The safe harbor rule: how to avoid an underpayment penalty
You don't have to pay every dollar of this year's tax on time — you just have to clear the safe harbor. Hit it and the IRS won't charge an underpayment penalty, even if you owe more in April.
- ✓Cover the smaller of 90% of this year's tax or 100% of last year's.
- ✓The threshold rises to 110% if your prior-year AGI was over $150,000.
- ✓Last year's number is the easy target — you already know it.
What the safe harbor is
A floor set by the IRS. Pay at least that much across your four installments and you're penalty-free regardless of your final bill. It's the smaller of 90% of the current year's tax or 100% of the prior year's total (110% over $150,000 prior-year AGI).
Why prior-year is the easy target
This year's tax is a moving estimate; last year's is a known number on your return. Sizing payments to it removes the guesswork. Enter last year's total in the calculator and it sets each payment to the minimum.
The underpayment penalty if you miss
Calculated on Form 2210 as interest on the shortfall from each due date until paid, at the federal short-term rate plus a few points. It accrues daily — so paying something, late, still beats paying nothing.
A W-2 job changes the math
Withholding counts as paid evenly across the year, so boosting withholding at a W-2 job can cover a freelance shortfall without quarterly payments.
Frequently asked questions
Paying the smaller of 90% of this year's tax or 100% (110% over $150,000 AGI) of last year's, so the IRS won't charge an underpayment penalty.
Related calculators & guides
A planning estimate, not tax advice. Figures use IRS Rev. Proc. 2025-32 (2026). Confirm decisions with real money on the line with a CPA or enrolled agent.