Estimated Tax Safe Harbor
§ 6654 · reviewed September 6, 2026
Tells you how much tax you must pay in during the year to avoid the underpayment penalty, and how to close any gap. AboutLess
In plain words. The IRS expects tax to be paid as you go, through withholding or quarterly payments. If you pay in too little during the year there is a penalty, even if you pay the balance in April. The safe harbor is the amount that avoids the penalty: the smaller of 90 percent of this year's tax or all of last year's tax (110 percent if last year's income was high). This tool computes that amount, how far short you are, and the withholding that would fix it.
Why it matters. In a year with a big Roth conversion or a sale, this year's tax jumps but last year's figure still counts as safe. And money withheld from an IRA withdrawal in December counts as if it were paid all year, which a quarterly payment does not.
An example. Last year's tax was $20,000; this year's will be $40,000; $15,000 is being withheld. The safe harbor is $20,000, so $5,000 more withheld before December 31 avoids the penalty. The other $20,000 is still due in April, without a penalty.
Where it stops. It covers individuals on a calendar year. It does not compute the penalty itself, or the method for income that arrives unevenly, and state estimated tax is separate. Everything it leaves out.
Your best guess at the year's federal income tax, including any conversion or sale.
Line 24 of your 2025 Form 1040.
Line 11 of that return. Above $150,000, the last-year test uses 110% of last year's tax instead of 100%.
Tax withheld from paychecks, pensions, Social Security, and IRA withdrawals. Use what will have been withheld by December 31.
Quarterly payments made, or to be made, by each due date.
- Tax still owed in April
- $25,000
- This year's tax minus what is paid in
- Extra withholding needed by December 31
- $5,000
- From an IRA or pension withdrawal
- Share of tax that sets the safe harbor
- 100%
- Of last year's $20,000 of tax
The safe harbor is the smaller of two figures. In a year with a big conversion or a sale, it is almost always the one based on last year's tax. Meeting it does not mean the tax is paid. It means no underpayment penalty is charged while you wait for April. Withholding is the lever. The IRS treats withholding as paid evenly across the year no matter when it happens, so a single December withholding from an IRA withdrawal does what four quarterly estimated payments would have.
This follows the federal estimated tax rules for people who file on a calendar year, single or joint. For a married person filing separately, the higher-income line is $75,000 instead. It leaves out the method for income that arrives unevenly through the year, the exception for a prior year with no tax owed, the special rules for farmers and fishermen, and the penalty itself, which is an interest charge figured quarter by quarter. Educational, not advice.
This is a simplified model, not your actual tax return or plan. It only knows what you type in, leaves out rules that may apply to you, and cannot weigh the other facts and trade-offs a real decision depends on. Before you act, talk with a professional who knows your whole situation.
Educational only, not investment, tax, or legal advice. Results are hypothetical estimates that vary with each use and over time and are not guaranteed accurate or complete. Using this tool creates no client relationship with Considerate Capital, and the site that linked here is not affiliated with it. By using it you agree to the tool terms.