The clock is ticking for millions of Americans who owe estimated taxes. The fourth and final quarterly payment for tax year 2025 is due Wednesday, January 15, 2026—and missing the deadline could result in penalties that add up quickly.

If you're self-employed, have substantial investment income, receive rental payments, or earned money through the gig economy, this deadline applies to you. Here's everything you need to know to stay compliant and avoid unnecessary costs.

Who Needs to Pay Estimated Taxes?

Estimated tax payments are required when you have income that isn't subject to regular withholding. The IRS expects quarterly payments from:

  • Self-employed individuals: Freelancers, contractors, consultants, and business owners
  • Investors: Those with significant capital gains, dividends, or interest income
  • Rental property owners: Landlords receiving rental income
  • Gig workers: Uber drivers, DoorDash couriers, Airbnb hosts, and similar earners
  • Retirees: Those receiving pension or retirement distributions without adequate withholding
  • High earners: Anyone whose withholding doesn't cover their full tax liability

The general rule: if you expect to owe at least $1,000 in taxes after subtracting withholding and credits, you likely need to make estimated payments.

The January 15 Deadline

The Q4 2025 payment covers income earned from October 1 through December 31, 2025. This is the final installment of the tax year, and it's often the most complex because it may need to account for:

  • Year-end bonuses: Unexpected income received in December
  • Stock sales: Capital gains realized during Q4
  • Cryptocurrency transactions: Taxable events from crypto trading
  • Holiday business income: Increased earnings for seasonal businesses
  • Dividend payments: Year-end dividend distributions

"Year-end surprises like bonuses, stock dividends, or crypto gains may require adjusting your final quarterly payment to avoid underpayment penalties."

— IRS Guidance

The Alternative: File by March 2

Here's an option many taxpayers don't know about: if you're a calendar year taxpayer and file your complete 2025 Form 1040 by March 2, 2026, you can skip the January 15 estimated payment entirely—as long as you pay all tax owed at that time.

This approach makes sense if:

  • You have straightforward taxes that can be prepared quickly
  • You expect a refund (meaning no estimated payment was needed anyway)
  • You want to consolidate your tax payments into one transaction

However, most taxpayers with complex returns—those with business income, investments, or multiple income sources—will find it difficult to file by March 2 and should make the January 15 payment.

How to Calculate Your Payment

Calculating the correct estimated payment can be tricky. The IRS provides Form 1040-ES with worksheets to help, but here's the general approach:

The Safe Harbor Methods

You can avoid penalties if you pay at least:

  • 90% of your current year tax liability, OR
  • 100% of your prior year tax liability (110% if your AGI exceeds $150,000)

The second method—paying 100% (or 110%) of last year's tax—is often easier because you know exactly what you owed. However, if your income increased significantly in 2025, you may still owe additional tax when you file.

The Annualized Income Method

If your income varies significantly throughout the year, you can use the annualized income installment method to calculate payments based on actual income received in each quarter. This requires more recordkeeping but can reduce payments in quarters with lower income.

How to Pay

The IRS strongly encourages electronic payment. Your options include:

  • IRS Direct Pay: Free online payments directly from your bank account at irs.gov/directpay
  • EFTPS: The Electronic Federal Tax Payment System for scheduled payments
  • Credit/Debit Card: Processing fees apply (typically 1.85-1.98% for credit cards)
  • Digital Wallets: PayPal, Click to Pay, and similar services (fees may apply)
  • Check or Money Order: Mail to the address listed on Form 1040-ES (allow extra time)

For electronic payments, the IRS must receive your payment by midnight Eastern time on January 15 to be considered timely.

Don't Forget State Taxes

Federal taxes aren't the only consideration. Most states with income taxes also require quarterly estimated payments, and many follow the January 15 deadline—but not all.

Check your state's requirements:

  • Same deadline states: California, New York, Texas (no income tax), and most others follow January 15
  • Different deadline states: Some states have unique schedules or requirements
  • No income tax states: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming have no state income tax

Penalties for Late Payment

Missing the deadline triggers the underpayment penalty, which is essentially interest charged on late payments. The current rate is approximately 8% annually, compounded daily from the due date until payment.

The penalty applies even if you're owed a refund when you file—though the refund will offset the penalty amount. The IRS calculates penalties automatically when you file your return.

Waiver Exceptions

The IRS may waive penalties in certain situations:

  • You retired after age 62 during 2025
  • You became disabled during the tax year
  • A casualty, disaster, or unusual circumstance made payment unreasonable
  • The underpayment was due to reasonable cause and not willful neglect

Tips for Q1 2026 Planning

As you make your Q4 2025 payment, consider adjusting your approach for the new tax year:

  • Review your withholding: If you consistently owe large amounts, consider increasing W-4 withholding at your day job
  • Set up automatic payments: EFTPS allows scheduled quarterly payments to avoid missing deadlines
  • Track income quarterly: Better records make payment calculations easier and more accurate
  • Consider prepayment: If you expect higher income in 2026, front-loading payments can reduce year-end stress

The Bottom Line

The January 15 estimated tax deadline is real, and the consequences of missing it—while not catastrophic—add unnecessary cost to your tax burden. For anyone with self-employment income, investments, or other non-W-2 earnings, this deadline deserves attention.

The good news: paying is easy. Electronic options make it possible to satisfy your obligation in minutes, even at the last minute. The IRS's Direct Pay system is free, secure, and available around the clock.

Don't let procrastination turn into penalties. Take a few minutes today to calculate what you owe and make your payment. Your future self—the one who doesn't have to pay interest charges—will thank you.

And if you're already behind? Pay as soon as possible. The penalty clock is ticking, but it stops the day your payment arrives. Even a late payment is better than no payment when it comes to minimizing IRS interest charges.