Third Quarter Estimated Taxes Are Due September 15

The third quarter estimated tax payment for 2026 is due Tuesday, September 15.

If you're self-employed, own a pass-through business, or have significant income that isn't subject to withholding, this one is on you. There's no employer withholding to cover it.

Who needs to pay

Generally, you need to make estimated payments if you expect to owe $1,000 or more when you file, after accounting for withholding and refundable credits.

That captures most self-employed people, most partners and S corporation shareholders, landlords with profitable properties, retirees taking distributions without withholding, and anyone with substantial investment income.

Note also that the third quarter payment covers income earned June through August — a three-month period, unlike the second quarter payment, which covers only two months. The quarters are not equal, which surprises people the first time they notice it.

The safe harbors

The penalty for underpaying estimated tax is calculated as interest on the shortfall for the period it was outstanding. You avoid it entirely by meeting one of the safe harbors:

Pay 90% of your current-year tax liability. This requires knowing what this year will look like, which is exactly the problem for variable income.

Pay 100% of last year's total tax liability, or 110% if your prior-year adjusted gross income exceeded $150,000. This one only requires a number you already have — look at your prior-year return.

The prior-year safe harbor is the practical choice for most people with unpredictable income. If you have a strong year, you'll owe more at filing, but you won't owe a penalty. If you have a weak year, you may have overpaid, and the money comes back.

There's a third option worth knowing about: the annualized income installment method. If your income is genuinely seasonal — a landscaper, a tax preparer, a retailer with a fourth-quarter concentration — this method lets you pay based on income actually earned in each period rather than in even quarters. It requires more work and a specific form, but it can eliminate penalties for a business that legitimately earns most of its income late in the year.

A withholding trick worth knowing

Estimated payments are credited when made. Withholding is generally treated as paid evenly throughout the year, no matter when it was actually withheld.

That means if you reach November and realize you're substantially underpaid, increasing withholding on a W-2 job — yours or a spouse's — or having tax withheld from a retirement distribution can retroactively cure earlier underpayments in a way that a large fourth-quarter estimated payment cannot.

This is a genuine planning tool, not a loophole, and it has rescued a lot of fourth-quarter situations.

Why September is the useful checkpoint

Eight months of the year are done. You have real data. What you do with that data over the next ninety days is where most of the value is.

Questions worth asking now:

Is my income tracking meaningfully above or below last year? If well above, the prior-year safe harbor keeps you penalty-free but you should be setting cash aside for a larger April payment. If well below, you may be overpaying and can reduce the remaining installments.

Do I have equipment or vehicle purchases planned? With 100% bonus depreciation permanent and Section 179 limits raised, timing a purchase before December 31 versus after has a real cash effect. Placed in service is the test, not ordered.

Am I near any threshold? The QBI phase-out ranges, the ACA premium tax credit cliff for anyone on a marketplace plan, and various credit phase-outs all turn on income levels. Being $3,000 over a threshold you could have managed is a preventable expense, but only if you notice in October.

Are my retirement contributions on track? A solo 401(k), SEP, or defined benefit plan can absorb substantial income. Some plans have to be established before year-end even if funded later.

What to do

Make the September 15 payment. Then, in the same sitting, pull a year-to-date profit and loss and compare it to the same point last year.

If the two numbers are close, your existing payment schedule is probably fine and you can move on. If they've diverged significantly in either direction, that's the signal to have a real planning conversation before the window closes.

This article is general information, not tax advice for your specific situation. Payment deadlines can shift for weekends, holidays, and disaster relief declarations. Please talk with us before acting on anything here.