Quarterly Tax Calculator

When you earn income from a side hustle, freelancing, or gig work, taxes aren't automatically withheld like they are from a W-2 paycheck. Instead, the IRS expects you to pay taxes throughout the year through quarterly estimated tax payments.

Who Must Pay Quarterly Taxes?

You're generally required to make quarterly estimated tax payments if:

• You expect to owe $1,000 or more in federal taxes after subtracting withholding and credits
• Your withholding and credits will be less than the smaller of 90% of this year's tax or 100% of last year's tax (110% if AGI over $150,000)

For most side hustlers earning more than a few thousand dollars annually, quarterly payments are required to avoid penalties.

What Taxes Are Included in Quarterly Payments?

Your quarterly estimated payment covers three types of tax on your side hustle income:

How to Calculate Your Quarterly Payment

The basic calculation involves these steps:

1. Estimate annual side hustle income (gross revenue)
2. Subtract business expenses to get net profit
3. Calculate self-employment tax (15.3% × 92.35% of net profit)
4. Calculate federal income tax on net profit (minus deductions)
5. Calculate state income tax based on your state's rates
6. Add all three taxes and divide by 4

Our calculator above handles all of this automatically—just enter your income and expenses.

Avoiding the Underpayment Penalty

The IRS charges a penalty if you don't pay enough tax throughout the year. To avoid this penalty, you must pay at least one of the following:

• 90% of the tax shown on your current year's return, OR
• 100% of the tax shown on your prior year's return (110% if your AGI was over $150,000)

The "safe harbor" method (100%/110% of last year's tax) is popular because it provides certainty—you know exactly what to pay regardless of how your income changes.

When Your Income Varies Throughout the Year

If your side hustle income isn't consistent—maybe you earn more in summer or during the holidays—you can use the annualized income installment method (Form 2210 Schedule AI). This calculates required payments based on income actually earned each quarter, potentially reducing early-year payments when income is lower.