There's no paycheck withholding forcing the issue, no tax software nagging you, and no April adrenaline. So the September 15 estimated payment is the deadline business owners forget more than any other, and the IRS quietly charges 7% interest, compounded daily, on what you should have sent. If you're self-employed, a landlord, an investor, or an S-Corp owner in Frederick County, this one's worth ten minutes before the 15th.
When you're a W-2 employee, taxes get pulled from every paycheck automatically. You never think about it. But the moment a meaningful share of your income comes from self-employment, a side business, rental property, investments, or S-Corp distributions, that automatic withholding disappears, and the IRS expects you to pay as you go, four times a year, on your own initiative.
The third-quarter payment is due September 15, 2026. It covers income you earned in June, July, and August. And because it lands in the middle of the year with none of the urgency of tax season, it's the installment people most often let slip, right up until the penalty notice arrives.
The rule in one sentence: if you expect to owe $1,000 or more in federal tax beyond your withholding this year, the IRS wants quarterly estimated payments, and skipping September's is the most common and most expensive mistake self-employed taxpayers make.
| Quarter | Income period | 2026 due date |
|---|---|---|
| Q1 | Jan – Mar | April 15, 2026 |
| Q2 | Apr – May | June 15, 2026 |
| Q3 | Jun – Aug | September 15, 2026 |
| Q4 | Sep – Dec | January 15, 2027 |
Note the quarters aren't even three-month blocks, which trips people up. And these are the dates your payment must be received or postmarked, not the day you get around to it. If you pay electronically, the payment generally needs to clear by 8:00 PM Eastern on the due date.
The estimated tax penalty isn't really a "penalty" in the punitive sense, it's interest, and it's mechanical. If your timely payments fall short, the IRS charges interest on the shortfall for each quarter it went unpaid. The rate for the third quarter of 2026 is 7% per year, compounded daily, and it runs from the September 15 due date until you pay or until you file.
Here's the part that catches people off guard: you can get a refund at filing and still owe an underpayment penalty. The IRS looks at whether you paid enough in each quarter, not just whether you squared up by April. Pay nothing all year and settle in April, and you'll still owe interest for every quarter you were short, even if your final balance is zero.
There's no penalty at all if the tax you owe after withholding is under $1,000, or if you meet one of the "safe harbors" below. The penalty is entirely avoidable, which is exactly why paying it is so frustrating.
You can sidestep the underpayment penalty entirely, regardless of how much you actually end up owing, by hitting one of two safe harbors. Pay, across your four installments, the smaller of:
The prior-year safe harbor is the one we steer most clients toward, because it turns a guessing game into a fixed number. You don't have to predict this year's income at all. Take your 2025 total tax, apply 100% or 110%, divide by four, and pay that each quarter. Done, no penalty, no matter what this year brings. This is exactly the kind of number we set for clients as part of ongoing tax planning.
Important distinction: the safe harbor protects you from the penalty, not from the tax. If you end up owing more than your safe-harbor payments covered, that balance is still due at filing, you just won't owe interest on the quarterly shortfall.
The IRS isn't the only one expecting quarterly payments. Maryland runs its own estimated tax system on the same due dates, April 15, June 15, September 15, and January 15, and it's completely separate from your federal payment. Maryland uses Form PV as the payment voucher, though you can skip the paper voucher entirely by paying electronically through Maryland Tax Connect.
Maryland has its own safe harbor (90% of the current year or 110% of the prior year) and charges its own interest on underpayments, calculated separately for each quarter. And the state's interest rate is steep: by statute it's the greater of 9% or three points above the prime rate, so Maryland's underpayment charge typically runs even higher than the IRS's. Missing the state payment is often the costlier mistake. For the broader picture on how Maryland taxes stack onto your federal return, our Maryland Tax Guide lays it out.
This is the first estimated-tax year running under the sweeping federal tax law passed last summer, and it quietly changed the math for a lot of people. The new tip and overtime deductions, the higher standard deduction, the $40,000 SALT cap, and revised brackets all shift your projected liability, which means the quarterly payment amount that was right last year may be wrong this year. If you're paying the same estimate you paid in 2025 out of habit, you could be significantly over- or under-paying. We keep a running plain-English breakdown of what changed in our 2025 Tax Law Guide.
S-Corp owners have an added layer: your "reasonable salary" runs through payroll withholding, but your distributions don't, so your estimated payments have to cover the gap. Get the salary-versus-distribution split wrong and your quarterly math is off from the start, a trap we cover in our breakdown of when the S-Corp election actually saves you money.
We'll calculate your federal and Maryland estimates, set your safe-harbor number so you never owe a penalty, and take the guesswork off your plate for good. Call (301) 662-6992.
Book a ConsultationIf you expect to owe $1,000 or more after withholding, the IRS expects quarterly payments, and settling only in April generally triggers an underpayment penalty for each quarter you were short. The penalty is interest-based (7% for Q3 2026, compounded daily), so it grows the longer you wait. The fix is either quarterly payments or increasing withholding elsewhere to cover the shortfall.
The safest answer is the prior-year safe harbor: take your 2025 total tax, multiply by 100% (or 110% if your 2025 AGI topped $150,000), divide by four, and pay that amount. It fully eliminates the penalty regardless of what you actually earn this year. If your income dropped sharply, the 90%-of-current-year method may let you pay less, but that requires projecting this year's tax, which is where a CPA earns their fee.
Possibly. A refund means you overpaid overall, but the estimated-payment rules look at each quarter individually. If your income shifted to include more self-employment or investment income this year, you could owe quarterly even though last year ended in a refund. It depends on your withholding versus your total projected tax, which is worth checking rather than assuming.
Maryland is entirely separate. The state runs quarterly estimates on the same due dates, with its own safe harbor and its own interest rate on underpayments, which by statute is the greater of 9% or prime plus three points, often higher than the IRS rate. Paying the IRS does nothing for your Maryland obligation, and the state charge for missing a payment is frequently the more expensive of the two.
By Roy Cogliandolo, CPA · Mercer Flanagan · July 25, 2026
This article is general information, not tax advice for your specific situation. Rates and thresholds cited are current as of July 25, 2026; the IRS underpayment rate changes quarterly.