If you got a surprise tax bill last April, the next few weeks are your chance to avoid a repeat.
The third-quarter estimated tax payment for 2025 is due September 15, and it applies to anyone who earns money without an employer withholding taxes for them.
That includes freelancers, gig drivers, rideshare workers, independent contractors, small business owners, and a growing number of people with side hustles.
If you made extra money selling crafts, tutoring, or consulting on top of a regular job, the IRS generally expects you to pay tax on it as you go, not all at once in the spring.
The mechanics are simple but easy to ignore.
The IRS wants your tax paid in four installments through the year, and if you underpay, it can tack on a penalty and interest.
That penalty is currently running around 7% on the underpaid amount, which is far more expensive than most savings accounts pay you.
The tricky part is figuring out how much to send.
Many people just guess, then either overpay and tie up cash they need, or underpay and get a letter from the IRS.
A rough rule of thumb is to set aside 25% to 30% of net self-employment income for taxes, though the exact number depends on your bracket, state, and deductions.
If you paid roughly the same in taxes last year and your income hasn't jumped much, you may be able to pay based on last year's total and avoid a penalty under what's called the safe harbor rule.
A tax pro or good software can run the math in minutes.
Here's the part that trips people up: the September deadline isn't the last one.
A fourth payment is due January 15, 2026, so this is really a mid-game checkpoint, not the finish line.
Miss September and you can still pay in January, but the clock on penalties started ticking back in the summer.
A few practical moves can soften the blow.
Open a separate savings account and move a slice of every payment you receive into it, so the money isn't sitting in your checking account begging to be spent.
Track your deductible expenses year-round, because every legitimate business cost lowers the income you owe tax on.
If you're behind, don't panic and don't just skip it.
Pay what you can now, and consider sending a bit extra with the January installment to close the gap.
The IRS penalty for paying late is generally gentler than the penalty for not paying at all, so even a partial payment helps.
You can pay through IRS Direct Pay from a bank account for free, or use a credit or debit card through a payment processor that charges a fee.
Mailing a check still works, but the payment needs to be postmarked by the deadline, not dropped in a box that day.
The people who get burned most often aren't the ones with the smallest incomes.
They're the ones whose income quietly grew during the year, a raise, a big freelance client, a side gig that took off, while their quarterly payments stayed frozen at last year's level. **Our take:** Estimated taxes are boring right up until they cost you hundreds in penalties you never saw coming.
If you're self-employed, the September 15 date is worth a calendar reminder today, not a scramble later.
Final Thoughts
Setting aside a percentage of every check now beats writing a painful lump sum in April.