Do I Have to Pay Quarterly Taxes My First Year as a 1099?

Updated 2026-10-18 · Not tax advice

Figures used: Rules and figures are from 2026 IRS sources: the 2026 Form 1040-ES (general rule, no-liability exception, January payment rule, standard deduction $16,100 single, tax rate schedules, $184,500 Social Security wage base) and Publication 505 (2026), Table 2-1 and Figure 2-A. 2027 figures are not published yet.

Free: the one-page Q4 2026 estimated tax worksheet (printable, Excel or Google Sheets) and the quarterly estimated tax calculator.

It depends on what you owed last year, not on how new your business is. The IRS has no first-year exemption for freelancers as such. What it has is one exception for people who owed no tax last year, and a safe harbor based on last year’s tax for everyone else (2026 Form 1040-ES).

Which case are you?

Last year (2025)	Quarterly payments in 2026?	Penalty if you skip them	What to aim for
Total tax was $0, or you didn’t have to file, and you were a U.S. citizen or resident all year	Not required	None	Set money aside for the April bill
You owed tax (for example, on a W-2 job)	Yes, if you expect to owe $1,000 or more after withholding and refundable credits	Yes, per quarter you fall short	The smaller of 90% of 2026 tax or 100% of 2025 total tax, through withholding and estimates (110% of 2025 tax if 2025 AGI was over $150,000, or $75,000 if you file separately in 2026)
You owed tax and still have a W-2 job	Maybe not	Only if withholding falls short	Raise withholding on Form W-4 instead of paying quarterly

The first row is the IRS no-liability exception. You had no tax liability for 2025 “if your total tax was zero or you didn’t have to file an income tax return,” and your 2025 tax year has to have covered all 12 months (Form 1040-ES; Pub. 505, chapter 2). Total tax means the total tax line on your 2025 return, not your balance due. A refund of everything withheld because you owed nothing counts as zero. A refund of only part of it doesn’t.

The second row is the general rule. You must pay estimated tax if you expect to owe at least $1,000 after withholding and refundable credits, and your withholding and credits will be less than the smaller of 90% of this year’s tax or 100% of last year’s. See the safe-harbor guide for the 110% rule and how to hit the number.

If you also have a W-2 job, extra withholding is usually easier than quarterly payments. Withholding counts as paid evenly through the year, so raising it in October still covers April and June (Pub. 505). The W-4 and side-hustle guide shows Step 4(c) per paycheck; the Instacart guide works through a full example.

Started mid-year? When your first payment is due

You don’t have to make estimated payments until you have income you’ll owe tax on. Your first payment is due by the due date for that period (Pub. 505, Table 2-1):

You first have income subject to estimated tax (self-employment or other, like interest or rent)	First payment due	Later payments
Before April 1, 2026	April 15, 2026	June 15, Sept. 15, 2026, Jan. 15, 2027
April 1 to May 31, 2026	June 15, 2026	Sept. 15, 2026, Jan. 15, 2027
June 1 to August 31, 2026	Sept. 15, 2026	Jan. 15, 2027
After August 31, 2026	Jan. 15, 2027	None

Starting late doesn’t shrink what’s due by each date on its own. The default penalty math splits your required annual payment into four equal parts starting April 15, so your first payment has to catch up the ones before it: 50% of the required annual payment by June 15, 75% by September 15 or 100% by January 15, minus anything you already paid (Pub. 505, chapter 2). When your income starts mid-year, the annualized income installment method on Form 2210 Schedule AI matches the requirement to when you actually earned the money, which can remove or cut the penalty for the early quarters. If you use it, you have to file Form 2210 with Schedule AI with your 2026 return, even if you owe no penalty (Form 2210 instructions). Otherwise the IRS figures the penalty with the regular method.

You can also skip the January 15, 2027 payment if you file your 2026 return by February 1, 2027 and pay the whole balance with it (Form 1040-ES). January 31 falls on a Sunday that year.

Worked example 1: left a W-2 job to freelance

Fictional numbers. Sam is single and left a salaried job at the end of 2025. Her 2025 return showed $4,800 of total tax on $62,000 of AGI. She freelances full time from January 2026 with no withholding and expects $60,000 of net profit for the year.

Step	Calculation	Amount
Self-employment tax	$60,000 × 92.35% × 15.3%	$8,478
AGI	$60,000 − half of SE tax ($4,239)	$55,761
Taxable income before QBI	$55,761 − $16,100 standard deduction	$39,661
QBI deduction	Smaller of 20% × $55,761 or 20% × $39,661	$7,932
Taxable income	$39,661 − $7,932	$31,729
Income tax	$1,240 + 12% × ($31,729 − $12,400)	$3,559
Total 2026 tax	$3,559 + $8,478	$12,037
90% of 2026 tax	$12,037 × 90%	$10,833
100% of 2025 tax	Her 2025 AGI was under $150,000, so 100%	$4,800
Required to avoid a penalty	The smaller one	$4,800
Each quarterly payment	$4,800 ÷ 4	$1,200

What that means for Sam:

• Her first year is cheap on the penalty side. Paying $1,200 on April 15, June 15 and September 15, 2026 and January 15, 2027 keeps her penalty-free, even though her real tax is more than twice that.
• April 15, 2027 is the hard day. She owes the rest of her 2026 tax, $12,037 − $4,800 = $7,237. Her first 2027 quarterly payment is due the same day. If 2027 looks like 2026, her 2027 safe harbor is the smaller of 90% of 2027 tax ($10,833) or 100% of her 2026 tax ($12,037), so $10,833, and that payment is about $2,708. Together that’s roughly $9,945 due on one day.
• The fix is to set aside the real tax, not the safe-harbor minimum. Paying the $1,200 quarterly but saving the full amount (about 20% of profit here) means April 2027 is a transfer, not a scramble. See how much to set aside from 1099 income.

Worked example 2: no tax last year

Fictional numbers. Jordan finished school in 2025 and owed no federal income tax that year, so the 2025 total tax was $0. Jordan was a U.S. citizen all year. In 2026 Jordan freelances and nets $40,000.

Step	Calculation	Amount
Self-employment tax	$40,000 × 92.35% × 15.3%	$5,652
AGI	$40,000 − half of SE tax ($2,826)	$37,174
Taxable income before QBI	$37,174 − $16,100	$21,074
QBI deduction	Smaller of 20% × $37,174 or 20% × $21,074	$4,215
Taxable income	$21,074 − $4,215	$16,859
Income tax	$1,240 + 12% × ($16,859 − $12,400)	$1,775
Total 2026 tax	$1,775 + $5,652	$7,427

Jordan meets the no-liability exception, so there’s no underpayment penalty for 2026 even with zero quarterly payments. The whole $7,427 is still due by April 15, 2027. For 2027 the exception is gone: Jordan’s 2027 safe harbor becomes the smaller of 90% of 2027 tax or 100% of that $7,427. If 2027 looks like 2026, 90% is smaller ($6,684), roughly $1,671 a quarter starting April 15, 2027.

Both examples ignore state tax, credits and other income. The Social Security wage base ($184,500 for 2026) doesn’t come into play at these incomes.

First-year checklist

1. Find the total tax line on your 2025 return. If it’s $0 (or you didn’t have to file), you were a U.S. citizen or resident all of 2025 and your 2025 tax year covered 12 months, you’re in the no-penalty case. If not, your safe-harbor target is the smaller of 90% of this year’s tax or 100% of that number (110% if your 2025 AGI was over $150,000, or $75,000 if you file separately in 2026).
2. Estimate this year’s real tax with the free quarterly calculator or the Form 1040-ES worksheet.
3. Pick your payment dates from the table above and pay through IRS Direct Pay or EFTPS.
4. Save the gap between the safe-harbor payments and your real tax for April.
5. Missed one already? See what to do after a missed estimated tax payment. Due in January? See the Q4 payment guide for January 15, 2027.

Sources

• Form 1040-ES (2026), Estimated Tax for Individuals, IRS
• Publication 505 (2026), Tax Withholding and Estimated Tax, IRS (Figure 2-A, Table 2-1, When To Start)
• Instructions for Form 2210, Underpayment of Estimated Tax, IRS
• Tax Withholding Estimator, IRS

This guide is general information, not tax advice. Confirm figures with IRS.gov or a qualified tax professional.

FAQ

Do I have to pay quarterly taxes my first year in business?

Not if you had no tax liability last year: your total tax was zero or you didn't have to file, you were a U.S. citizen or resident all year, and the year was a full 12 months. Then there is no underpayment penalty for this year. If you did owe tax last year, the usual rules apply: pay quarterly if you expect to owe $1,000 or more after withholding and refundable credits, and those will cover less than the smaller of 90% of this year's tax or 100% of last year's (110% if last year's AGI was over $150,000, or $75,000 married filing separately).

What's the minimum I have to pay in my first year to avoid a penalty?

The smaller of 90% of this year's tax or 100% of last year's total tax (110% if last year's AGI was over $150,000, or $75,000 married filing separately), paid through withholding and estimated payments. For most first-year freelancers last year's tax is lower, so 100% of it is the cheaper target.

I started freelancing in the middle of the year. When is my first payment due?

Your first payment is due for the period in which you first have income subject to estimated tax. Start between April 1 and May 31 and it's June 15; between June 1 and August 31 it's September 15; after August 31 it's January 15. Under the regular method that first payment has to catch up the earlier quarters. If your income is uneven, the annualized income installment method on Form 2210 Schedule AI can lower the required amounts for earlier quarters; if you use it, file Form 2210 with your return.

Do I still owe tax if I qualify for the no-penalty exception?

Yes. The exception only removes the underpayment penalty. You still owe all your income tax and self-employment tax for the year when you file, by April 15.

Why is my second year as a freelancer so expensive?

In April of year two you pay whatever is left of year one's tax and your first quarterly payment for year two on the same day, April 15. Your year-two safe harbor is also based on year one's full self-employment tax, so each quarterly payment usually jumps.