THE BARATELLI INSTITUTE · Mentoring at Scale
FOR SELF-EMPLOYED, BUSINESS OWNERS, RETIREES, AND ANYONE WITH NON-W-2 INCOME

Quarterly estimated tax — done right, with the safe harbor framing.

The IRS expects you to pay tax as you go. If you don't, the underpayment penalty hits — currently around 8% annualized. The fix is the safe harbor. Pay 100% of prior-year tax (110% if AGI > $150K) OR 90% of current-year, divided over four quarters. This tool runs both calculations and tells you which is cheaper.

100%
Prior-year safe harbor
110%
If AGI > $150K
90%
Current-year safe harbor
~8%
Underpayment penalty rate
YOUR ESTIMATES
1
Filing & income
2
Deductions & credits
3
Prior-year baseline
4
Already-paid
5
Quarterly schedule
STAGE 1 OF 5

Filing status & current-year income

Defaults model a self-employed MFJ couple making $250K of self-employment income in Florida — typical small-business owner profile.

Determines whether state estimates are also required (most states require quarterly estimates for non-withholding income above a threshold).
If you have a W-2 job, enter expected gross wages. Withholding from this income counts as already-paid for safe harbor purposes.
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Net of business expenses (Schedule C net profit, K-1 ordinary income from active business, etc.). This is the income that triggers SE tax (15.3%) plus federal income tax — and the reason you need to make quarterly estimates.
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Taxed at ordinary rates. Includes interest, non-qualified dividends, short-term capital gains, REIT distributions.
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Taxed at preferential 0/15/20% rates. Includes LTCG on appreciated stock, mutual fund distributions, qualified dividends. NIIT 3.8% may apply above thresholds.
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Net of depreciation, mortgage interest, taxes, repairs, etc. Generally taxed as ordinary; passive loss rules may apply.
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RMDs, pension distributions, Social Security (taxable portion). Many retirees opt to withhold tax directly from these distributions instead of making quarterly estimates — see the recommendation at the end.
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Why estimates matter (and the loophole most retirees miss). The IRS treats W-2 withholding as paid evenly throughout the year, even if it actually all happened in December. That means a retiree can have ZERO withholding for 11 months, then withhold the entire year's tax bill from a December IRA distribution — and avoid the underpayment penalty entirely. For self-employed without W-2 income, you don't have this option; the quarterly schedule is your only path.
STAGE 2 OF 5

Deductions & credits

Subtract from taxable income before applying brackets. Standard deduction defaults are 2025 amounts.

2025 standard deduction: $15,000 single / $30,000 MFJ / $22,500 HoH. Most filers use the standard deduction post-TCJA. Itemize if SALT + mortgage interest + charitable + medical exceeds the standard.
Total of SALT (capped at $10K), mortgage interest, charitable contributions, casualty losses, qualifying medical above 7.5% AGI. Ignored if "standard" selected.
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Adjustments that reduce AGI: HSA contributions, traditional IRA, SEP/Solo 401(k), self-employed health insurance, half of SE tax, student loan interest. SE folks can be major contributors here ($30K+ to a Solo 401(k) is common).
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20% of qualified business income deduction for pass-through owners. For most service businesses (CPA, law, consulting) phased out above $483K MFJ / $241K single 2025. For non-SSTB businesses, more generous. Auto-estimate 20% of SE income up to phase-out — override if you have a more refined number.
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Reduces tax dollar-for-dollar. Child tax credit: $2,000 per child under 17 (2025). Dependent care credit. Other credits (EV, residential energy, etc.).
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$2,000 per child credit, phased out above $400K MFJ / $200K single. Auto-included in credit calculation if non-zero.
STAGE 3 OF 5

Prior-year baseline (for safe harbor)

The "100% prior-year" safe harbor is the easiest way to avoid the underpayment penalty. Get these numbers from line 24 of last year's 1040.

Total federal tax liability from prior year. Includes regular tax, AMT, SE tax, NIIT, additional Medicare. This is the number you must "match" 100% of (or 110% if prior-year AGI > $150K) to be safe.
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Determines whether you must pay 100% or 110% of prior-year tax. AGI > $150K (or $75K MFS) = 110% required.
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Why 100% prior-year is usually the right answer. Even if your current-year income is going up, paying 100% of prior-year tax (110% if higher-income) means you cannot owe an underpayment penalty no matter what — even if you end up owing $500K in April, you avoid the penalty. The only reason to use the 90%-current-year harbor is if income is going DOWN this year (which lowers the required estimates). For most years, "match what I paid last year" is the easiest, safest play.
STAGE 4 OF 5

Already-paid amounts

Withholding from W-2 wages, retirement distributions, or quarterly payments already made this year reduce what's owed for the remaining quarters.

Total federal tax you expect to be withheld from W-2 wages for the full year. Treated as paid evenly throughout the year for safe-harbor purposes — even if the W-2 is end-loaded.
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Withholding from IRA distributions, RMDs, pension. Same treatment as W-2 — paid evenly through the year for safe-harbor purposes.
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If you've made the Q1 payment, enter here. Tool subtracts it from remaining-quarter requirements.
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Same.
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Same.
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Same.
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STAGE 5 OF 5 · YOUR SCHEDULE

Your quarterly estimated tax schedule

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Safe harbor analysis

Prior-year safe harbor
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Current-year safe harbor (90%)
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Quarterly payment schedule

Current-year tax projection

Tax metrics

Recommendations

PAIRS WITH
FO Reference Guide · CPA Practice Tools · W-4 Withholding Estimator
The FO Reference Guide chapter on tax projection covers the full annual sequencing (estimates + year-end Roth conversion + charitable bunching + retirement contribution optimization). For W-2 employees who want to fine-tune withholding instead of estimates, see the W-4 Withholding Estimator. Subscribe to the library →
FO REFERENCE GUIDE

Quarterly estimates are one piece of annual tax projection. Get the full playbook.

Year-end Roth conversion sizing · charitable bunching with DAFs · estimated-tax safe harbors · withholding optimization · timing of Roth/IRA contributions · QBI optimization.

Federal brackets reflect 2025 statutory amounts. The model uses simplified assumptions on QBI (§199A) phaseouts, the SE tax computation (15.3% up to SS wage base, 2.9% above + 0.9% additional Medicare on wages above $200K single / $250K MFJ), AMT, and the annualized installment method (Form 2210 Schedule AI for uneven income). State estimates are not separately calculated — most states require similar quarterly schedules but mechanics vary. Underpayment-penalty rate quoted is approximate and resets quarterly per the federal short-term rate + 3%. This is not tax advice. Engage a CPA for any year with significant complexity, especially years with sale of a business, large capital gains, or a retirement-plan rollover.
WANT THE METHODOLOGY BEHIND THIS TOOL?
This calculator is one chapter of CFO & Controller's Reference Guide.
The tool gives you the answer. The guide gives you the argument — the case law, the worked examples, the negotiation playbook, the cross-check tables, the exception cases. Read the chapter and you can defend your number to a board, a buyer, an examiner, or a counterparty.
The methodology behind this calculator is in Ch 30 Treasury & Banking of the reference guide.
See the Guide → Browse all 22 guides
PROFESSIONAL DISCLAIMER · PLEASE READ

Educational and informational purposes only. This calculator and any output it produces are intended solely for general educational and decision-support purposes. They do not constitute investment, tax, legal, accounting, appraisal, lending, insurance, or any other professional advice, and they do not create a fiduciary, attorney-client, accountant-client, or advisor-client relationship of any kind.

Estimates based on your inputs. All results are estimates derived from the data and assumptions you provide. Tax law, accounting standards, regulations, market conditions, and the specific facts of your situation can materially change the answer. The Baratelli Institute, its affiliates, and any co-branding professional make no warranty of accuracy, completeness, currency, or fitness for any particular purpose, and disclaim all liability for decisions made in reliance on the output.

Consult your own qualified professionals. Before acting on anything calculated here, consult your own attorney, CPA, financial advisor, appraiser, lender, or other qualified professional licensed in your jurisdiction who has reviewed your specific facts and applicable current law. The Baratelli Institute is a publisher of practitioner reference material. It is not a registered investment adviser, broker-dealer, law firm, accounting firm, appraisal firm, or lender.

Co-branded versions: If a professional advisor's name and contact information appear on this tool, that advisor has elected to make the tool available to clients as a courtesy. Inclusion of an advisor's name does not constitute the advisor's endorsement of any specific result, nor does it transfer professional responsibility for the underlying methodology to that advisor. The disclaimer above applies regardless of co-branding.