Pay in enough, and April is just a bill.

The facts, in one place.

Six quotable sentences on the estimated-tax safe harbor.

1. No underpayment addition applies if the amount paid in during the year, through withholding and timely estimates, is at least the lesser of 90 percent of this year's tax or 100 percent of last year's (§ 6654(d)(1)(B)).
2. If last year's adjusted gross income was above $150,000 ($75,000 married filing separately), the prior-year figure is 110 percent instead (§ 6654(d)(1)(C)).
3. Nothing is owed either way if the tax left after withholding is under $1,000 (§ 6654(e)(1)).
4. Withholding is treated as paid in equal parts on the four due dates whenever it was actually withheld (§ 6654(g)). An estimated payment counts only when made. So a withholding from an IRA or pension distribution in December cures a whole year's shortfall; a December estimate cures only the last quarter's.
5. Example: last year's tax was $20,000; this year, with a large conversion or sale, it will be $40,000. The safe harbor is $20,000, the prior-year figure, not $36,000. With $15,000 withheld, $5,000 more withheld before December 31 makes the year safe; the remaining $20,000 is simply due with the return.
6. The due dates are April 15, June 15, September 15, and January 15 of the next year. A first-year retiree with no withholding on a new pension is the classic underpayer; the fix is a Form W-4P.

The rule.

The rule, the high-income variant, the de minimis test, and the withholding treatment in one table.

How the harbor works.

Income tax is pay-as-you-go: enough has to be paid in during the year, through withholding or quarterly estimates, or an underpayment addition is charged on the shortfall. The safe harbor says how much is enough: the smaller of 90 percent of this year's tax or 100 percent of last year's (110 percent if last year's income was over the threshold). Meet it and no addition is charged, whatever the balance due in April turns out to be.

In a year with a Roth conversion, a business sale, or a first required distribution, this year's tax jumps and last year's figure is the one that binds, which is what makes the harbor useful: the extra tax can be paid in April without penalty as long as last year's amount was paid in on time. And withholding is the lever. It is treated as paid evenly across the year no matter when it was withheld, so a single withholding from an IRA distribution in December cures a shortfall from January; a December estimated payment does not.

Methodology.

1. Inputs. This year's expected total tax, last year's total tax and adjusted gross income, withholding for the whole year, and timely estimated payments.
2. The harbor. The smaller of 90 percent of this year's tax and 100 percent of last year's, or 110 percent when last year's adjusted gross income exceeded $150,000 (§ 6654(d)(1)(B) and (C)).
3. The shortfall. The harbor less withholding and estimates, never below zero; the year is safe when it is zero, or when the tax left after withholding is under $1,000 (§ 6654(e)(1)).
4. The cure. The shortfall, withheld from an IRA or pension distribution before December 31, because withholding is deemed paid in equal parts on the four due dates (§ 6654(g)(1)).
5. Validation. The prior-year figure binding, the 110 percent rule, 90 percent of a smaller current year binding, the de minimis test, and the separate-return threshold. A transcription error fails the build.
6. Not modeled. The annualized-income installment method for income that arrives unevenly, the exception for a prior year with no liability, the special rules for farmers and fishermen, the addition itself (an interest charge by quarter at the federal short-term rate plus three points), and state estimated tax. Educational, not advice.

Sources.

1. 1. United States Code (Cornell LII), 26 U.S.C. § 6654 — Failure by individual to pay estimated income tax. The required annual payment as the lesser of 90 percent of the current year's tax or 100 percent of the prior year's (d)(1)(B); 110 percent when prior-year adjusted gross income exceeds $150,000, or $75,000 married filing separately (d)(1)(C); no addition when the tax after withholding is under $1,000 (e)(1); and that withholding is treated as paid in equal parts on each due date (g)(1). Retrieved September 6, 2026; verified September 6, 2026.
2. 2. Internal Revenue Service, Publication 505, Tax Withholding and Estimated Tax. The Service's statement of who must pay estimated tax, the safe harbor, the due dates, and that withholding from a pension or IRA distribution counts toward it. Retrieved September 6, 2026; verified September 6, 2026.

Revision history.

The record's history.

September 6, 2026

First release: the required annual payment, the shortfall against withholding and estimates paid, the de minimis test, and the year-end withholding figure that closes the gap.

Canonical address: https://consideratecapital.com/tools/estimated-tax-safe-harbor