What Are Estimated Taxes?
Estimated taxes are periodic payments of income tax, and for the self-employed also self-employment tax, made during the year on income that has no withholding. In the United States, they are generally paid in four installments, and underpaying can result in a penalty.
Who Pays Them
Freelancers, independent contractors, small business owners, and people with significant investment or rental income commonly make estimated payments.
How the Amount Is Estimated
A common method is to project the year's income and tax, then divide the expected amount due by four.
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🔗 Related Terms
More Taxes Terms
- Additional Medicare Tax
- Adjusted Gross Income (AGI)
- Alternative Minimum Tax (AMT)
- Capital Gains Tax
- Capital Loss
- Child Tax Credit
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.