The Q4 estimated tax payment due January 15, 2027: how to work out the amount

The date and who pays

The fourth estimated tax payment for 2026 is due Friday, January 15, 2027. It covers income from September 1 to December 31, 2026.

Estimated tax is how people without enough withholding pay income tax and self-employment tax during the year: sole proprietors, single-member LLC owners, partners and S corporation shareholders with untaxed distributions. Under the IRS's general rule, you must pay estimated tax for 2026 if both of these apply:

1. You expect to owe at least $1,000 for 2026 after withholding and refundable credits.
2. Your withholding and refundable credits will be less than the smaller of 90% of your 2026 tax or 100% of your 2025 tax.

Corporations pay their own estimated tax on a different schedule. This article is about individuals filing Form 1040.

The safe-harbor rules

You avoid the underpayment penalty if your withholding and timely estimated payments together reach the smaller of:

The last-year test is the easy one, because you already know the number. The this-year test can be cheaper when 2026 was a weaker year than 2025, but it needs a good estimate of the full year's profit, which is why up-to-date books matter in December.

The penalty works like interest on each payment that was short or late, for the days it was late. For October to December 2026 the IRS rate is 7% a year; the rate for January to March 2027 has not been announced yet.

A worked example

A sole proprietor, single, had total tax of $14,000 on the 2025 return with AGI of $110,000. She has no wages and paid $3,500 on each of the first three 2026 dates.

• Using last year: 100% of $14,000 is $14,000. She has paid $10,500, so the fourth payment is $3,500. Whatever 2026 turns out to be, she has no underpayment penalty; any extra tax is due with the return in April.
• If her 2025 AGI had been over $150,000: the target is 110%, or $15,400, and with equal payments each quarter should have been $3,850. Paying more in January does not cure an earlier short quarter, but it stops the penalty from running on it.
• Using this year: her books show 2026 profit lower than expected, and her estimated 2026 tax is $12,000. 90% of that is $10,800, so with equal quarterly payments of $2,700 she was already ahead, and a fourth payment of $300 would bring her to $10,800. The risk is that the estimate is wrong.

To estimate 2026 tax, start with the year's net profit from your books (projected to December 31), then work through the 2026 Estimated Tax Worksheet in the Form 1040-ES instructions. Self-employment tax is figured on 92.35% of net profit: 12.4% Social Security on earnings up to $184,500 for 2026, plus 2.9% Medicare on all of it. Half of it is deductible. The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.

Your state probably has its own estimated tax with its own January date. Check it alongside the federal one.

If your income was uneven

If most of the year's profit came late, such as a seasonal business or a big job in November, the equal-installment assumption can make earlier quarters look short. The annualized income installment method lets you match each payment to the income actually earned in that period. You figure it on Schedule AI of Form 2210, filed with the return, and it needs your income by period: January to March, April to May, June to August, and September to December. That is a report your books can give you; a shoebox of receipts cannot.

When you can skip it

You do not have to make the January 15 payment if you file your 2026 return by February 1, 2027 and pay the whole balance with it. Farmers and fishers have their own option: file and pay in full by March 1, 2027, and no estimated payments are needed for 2026.

Filing by February 1 is realistic only if your books are closed and your 1099s and other forms are in, so most business owners make the payment instead. See the year-end closing checklist.

How to pay

• IRS Online Account or IRS Direct Pay: from a bank account, free. Choose estimated tax for tax year 2026.
• EFTPS: free, but you must enroll first, which takes time. Many employers already use it for payroll deposits.
• Debit or credit card or digital wallet through an IRS-approved processor, for a fee.
• By mail with the 1040-ES voucher. The IRS now notes that the postmark date is the date the post office processes the envelope, which may be later than the day you mail it, so mail early or pay online.

Record the payment as an owner's draw, not a business expense: income tax on a sole proprietor's profit is personal. See owner draws vs contributions.

Source: IRS Form 1040-ES (2026) and its instructions, and the IRS release on interest rates for the fourth quarter of 2026. AcboBooks does not calculate estimated tax, but its profit and loss report for any date range, including the periods Schedule AI asks for, gives you the starting figure.