How to Calculate Quarterly Taxes for Self Employed

As a self-employed individual, you operate as your own employer and are responsible for paying your own taxes throughout the year. Unlike traditional employees who have taxes automatically taken from each paycheck, you must calculate and remit these funds to the government periodically. These payments, known as estimated taxes, cover both your income tax and self-employment taxes, which fund Social Security and Medicare. You must pay estimated taxes if you expect to owe at least $1,000 in tax for the year, after subtracting withholding and refundable credits. You are also required to make these payments if your withholding and credits are expected to be less than 90% of the tax on your current year’s return or 100% of the tax on your prior year’s return (110% for higher-income taxpayers).

Gathering Your Financial Information

The first step is to track all sources of income from your self-employment activities, including payments for services, revenue from goods sold, and other business-related earnings. This includes income reported on Form 1099-NEC, but all income must be included regardless of whether you received a 1099.

Next, identify all your deductible business expenses, which are the ordinary and necessary costs incurred while running your business. They reduce the amount of your income that is subject to tax. Common deductions include:

• The home office deduction for a dedicated workspace
• Vehicle expenses calculated using the standard mileage rate or actual costs
• The price of business supplies and software subscriptions
• Costs for business-related travel
• Professional development courses
• Premiums paid for health insurance

To determine your net earnings, subtract your total business expenses from your gross self-employment income. Maintaining organized records of your income and expenses makes this process more manageable.

Calculating Your Estimated Tax Payment

The calculation process follows the worksheet in IRS Form 1040-ES. First, project your net earnings for the entire year. You can use the previous year’s earnings as a baseline or annualize your earnings from the current quarter by multiplying them by four.

Next, calculate your self-employment (SE) tax. Multiply your estimated annual net earnings by 92.35% to find the amount subject to SE tax. This amount is taxed at 12.4% for Social Security up to an annual limit and 2.9% for Medicare on all net earnings. High-income individuals may also be subject to an Additional Medicare Tax.

Then, calculate your adjusted gross income (AGI) by subtracting certain deductions from your net earnings, with a primary deduction being one-half of your total calculated SE tax. After determining your AGI, find your taxable income by subtracting either the standard deduction or your itemized deductions, whichever is larger.

Estimate your income tax liability for the year by applying the federal income tax brackets to your taxable income. The progressive nature of the tax system means different portions of your income are taxed at different rates. Add your estimated income tax to your total SE tax to find your total estimated tax liability for the year. To determine your required quarterly payment, divide this total by four. If your income fluctuates, you can re-calculate your payment each quarter.

Making Your Quarterly Tax Payments

After calculating your quarterly payment, you must submit it to the IRS. For 2025, payments are due on April 15, June 16, September 15, and January 15, 2026. If a due date falls on a weekend or holiday, the deadline moves to the next business day. If you file your 2025 tax return by January 31, 2026, and pay the entire balance, you do not have to make the January 15 payment.

The IRS offers several payment methods:

• IRS Direct Pay, which allows a free payment directly from a checking or savings account.
• Debit card, credit card, or a digital wallet, though third-party processors may charge a fee.
• The Electronic Federal Tax Payment System (EFTPS), a free government service that requires enrollment.
• Mail a check or money order with the correct payment voucher from Form 1040-ES. The mailing address is based on your location and is listed in the form’s instructions.

Your federal tax obligations are separate from any state requirements. Most states with an income tax also have their own system for estimated tax payments, with separate forms, rules, and due dates. You will need to check with your state’s tax agency to understand its requirements and make those payments on time.