Quarterly Estimated Taxes for Contractors: How They Work in 2026

Quarterly estimated taxes are the income tax and self-employment tax a contractor pays the IRS during the year because no employer withholds it. For tax year 2026 the payments are due April 15, June 15 and September 15, 2026, and January 15, 2027. You generally must pay if you expect to owe at least $1,000.

What are quarterly estimated taxes?

Estimated tax is how you pay tax on income that nobody withholds from. When you work for a company, your employer holds back income tax, Social Security and Medicare from every paycheck. When you run your own plumbing, HVAC or roofing business as a sole proprietor or single-member LLC, nobody does that for you. The IRS still expects to be paid as you earn, so you send it money four times a year.

Those payments cover two different taxes: federal income tax on your profit and [self-employment tax](/learn/self-employment-tax), the 15.3% Social Security and Medicare tax that self-employed people pay on their own. Most states with an income tax have their own estimated payments too. See your state's page under state tax guides.

Who has to pay estimated taxes in 2026?

Under the 2026 Form 1040-ES instructions, you generally must make estimated payments for 2026 if both of these are true:

1. You expect to owe at least $1,000 in tax for 2026 after subtracting your withholding and refundable credits.
2. You expect your withholding and refundable credits to be less than the smaller of (a) 90% of the tax on your 2026 return or (b) 100% of the tax on your 2025 return (your 2025 return must cover all 12 months).

There is one clean exception: if you were a U.S. citizen or resident for all of 2025 and had no tax liability for 2025, you don't have to pay estimated tax for 2026. That mostly helps people in their first profitable year.

Who this catches in the trades: owner-operators filing Schedule C, partners and LLC members whose share of profit isn't withheld on, and S corporation owners who take distributions on top of a small salary. If you or your spouse also have a W-2 job, raising withholding on a new Form W-4 can cover some or all of it instead.

When are estimated taxes due for 2026?

Notice the periods aren't equal. The second payment covers only two months and the fourth covers four. That trips up a lot of owners, because the June payment lands right when spring work is starting to pay and the January payment lands after the holidays.

How much should each quarterly payment be?

Most contractors size their payments using one of the IRS safe harbors. Pay at least the safe harbor amount, on time, in four equal parts, and you generally won't owe an underpayment penalty even if you owe more when you file.

Quarterly payment = (2025 total tax × 100% or 110%) ÷ 4

Use the quarterly estimated tax calculator to run your own numbers, and the self-employment tax calculator to see the SE tax piece by itself. If you'd rather think in percentages, see how much to set aside for taxes.

What if your income is seasonal?

If most of your profit lands in a few months, the annualized income installment method can lower or remove a penalty for the early quarters. Instead of four equal payments, each payment is based on what you actually earned through the end of that period. You figure it on Schedule AI of Form 2210 when you file. It takes more bookkeeping, but it fits how a lot of trades really earn.

How do you pay estimated taxes?

You can pay online through IRS Direct Pay from a bank account, through your IRS Online Account, through EFTPS, by debit or credit card through an IRS-approved processor (they charge a fee), or by mailing a check with a Form 1040-ES voucher. Online payments give you a confirmation number, which is worth saving with your books. Pay state estimates separately through your state's tax agency.

What is the penalty for underpaying estimated tax?

If you pay too little or too late, the IRS charges a penalty that works like interest. It is figured on the amount you underpaid, for the number of days it was late, at the IRS's published quarterly underpayment interest rate. You use Form 2210 to see whether you owe it. The penalty is figured period by period, so per Publication 505 you can owe it for a short quarter even if you end up due a refund when you file.

The IRS can waive the penalty if a casualty, disaster or other unusual circumstance kept you from paying, or if you retired after age 62 or became disabled in the tax year or the year before and the underpayment was due to reasonable cause.

Common mistakes contractors make with estimated taxes

• Forgetting self-employment tax. Owners estimate income tax and forget the 15.3% SE tax, which is often the bigger number at lower profit levels.
• Using revenue instead of profit. Tax is figured on profit after expenses. If you don't track deductions and mileage during the year, your estimate will be too high or your return will be too thin on proof.
• Missing the 110% rule. Once your AGI tops $150,000, the prior-year safe harbor is 110%, not 100%.
• Spending the tax money. Payments are easy when the money is already parked in a separate account. They're painful when it has to come out of next week's payroll.
• Ignoring big equipment purchases. A truck or machine you expense under Section 179 or bonus depreciation can cut your tax a lot. Tell your CPA before the September or January payment, not after.
• Skipping the state. Most income-tax states expect quarterly payments too, on their own schedule.

For the full picture, including entity choice and year-end planning, read the contractor taxes guide or see how BRIX bookkeeping and tax help works.