Either way, the safe harbor method is exactly what the name implies. It's a way to protect yourself from penalties when the future is uncertain.
Knowing which method fits your situation and how to apply it step by step to your actual numbers with real examples and zero guesswork, is key. Get the full breakdown here.
When Your Income Changes Mid-Year
The real complication for most self-employed people isn't the first payment. It's what happens when income shifts throughout the year. Maybe you had a slow first quarter and a busy summer. Maybe a new client came in and doubled your revenue by June. That's where the annualized income installment method becomes valuable.
Say your annualized income in April looks like $50,000, and your total estimated tax liability on that income is $10,000. Your first quarterly payment is $2,500, which is calculated by dividing $10,000 by 4.
Now say you've been hustling, and by June your annualized income has climbed to $70,000. Your total estimated liability is now $16,000. You've already paid $2,500. For the remaining three payments, take $16,000, subtract the $2,500 already paid, and divide the remaining $13,500 by three. Each of those three payments becomes $4,500.
If your income shifts again by September, up or down, you follow the same logic: figure out your updated estimated liability, subtract what you've already paid, and divide by however many payments remain.
Why People Get Hit With Penalties (And How Not To)
The underpayment penalty isn't a dramatic number on its own, but it adds up, and it's completely avoidable. People get hit with it for a few reasons. Some skip quarterly payments entirely because they didn't know they were required. Others make payments but don't adjust when income increases mid-year, ending up short by the time they file. And some simply underestimate because they're only thinking about income tax and forgetting that self-employment tax is sitting right there too.
Being penalty-proof doesn't mean everything is paid perfectly, either. It means you've paid enough throughout the year, on time, to meet the IRS minimum requirements. You might still owe a balance when you file, and that's okay. The goal isn't to overpay just to feel safe. It's to pay just enough, on schedule, to avoid extra charges while keeping as much cash working in your business as possible.
A good habit is building estimated taxes into your income planning from day one. Every time money comes in, you should already have a sense of what portion is spoken for. The surprise bill at the end of the year is almost always the result of treating tax payments as something to figure out later, when the math was always there, waiting to be done.
The Bottom Line on Estimated Taxes
Quarterly tax payments don't have to be a source of dread. They just need a little structure by understanding your net income, knowing which calculation method fits your situation, and adjusting as the year unfolds. The math is genuinely manageable once you see it laid out clearly.
If you want to understand the full picture of what self-employment means for your taxes, not just estimated payments but every piece of the puzzle from how your income is taxed to what you can legally reduce it by, Self-Employed 101 was built specifically for people navigating this for the first time. Stop guessing and start making confident, informed decisions about your money.
