The 110% rule for estimated tax payments applies to high earners. If you are self-employed, a contractor, or a freelancer, and your AGI (adjusted gross income) last year was $75,000 or higher ($150,000 if married filing jointly), the IRS requires you to pay 110% of your total tax from last year through estimated quarterly tax payments to avoid underpayment penalties.

If your AGI is less than these limits, you’re not off the hook. The IRS requires you to pay four estimated taxes equal to 100% of your tax bill from last year. Alternatively, you can pay 90% of the current year’s total tax liability in estimated quarterly tax payments to avoid underpayment penalties.

Estimated quarterly tax payments and underpayment penalties are just a couple of the many things self-employed workers must think about come tax time. Don’t file alone. Work with the pros who can help you get it right. Book your appointment today.

Sharon Brucker, CPA Senior Tax Research Analyst Published on: August 08, 2025
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*This content is for general informational purposes only. It is not intended to be comprehensive and should not be construed as professional tax or financial advice for any specific individual tax situation. Taxpayers should always consult a qualified professional for individual guidance. This information constitutes a solicitation under the Treasury Department's Circular 230. Most offices are independently owned and operated.