There will be no federal penalties for not prepaying enough taxes during the year if withholding
1) and timely estimated tax payments equal or exceed 90% of your 2026 tax or
2) and timely estimated tax payments equal or exceed 100% of your 2025 tax (110% if your 2025 adjusted gross income was more than $150K) or
3) the balance due after subtracting taxes withheld from 90% of your 2026 tax is less than $1,000 or
4) your total 2026 taxes are less than $1,000
The lower of 1 or 2 is your required prepayments. 1 is difficult to know until the year-end, so option 2 is safer. Under the simplified method, 25% of your estimated tax payments must be paid in each period by 4/15, 6/15, 9/15 and 1/15/26. Unless you choose otherwise. 25% of your annual withholding is assumed to occur in each period, but you can use actual.
Failing the safe harbors, you can use the annualized installment income method. This method requires knowing your income and deductions thru 3/31, 5/31, 8/31, and finally, the year-end, which is the same as the tax return. The income is annualized. taxes are computed on the annualized income and then de- annualized. Your cumulative tax payments (estimates and withholding) for each period must equal or exceed these amounts to avoid penalties.
if you can increase withholding to meet any exception, then paying the estimates is not required. Some taxpayers choose to pay the penalties because they can make more on the money they keep than the penalties
state laws vary
