Quarterly Tax Payments: When Should You Pay in 2024–2025?

Quarterly Tax Payments

Paying taxes isn’t just an annual event for millions of Americans—it’s a quarterly responsibility. Whether you’re self-employed, own a small business, or earn extra income outside of your regular job, understanding how and when to make quarterly tax payments can help you avoid costly IRS tax penalties.

In this article, we’ll walk you through what quarterly taxes are, who needs to pay them, how to calculate them, and the key deadlines for the 2024–2025 tax year.

1) What Are Quarterly Tax Payments?

Quarterly tax payments, also called estimated tax payments, are advance payments made to the IRS four times a year. They cover the estimated income tax and self-employment tax you owe for the year.

The U.S. operates on a pay-as-you-go tax system. This means the IRS expects you to pay taxes on your income as you earn it, rather than all at once at the end of the year.

If you don’t have taxes withheld from your income, or if your withholdings are too low, you may need to make quarterly payments to stay compliant and avoid penalties.

2) Who Needs to Make Quarterly Tax Payments?

You must make estimated tax payments if:

  • You expect to owe at least $1,000 in tax for the year, after subtracting withholding and refundable credits.

  • Your withholding and credits will be less than the smaller of:

    • 90% of the tax is to be shown on your current year’s tax return, or

    • 100% of the tax shown on your prior year’s tax return (110% if your AGI was over $150,000).

Here’s who typically needs to make quarterly tax payments:

2.1) Self-Employed Individuals

Freelancers, independent contractors, and gig workers must often make quarterly tax payments. Since you don’t have an employer withholding taxes for you, the IRS expects you to do it yourself.

2.2) Small Business Owners

If you operate a sole proprietorship, partnership, or S corporation, you may need to make quarterly tax payments on your business profits, especially if there’s no tax withholding mechanism in place.

2.3) Individuals with Additional Income

If you earn income from dividends, interest, rental properties, alimony (for divorces finalized before 2019), or capital gains, you may need to make estimated payments even if you also have a W-2 job.

2.4) W-2 Employees with Insufficient Withholding

If your employer doesn’t withhold enough from your paycheck to cover your total tax liability, especially if you have a side hustle, you might still need to pay quarterly.

3) Quarterly Tax Payment Deadlines

For 2024–2025, here are the IRS deadlines to remember:

Quarter Income Period Payment Due Date
Q1 January 1 – March 31, 2024 April 15, 2024
Q2 April 1 – May 31, 2024 June 17, 2024 (15th is a weekend)
Q3 June 1 – August 31, 2024 September 16, 2024 (15th is a Sunday)
Q4 September 1 – December 31, 2024 January 15, 2025

Tip: If the 15th falls on a weekend or holiday, the deadline moves to the next business day.

4) How to Calculate Your Quarterly Tax Payments

Accurately calculating your quarterly tax payments is crucial. Here are the steps:

1. Estimate Your Total Income for the Year

Add up all sources of income—business profits, interest, dividends, rent, and any other earnings.

2. Subtract Adjustments to Income

Include deductions like contributions to retirement accounts, student loan interest, or health savings accounts (HSAs).

3. Calculate Your Taxable Income

Subtract deductions from your total income to get your taxable income.

4. Apply the Appropriate Tax Rate

Use the IRS tax brackets to calculate your expected income tax liability.

5. Add Self-Employment Tax (if applicable)

This includes both the employer and employee portions of Social Security and Medicare, totaling 15.3%.

6. Subtract Tax Credits

Include credits such as the Child Tax Credit, Education Credits, or Energy Tax Credits.

7. Account for Withholding (if any)

Subtract any tax your employer or client has withheld already from your payments.

8. Divide by Four

Split your estimated tax liability into four equal payments—one for each quarter.

9. Adjust as Needed

If your income changes significantly during the year, you can adjust the remaining payments to reflect that.

4.1) What Taxes Do Self-Employed People Pay?

Self-employed individuals pay:

  • Income Tax (based on tax bracket)

  • Self-Employment Tax (15.3%, which includes 12.4% for Social Security and 2.9% for Medicare)

4.2) Example of Self-Employment Tax Calculation

Let’s say your net earnings from freelancing are $50,000.

  • 92.35% of your earnings are subject to SE tax:

    • $50,000 × 0.9235 = $46,175

  • Self-Employment Tax:

    • $46,175 × 15.3% = $7,065.78

This is in addition to your regular income tax.

4.3) What Is the Qualified Business Income Deduction?

The Qualified Business Income (QBI) deduction allows eligible self-employed individuals and small business owners to deduct up to 20% of their qualified business income.

To qualify:

  • You must operate a pass-through entity (sole prop, partnership, S corp).

  • Your income must be below IRS thresholds ($191,950 for single filers or $383,900 for joint filers in 2024).

4.4) Example of QBI Deduction Calculation

If your business earns $80,000 in qualified income:

  • QBI Deduction = $80,000 × 20% = $16,000

  • Your taxable income is reduced by $16,000, potentially lowering your overall tax liability.

5) How to Avoid IRS Penalties on Quarterly Taxes

Failing to make quarterly payments or underpaying can lead to IRS penalties. Here’s how to avoid them:

  • Pay at least 90% of the tax you’ll owe for the current year.

  • Or, pay 100% of last year’s tax liability (110% if your AGI was over $150,000).

  • File Form 2210 if you want the IRS to waive penalties for underpayment due to special circumstances.

  • Use the Electronic Federal Tax Payment System (EFTPS) to ensure on-time payments.

6) Best Practices for Managing Quarterly Payments

To make tax season easier:

  • Set reminders for each payment deadline.

  • Use bookkeeping software to track income and expenses.

  • Work with a tax professional to estimate payments accurately.

  • Open a separate tax savings account to set aside funds.

  • Review income regularly and adjust payments if income spikes or drops.

  • File taxes early to spot any underpayments before the IRS does.

  • Keep detailed records for deductions and credits.

  • Use IRS Form 1040-ES for calculation and vouchers.

  • Automate payments through EFTPS or IRS Direct Pay.

7) Final Thoughts

Paying quarterly taxes isn’t just about staying compliant—it’s about taking control of your financial health. Whether you’re self-employed, running a growing business, or earning extra income, understanding how and when to make quarterly tax payments helps you avoid penalties and better manage your cash flow.

By following IRS guidelines and staying organized throughout the year, you’ll set yourself up for a smoother, stress-free tax season in both 2024 and 2025.

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