The IRS has some safe harbor rules. Meet any one of them, and there will be no federal underestimation of tax penalties.
There will be no 2026 federal penalties for not prepaying enough taxes during the year if withholding and
- timely estimated tax payments equal or exceed 90% of your 2026 tax or
- timely estimated tax payments equal or exceed 100% of your 2025 tax (110% if your 2025 adjusted gross income was more than $150K) or
- the balance due after subtracting taxes withheld from 90% of your 2026 tax is less than $1,000 or
- your total taxes are less than $1,000
The second one is the easiest to meet because if you complete your 2025 taxes by around the end of March,
you'll know what must be paid in - 1/4 of the required amount each period, which generally have due dates of 4/15, 6/15,9/15 and 1/15 of the following year. If you have any control over your withholding, you may be able to increase it later in the year to make up for any deficiency. The IRS rules state that you can deem 1/4 of your annual withholding to be withheld each period. However, estimated tax payments only count for that period if paid on or before the due date.
state laws differ
