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If you make quarterly estimated tax payments, the amount you owe may be affected by the One Big Beautiful Bill Act (OBBBA). The law, which was enacted on July\u00a04,\u00a02025, introduces new deductions, credits and tax provisions that could shift your income tax liability this year.<\/p>\n
Tax basics<\/strong><\/p>\n Federal estimated tax payments are designed to ensure that certain individuals pay their fair share of taxes throughout the year.<\/p>\n If you don\u2019t have enough federal tax withheld from your paychecks and other payments, you may have to make estimated tax payments. This is the case if you receive interest, dividends, self-employment income, capital gains, a pension or other income that\u2019s not covered by withholding.<\/p>\n Individuals generally must pay 25% of a \u201crequired annual payment\u201d by April\u00a015, June\u00a015, September\u00a015, and January\u00a015 of the following year, to avoid an underpayment penalty. If one of those dates falls on a weekend or holiday, the payment is due on the next business day.<\/p>\n The third installment for 2025 is due on Monday, September\u00a015. Payments are made using Form\u00a01040-ES.<\/p>\n Amount to be paid<\/strong><\/p>\n The required annual payment for most individuals is the lower of 90% of the tax shown on the current year\u2019s return or 100% of the tax shown on the return for the previous year. However, if the adjusted gross income on your previous year\u2019s return was more than $150,000 ($75,000 if you\u2019re married filing separately), you must pay the lower of 90% of the tax shown on the current year\u2019s return or 110% of the tax shown on the return for the previous year.<\/p>\n Most people who receive the bulk of their income in the form of wages satisfy these payment requirements through the tax withheld from their paychecks by their employers. Those who make estimated tax payments generally do so in four installments. After determining the required annual payment, divide that number by four and make four equal payments by the due dates.<\/p>\n But you may be able to use the annualized income method to make smaller payments. This method is useful to people whose income flow isn\u2019t uniform over the year, perhaps because of a seasonal business. For example, if your income comes exclusively from a business operated in a resort area during June, July and August, no estimated payment is required before September 15.<\/p>\n The underpayment penalty<\/strong><\/p>\n If you don\u2019t make the required payments, you may be subject to an underpayment penalty. The penalty equals the product of the interest rate charged by the IRS on deficiencies times the amount of the underpayment for the period of the underpayment.<\/p>\n However, the underpayment penalty doesn\u2019t apply to you if:<\/p>\n In addition, the IRS may waive the penalty if the failure was due to casualty, disaster or other unusual circumstances, and it would be inequitable to impose the penalty. The penalty can also be waived for reasonable cause during the first two years after you retire (and reach age 62) or become disabled.<\/p>\n OBBBA highlights<\/strong><\/p>\n Several provisions of the OBBBA could directly affect quarterly estimated tax payments because they change how much tax some individuals will ultimately owe for the year. For example, the law introduces a temporary (2025 through 2028) additional $6,000 deduction for seniors, which can lower taxable income. It creates new deductions for overtime pay, tips and auto loan interest \u2014 available even if you don\u2019t itemize \u2014 which can meaningfully reduce estimated liabilities. The bill also increases the state and local tax deduction cap for certain taxpayers and temporarily enhances the Child Tax Credit. Because these deductions and credits apply during the tax year rather than after, they can reduce your quarterly payment obligations mid-year, making it important to recalculate estimates to avoid overpayment or underpayment penalties.<\/p>\n Seek guidance now<\/strong><\/p>\n Contact us if you need help figuring out your estimated tax payments or have other questions about how the rules apply to you.<\/p>\n \u00a9 2025<\/em><\/p>\n <\/body> If you make quarterly estimated tax payments, the amount you owe may be affected by the One Big Beautiful Bill Act (OBBBA). The law, which was enacted on July\u00a04,\u00a02025, introduces new deductions, credits and tax provisions that could shift your income tax liability this year. Tax basics Federal estimated tax payments are designed to ensure […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,6,10],"tags":[8,11,12],"class_list":["post-17405","post","type-post","status-publish","format-standard","hentry","category-articles","category-individual-tax","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17405","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=17405"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17405\/revisions"}],"predecessor-version":[{"id":17406,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17405\/revisions\/17406"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=17405"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=17405"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=17405"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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