Third Quarter Tax Payments 2025

If you make quarterly estimated tax payments, the amount you owe may be affected by the One Big Beautiful Bill Act (OBBBA). The law, which was enacted on July 4, 2025, introduces new deductions, credits and tax provisions that could shift your income tax liability this year.

Tax basics

Federal estimated tax payments ensure that certain individuals pay their fair share of taxes throughout the year.

If you don't have enough federal tax withheld from your paychecks and other payments, you may need to make estimated tax payments. This applies if you receive interest, dividends, self-employment income, capital gains, a pension or other income that's not covered by withholding.

Key payment deadlines for 2025

Individuals generally must pay 25% of their "required annual payment" by these specific dates to avoid an underpayment penalty:

• April 15, 2025 (first installment)
• June 16, 2025 (second installment - moved to Monday since June 15 falls on Sunday)
• September 15, 2025 (third installment - due Monday)
• January 15, 2026 (fourth installment)

Note: If any due date falls on a weekend or holiday, payment is due the next business day.

Payments are made using Form 1040-ES.

Amount to be paid

The required annual payment for most individuals is the lower of:

• 90% of the current year's tax, OR
• 100% of the previous year's tax

Higher earners exception: If your previous year's adjusted gross income exceeded $150,000 ($75,000 if married filing separately), you must pay the lower of:

• 90% of the current year's tax, OR
• 110% of the previous year's tax

Most wage earners meet these requirements through employer withholding. Those making estimated payments typically divide their required annual payment by four and make equal installments by the due dates above.

Alternative option: You may use the annualized income method for smaller payments if your income isn't uniform throughout the year. This works well for seasonal businesses - for example, if your income comes exclusively from a summer resort business operating June-August, no estimated payment is required before September 15.

The underpayment penalty

Missing required payments may trigger an underpayment penalty. The penalty equals the IRS interest rate on deficiencies multiplied by the underpayment amount for the underpayment period.

You're exempt from penalties if:

• Your total tax owed is less than $1,000 after subtracting withholding
• You had no tax liability the previous year, were a U.S. citizen or resident for the full year, and that period was 12 months
• For the January 15 installment, you file your return by January 31 and pay in full
• You're a farmer or fisherman who pays your entire estimated tax by January 15 or pays your entire tax and files by March 2, 2026

The IRS may also waive penalties for casualty, disaster, or unusual circumstances, or for reasonable cause during your first two years after retirement (age 62+) or becoming disabled.

OBBBA highlights

Several OBBBA provisions could directly affect your quarterly payments by changing your annual tax liability:

• Temporary senior deduction: Additional $6,000 deduction for seniors (2025-2028)
• New deductions: Available for overtime pay, tips, and auto loan interest - even if you don't itemize
• Enhanced credits: Increased state and local tax deduction caps for certain taxpayers and temporary Child Tax Credit improvements

These changes apply during the tax year, potentially reducing your quarterly obligations mid-year. It's crucial to recalculate your estimates to avoid overpayment or underpayment penalties.

Seek guidance now

Contact us if you need help calculating your estimated tax payments or have questions about how these rules apply to your situation.