Safe harbors, required installments and the penalty by period at the IRS rate
Updated October 2026
For 2026 you generally owe no penalty if your total tax minus withholding is under $1,000, or if you had no tax liability for a full-year 2025 as a U.S. citizen or resident. Otherwise, your withholding and timely estimated payments must reach the required annual payment, the smaller of 90% of your 2026 tax or 100% of your 2025 tax. If your 2025 adjusted gross income was more than $150,000 ($75,000 married filing separately), the prior-year figure is 110%. Farmers and fishers use 66â…”% instead of 90%.
2026 total tax is the tax on your 2026 return after credits (Form 1040 line 22) plus other taxes such as self-employment tax that Form 2210 counts. 2025 tax and AGI come from last year’s return. Withholding is federal income tax withheld from wages, pensions and other payments. Enter each estimated payment under the due date it was made by; a payment made after a due date goes in the catch-up fields with its date. The 2027 rate field covers January 1 to April 15, 2027, whose rates the IRS has not yet announced.
The required annual payment is due in four equal installments on April 15, 2026, June 15, 2026, September 15, 2026 and January 15, 2027. You can skip the January payment if you file your 2026 return by February 1, 2027 and pay the full balance with it. Withholding counts as paid in equal parts on the four due dates unless you elect, on Form 2210 box D, to use the dates it was actually withheld.
Penalty = underpayment Ă— days unpaid Ă· 365 Ă— the rate for each rate period, figured separately for each installment. Payments apply first to the oldest unpaid installment, even if you meant them for a later one. In the default case the required annual payment is $12,000 (100% of 2025 tax, smaller than 90% of $16,000 = $14,400), so each installment is $3,000.
The June installment goes unpaid. The September payment pays it off first: June 16–30 is 15 days at 6% ($7.40) and July 1–September 15 is 77 days at 7% ($44.30), $51.70 in all. That leaves the September installment unpaid until the January payment: 122 days at 7%, $70.19. The January installment is then unpaid until April 15, 2027: 90 days at the assumed 7%, $51.78. Total: $173.67.
| Quarter | Rate | Published in |
|---|---|---|
| January–March 2026 | 7% | Rev. Rul. 2025-22, IRB 2025-48 (Nov. 24, 2025) |
| April–June 2026 | 6% | Rev. Rul. 2026-5, IRB 2026-8 (Feb. 17, 2026) |
| July–September 2026 | 7% | Rev. Rul. 2026-10, IRB 2026-22 (May 26, 2026) |
| October–December 2026 | 7% | Rev. Rul. 2026-15, IRB 2026-36 (Aug. 31, 2026) |
| January–April 15, 2027 | Not yet announced | Calculator input (default 7%) |
The rate is the federal short-term rate plus 3 percentage points, reset each quarter. The first 2026 installment is due April 15, so the January–March rate never applies to 2026 estimated tax.
| Situation | Required annual payment | Each installment | Estimated penalty |
|---|---|---|---|
| Freelancer skipped June ($3,000), default | $12,000 | $3,000 | $173.67 |
| Same freelancer pays the missed $3,000 on July 15 | $12,000 | $3,000 | $16.03 |
| Retiree, big December capital gain, paid nothing extra until April | $9,000 | $2,250 | $45.93 |
| High earner paid 100% of 2025 tax, but 110% applied | $44,000 | $11,000 | $183.73 |
| W-2 worker adds $4,000 of December withholding | $15,000 | $3,750 | No penalty |
| W-2 worker without the December fix | $15,000 | $3,750 | $137.79 |
Paying the missed June installment on July 15 instead of waiting cuts the penalty from $173.67 to $16.03. The retiree with a December gain owes a penalty under the regular method, which assumes income arrived evenly; the annualized income method on Form 2210 Schedule AI can lower or remove it. The high earner paid exactly 100% of 2025 tax, which falls short because 2025 AGI over $150,000 requires 110%. Extra December withholding fixes a shortfall completely, because withholding is treated as paid evenly through the year; the W-2 worker who does not add it owes $137.79.
The IRS can waive all or part of the penalty if you retired after reaching age 62 or became disabled in the tax year or the year before and the underpayment had reasonable cause, or if it was due to a casualty, disaster or other unusual circumstance. People in federally declared disaster areas get automatic relief. If your income came unevenly, as with a year-end bonus or capital gain, the annualized income installment method (Schedule AI) sets smaller required installments for the early due dates.
It uses the regular method only: no Schedule AI, no farmer and fisher rules, no section 965 or section 1062 elections, and no withholding by actual date. It assumes any unpaid balance is paid April 15, 2027, and payments made on a weekend-adjusted date are treated as on time. It does not include the separate failure-to-pay penalty or interest on a balance due after April 15, 2027. The IRS figures the penalty and sends a bill if you leave the line blank; a CPA or enrolled agent can check whether a waiver or the annualized method applies.
Catching up in January. A large January 15 payment does not erase penalties on earlier installments; each one accrues from its own due date.
Missing the 110% rule. High earners who pay 100% of last year’s tax are still short.
Thinking a refund means no penalty. The penalty is figured per installment, so it can apply even when you are due a refund.
Paying estimates when withholding would work. Raising withholding late in the year counts as if paid evenly, which estimated payments do not.