How to Calculate Quarterly Estimated Taxes as a Freelancer in 2026

Quarterly estimated taxes are how many freelancers pay federal income tax, self-employment tax, and sometimes state tax during the year. If no employer withholds tax from your invoices, the IRS still expects you to pay as income is earned. The goal is not to predict your final return perfectly in January. The goal is to make a reasonable plan, update it as your income changes, and avoid an unpleasant balance due.

Start with net income, not gross revenue

The most common mistake is estimating tax from total deposits. Freelancers are taxed on profit after ordinary and necessary business expenses. If you invoice $120,000 and spend $20,000 on software, subcontractors, insurance, equipment, and professional services, your starting point is closer to $100,000 of net profit. Keep expenses current so the estimate reflects the business you actually run.

Estimate self-employment tax

Self-employment tax covers Social Security and Medicare. For 2026 planning, MyTaxQuarter applies the Social Security wage base cap, the Medicare portion, and Additional Medicare Tax when income exceeds the relevant threshold. It also accounts for the deduction for the employer-equivalent share of self-employment tax when estimating federal income tax. This matters because a simple 15.3% shortcut can overstate tax above the Social Security wage base and miss Additional Medicare Tax for high earners.

Estimate federal income tax

Federal income tax is separate from self-employment tax. After estimating net income, subtract the self-employment tax deduction and the standard deduction for your filing status, unless you know you will itemize. The remaining taxable income is run through progressive tax brackets. Because brackets are marginal, only the income inside each band is taxed at that band's rate. A freelancer in the 24% bracket does not pay 24% on every dollar.

Add state tax

State tax can materially change the amount you should set aside. Some states have no individual income tax, while others have flat or progressive systems. Local taxes can also matter, especially in large cities. MyTaxQuarter includes state estimates for the largest states and a fallback for other states, but you should verify the exact rules with your state revenue department before making payments.

Compare safe harbor and annualized estimates

Safe harbor planning uses last year's tax as a penalty-avoidance target. Many taxpayers can avoid penalties by paying 100% of prior-year tax, or 110% when prior-year AGI was above the higher-income threshold. Annualized planning looks at this year's income pace. If your freelance income is growing quickly, safe harbor may be lower. If last year was unusually high, annualized tax may be lower. Comparing both methods gives you a more practical recommendation.

Divide and update

Once you have an annual target, divide by four and adjust for payments already made. Do not stop there. Recalculate after large projects, slow months, a move to a new state, retirement contributions, health insurance changes, or major deductions. Quarterly taxes work best as a routine, not a once-a-year scramble.

This process will not replace a full tax return, but it gives freelancers a defensible planning number. Estimate from net profit, include self-employment tax, add income tax and state tax, compare safe harbor with annualized income, and keep records for every payment.