How to estimate quarterly taxes as a freelancer

When you were on a W-2, your employer quietly withheld federal income tax, Social Security and Medicare from every paycheck. As a freelancer, nobody’s doing that for you — which is why the IRS makes you pre-pay yourself, four times a year, via estimated quarterly taxes.

Who has to pay quarterly taxes

You generally need to pay estimated taxes if you expect to owe at least $1,000 in federal tax for the year after subtracting any withholding and refundable credits. That threshold catches almost every full-time freelancer.

If you also have a W-2 day job alongside your freelance work, you can sometimes increase the withholding on the W-2 instead of writing quarterly checks — same result, less paperwork.

What you actually owe each quarter

Quarterly tax isn’t a separate tax — it’s a prepayment on the same tax bill you settle in April. It covers two things:

• Federal income tax on your net self-employment earnings (gross income minus deductible business expenses).
• Self-employment tax — 15.3% on the first $168,600 of net earnings in 2026 (12.4% Social Security up to the wage base + 2.9% Medicare with no cap, plus an extra 0.9% Medicare surtax over $200,000 single / $250,000 joint).

State income tax, if your state has one, is on top — paid to the state, on its own schedule.

The two ways to calculate it

1. The forecasting method

Project your full-year net self-employment income, multiply by your combined federal + SE tax rate, divide by four, and send that much each quarter. The IRS’s Form 1040-ES worksheet walks you through it line by line.

Most freelancers land at an effective rate between 22% and 32% of net income once you stack federal income tax + SE tax. Save 25–30% as a default and you’ll usually be close.

2. The safe-harbor method

Forecasting is hard when your income is lumpy. The IRS gives you a way out: as long as your total payments over the year hit one of the following safe-harbor thresholds, they won’t charge an underpayment penalty even if you end up owing more in April:

• 100% of last year’s total tax (110% if your prior-year adjusted gross income was over $150,000), or
• 90% of this year’s total tax, whichever is smaller.

In practice: take last year’s total tax bill from line 24 of your Form 1040, multiply by 1.0 (or 1.1 if you’re a higher earner), divide by four. Pay that each quarter and you can’t be penalized, full stop — even if you have a breakout year.

The deadlines

The IRS quarterly windows don’t map cleanly to actual calendar quarters, which trips everyone up the first year. For income earned in:

• Jan 1 – Mar 31 — payment due April 15
• Apr 1 – May 31 — payment due June 15
• Jun 1 – Aug 31 — payment due September 15
• Sep 1 – Dec 31 — payment due January 15 of the following year

Q2 is only a two-month window and Q4 is a four-month window. Missing the date by even a day starts the underpayment penalty clock.

How to actually send the payment

The simplest path is IRS Direct Pay at directpay.irs.gov — no account needed, free, bank transfer, receipt by email. Choose “Estimated Tax” as the reason and “1040ES” as the form.

For larger or recurring amounts, sign up for EFTPS — same idea, but you can schedule all four payments in advance.

What happens if you skip a payment

The IRS charges an underpayment penalty — currently running around 8% APR, calculated per-quarter on the shortfall. It compounds. The penalty is annoying but not catastrophic for small misses; the bigger risk is owing a huge lump sum next April with no cash on hand to cover it.

Make this someone else’s problem

The single biggest lift for freelancers is keeping a running estimate of what you owe so each payment isn’t a fresh crisis. That’s what RevTrackr is built for — log income and expenses by business, see a live estimated-tax figure update as the quarter goes, and never guess at the safe-harbor number again.