Estimated tax safe harbor rule
You do not have to guess this year's tax exactly. Paying enough by each date, measured one of three ways, avoids the underpayment penalty.
The three ways to be safe
You generally avoid the federal underpayment penalty if your withholding plus timely estimated payments equal at least the smaller of:
- 90% of the tax on this year's return, or
- 100% of the tax on last year's return, or 110% if last year's adjusted gross income was over $150,000 ($75,000 if married filing separately).
Last year's return has to cover a full 12 months. Separately, there is no penalty if you owe less than $1,000 after withholding and credits, or if you had no tax liability last year and were a US citizen or resident for the whole year.
Why last year's tax is the easy route
This year's tax is a guess until December. Last year's tax is a fixed number: the total tax line of your 2026 Form 1040. Divide 100% (or 110%) of it by four, subtract withholding, and you know every payment on January 1. If your income grows a lot in 2027, you will owe the difference in April 2028, but without a penalty.
Example with made-up numbers
2026 total tax: 9,800 · 2026 AGI: 78,000 (under 150,000, so 100%)
2027 W-2 withholding expected: 3,360
Prior-year safe harbor: 9,800 − 3,360 = 6,440 → 1,610 per quarter
If 2027 tax turns out to be 16,592, the remaining balance is due with the return, without an underpayment penalty
When 90% of this year is lower
If your income drops this year, 90% of the current-year tax may be the smaller number. It needs a good estimate, updated during the year, because if your income turns out higher than you thought, 90% of the real number may be more than you paid.
Each payment counts on its own date
The safe harbor is checked quarter by quarter: roughly a quarter of the required amount by April 15, half by June 15, three quarters by September 15 and the full amount by January 18, 2028. Paying everything in January does not fix a missed April payment. The exception is withholding, which is treated as paid evenly through the year unless you choose otherwise.
Uneven income
If most of your income arrives late in the year, equal payments from April may feel unfair. The annualized income installment method on Form 2210 lets each required payment follow when you actually earned the money. It takes more paperwork, so it is mostly worth it when income is strongly seasonal.
Safe harbor is not what you owe
Paying the safe harbor amount protects you from the penalty, not from the bill. If your tax for 2027 is higher, you still pay the rest when you file. Set aside the difference during the year so April does not hurt. Keeping two numbers in view helps: the safe harbor payment (the minimum) and the payment that leaves you owing about $0.
State rules
States that tax income have their own estimated tax rules, and the safe harbor percentages and thresholds may differ from the federal ones. Check your state's instructions separately.
The free quarterly estimated tax calculator shows both numbers side by side. For the four deadlines, see estimated tax due dates 2027.
Frequently asked questions
What is the safe harbor for estimated taxes?
Paying, through withholding and on-time estimated payments, at least the smaller of 90% of this year's tax or 100% of last year's tax (110% if last year's AGI was over $150,000).
Do I still owe money if I pay the safe harbor?
Possibly. The safe harbor avoids the underpayment penalty, but if this year's tax is higher you pay the difference when you file.
Where do I find last year's total tax?
On your prior-year Form 1040, the total tax line (line 24 on recent versions of the form).
General information, not financial, tax or legal advice. Examples use made-up numbers.
Quarterly Estimated Tax Calculator 2027
Project your 2027 tax month by month, find the safe harbor amount and log each quarterly payment.