How to Calculate Quarterly Taxes
Calculating quarterly taxes the first time feels intimidating, but the actual math is five simple steps. This guide walks through each one in plain English using 2026 IRS numbers, so you can run the numbers for yourself in about 10 minutes — no spreadsheet required. Built for freelancers, gig workers, and 1099 contractors who don't want to guess.
Calculating quarterly taxes takes five steps: estimate annual net profit, compute the 15.3% self-employment tax on 92.35% of it, work out federal income tax after deductions, add the two together, and divide by four. Each payment goes to the IRS with Form 1040-ES.
The 5-step process
Every quarterly tax estimate follows the same shape: project your annual income, subtract expenses and deductions, apply two taxes (federal income + self-employment), then divide by four. Here's how each step works.
Estimate your annual 1099 income
Take your year-to-date 1099 income and project it forward. The simplest method: divide what you've earned so far by the number of months elapsed, then multiply by 12. If your work is seasonal or growing, weight the projection accordingly. The number doesn't need to be exact — you'll adjust as the year unfolds.
Subtract business expenses (Schedule C)
List every legitimate business expense: home office, business mileage (72.5¢/mi in 2026), software subscriptions, equipment, professional services, health insurance premiums, and retirement contributions. Subtract that total from your gross income. The result is your net self-employment income — the figure both taxes are calculated on.
Example: $80,000 gross − $6,000 expenses = $74,000 net SE income. The freelance business expenses list covers every deductible category, the home office deduction reference walks through the simplified-vs-actual choice, and the mileage deduction calculator handles vehicle math at the 72.5¢/mi 2026 rate.
Calculate self-employment tax (15.3%)
Self-employment tax is a flat 15.3% (12.4% Social Security + 2.9% Medicare) applied to 92.35% of your net SE income. Social Security caps at the 2026 wage base of $184,500; Medicare has no cap. Half of the SE tax is then deductible on your federal return.
Example: $74,000 × 0.9235 = $68,339. SE tax = $68,339 × 0.153 = $10,456. Half-SE deduction = $5,228.
Estimate federal income tax
Start with your net SE income, subtract the half-SE deduction (above-the-line), the 2026 standard deduction ($16,100 single / $32,200 MFJ), and the QBI deduction (up to 20% of qualified business income — §199A limitations begin phasing in above 2026 taxable income of $201,750 single / $403,500 MFJ). Apply the 2026 federal brackets to what's left.
Example continued for an $80,000 freelancer: $74,000 − $5,228 − $16,100 − $10,534 (QBI) = $42,138 federal taxable income → roughly $4,809 federal tax.
2026 federal brackets (single filer)
| Taxable income | Rate |
|---|---|
| $0 – $12,400 | 10% |
| $12,400 – $50,400 | 12% |
| $50,400 – $105,700 | 22% |
| $105,700 – $201,775 | 24% |
| $201,775 – $256,225 | 32% |
| $256,225 – $640,600 | 35% |
| Above $640,600 | 37% |
Divide the annual total by four
Add your SE tax and federal income tax together, then divide by 4. That's your quarterly Form 1040-ES payment — once you have the number, how to pay quarterly taxes as a freelancer covers submitting it to the IRS.
Example: $10,456 + $4,809 = $15,264 annual → $15,264 ÷ 4 = $3,816 per quarter.
Worked example summary: $80,000 freelancer (2026)
Single filer, $6,000 in business expenses, no W-2 income.
| Step 1 — Gross 1099 income | $80,000 |
| Step 2 — Business expenses | − $6,000 |
| Net SE income | $74,000 |
| Step 3 — Self-employment tax | $10,456 |
| Step 4 — Federal income tax | $4,809 |
| Annual federal + SE total | $15,264 |
| Step 5 — Quarterly 1040-ES | $3,816 |
Faster way: use the calculator
All five steps above are baked into the quarterly tax calculator — enter income and expenses, get the quarterly number in 5 seconds.
Adjusting mid-year
Quarterly taxes are estimates, not contracts. If your income spikes in Q2, increase your Q3 and Q4 payments to catch up. If income drops, lower future quarters. Most freelancers run a quick re-estimate before each deadline using their year-to-date numbers. The IRS doesn't penalize you for adjusting — only for underpaying overall.
Don't forget state tax
The five steps above cover federal only. If you live in a state with income tax (41 states + DC), add a state-specific quarterly payment. State tax usually runs 3–10% of your net SE income. The exact bracket schedule for your state is on the state calculator page — for example California, New York, Texas (no state tax), or Florida (no state tax).
Common mistakes
- Forgetting the 92.35% multiplier. SE tax is on 92.35% of net income, not the full amount.
- Skipping the QBI deduction. Eligible freelancers may claim a QBI deduction of up to 20%, subject to §199A trade-or-business, taxable-income, wage/property, and specified-service-trade-or-business rules — for a typical $80k freelancer it is worth $1,500–$3,000 in federal tax savings, with limitations phasing in above 2026 taxable income of $201,750 single / $403,500 MFJ.
- Forgetting the half-SE deduction. Half of your SE tax is deductible above the line — that's a $5,000+ federal tax saving for a typical mid-six-figure freelancer.
- Using last year's brackets. Federal brackets shift slightly every January with inflation. Double-check the 2026 figures.
- Forgetting state tax. Federal calculations alone leave you $1,000–$8,000 short in high-tax states.
Related guides & calculators
Last updated: January 15, 2026. Disclaimer: This guide is educational only. It is not tax or legal advice. Consult a licensed CPA before filing.
More on this topic: Shipt shopper tax guide, and Grubhub driver tax guide.
Further reading on related topics: estimated income planning for freelancers, cash flow management for freelancers, budgeting for self-employed workers, freelancer financial planning, and business entity guide for freelancers.