Estimated tax safe harbor: 90%, 100%, and 110%
Checked October 17, 2026 · Educational summary
The IRS says you may avoid the underpayment penalty if your filed return shows you owe less than $1,000 after withholding, or if you paid at least 90% of the tax shown on this year's return or 100% of the tax shown on last year's return, whichever is smaller. If last year's AGI was greater than $150,000 ($75,000 if married filing separately), use 110% instead of 100%.
Uncertain. The IRS penalty page we read still used 2023 and 2024 as the example years inside that safe-harbor sentence. The rule itself matches the individuals FAQ updated September 29, 2026. This page follows the FAQ wording. Check Publication 505 for the return you are filing.
The smaller of two tests
Withholding and refundable credits count toward the target. Subtract them before you divide the rest into payments. The prior-year test needs a prior return that covered 12 months. A safe-harbor payment lowers penalty risk. It does not erase the rest of the bill. In the first example below, the rest is still due when you file.
Made-up examples
No withholding, and the same amount on each of four dates.
| Prior-year tax | Expected current-year tax | 90% current | 100% or 110% prior | Smaller target | Per quarter | |
|---|---|---|---|---|---|---|
| A | $12,000 (AGI $90,000) | $20,000 | $18,000 | $12,000 | $12,000 | $3,000 |
| B | $12,000 (AGI $180,000) | $20,000 | $18,000 | $13,200 (110%) | $13,200 | $3,300 |
| C | $20,000 | $10,000 | $9,000 | $20,000 | $9,000 | $2,250 |
Notes
- If income is uneven, the IRS says you can use the annualized income installment method on Form 2210, Schedule AI.
- Withholding early in the year can be treated differently from a quarterly payment. See the Form 2210 instructions.
- AGI exactly at $150,000, or $75,000 if married filing separately, stays at 100%. The FAQ says "greater than" those amounts.
FAQ
Does 100% of last year's tax pay the whole bill?
No. It can avoid the underpayment penalty if the other conditions are met. The remaining tax is still due when you file.
Which year counts if I started freelancing this year?
Not covered here. See Publication 505.
Run the same comparison on numbers you choose in the quarterly tax planner.
What we could not verify
Uncertain. No 2027 income-tax rates are stated. The examples use assumed totals.
Special rules for higher-income taxpayers and for farmers and fishers were not read in full in Publication 505.
Sources
- IRS, Underpayment of estimated tax by individuals penalty, read October 17, 2026.
- IRS, Estimated tax: Individuals (FAQ, updated September 29, 2026), read October 17, 2026.
- IRS, Publication 505, Tax Withholding and Estimated Tax. Referenced by the IRS FAQs. Not read in full for this page.