The United States federal income tax system and California's conforming personal income tax system operate on a pay-as-you-go basis. Individuals who expect to owe tax after withholding and credits generally make quarterly estimated tax payments to avoid additions to tax (commonly called underpayment penalties). This article explains the 2026 federal and California rules governing those payments, the statutory safe-harbor methods that protect taxpayers from penalties, the distinct installment schedules, and the material high-income limitations that apply in California.
The discussion is limited to the statutory framework under Internal Revenue Code (IRC) §6654 and California Revenue and Taxation Code §19136 as in effect for the 2026 taxable year. All examples are purely hypothetical and do not address any particular taxpayer's facts.
This article covers the 2026 federal and California estimated-tax due dates and installment percentages, the safe-harbor payment thresholds (including the California $1,000,000 AGI restriction), the $1,000 federal de-minimis exception, special rules for farmers and fishermen, and the official worksheets and forms used to compute required payments.
1. Federal Estimated Tax Framework for 2026 (IRC §6654)
Under IRC §6654, an individual taxpayer is generally required to make estimated tax payments if the tax remaining after withholding and refundable credits is expected to be $1,000 or more. The required annual payment is the lesser of:
- 90 percent of the tax shown on the 2026 return, or
- 100 percent of the tax shown on the 2025 return (110 percent if 2025 adjusted gross income exceeded $150,000, or $75,000 for married filing separately).
These percentages constitute the statutory safe harbors. A taxpayer who timely pays at least the safe-harbor amount through a combination of withholding and estimated payments is not subject to the underpayment addition to tax, even if a large balance remains due when the return is filed.
2026 Federal Installment Schedule
The four equal (25 percent) installments for calendar-year taxpayers are due on:
| Payment Period | Due Date |
|---|---|
| January 1 – March 31 | April 15, 2026 |
| April 1 – May 31 | June 15, 2026 |
| June 1 – August 31 | September 15, 2026 |
| September 1 – December 31 | January 15, 2027 |
The January 15, 2027 payment may be skipped if the 2026 return is filed and the full balance paid by February 1, 2027.
Taxpayers whose 2025 AGI exceeded $150,000 ($75,000 married filing separately) must use the 110 percent prior-year safe harbor. Failure to apply the higher percentage can result in an underpayment penalty even when total payments equal 100 percent of the prior year's tax. Taxpayers with uneven income may elect the annualized-income installment method on Form 2210, Schedule AI. Special one-payment rules apply to qualifying farmers and fishermen under IRC §6654(i).
2. California Estimated Tax Framework for 2026 (§19136)
California imposes its own estimated-tax regime. The required annual payment is generally the lesser of 90 percent of the tax shown on the 2026 California return, or 100 percent of the tax shown on the 2025 California return (110 percent if 2025 California AGI exceeded $150,000, or $75,000 for married/RDP filing separately). Two material exceptions apply:
- When current-year California AGI is $1,000,000 or more ($500,000 married/RDP filing separately), the prior-year safe harbor is unavailable. The taxpayer must pay at least 90 percent of the current-year California tax liability.
- Certain new residents or part-year residents cannot rely on a prior-year California return and therefore must use the 90 percent current-year method.
2026 California Installment Schedule
California's installment schedule is front-loaded and differs sharply from the federal equal-quarter schedule:
| Installment | % of Required Annual Payment | Due Date |
|---|---|---|
| 1st | 30% | April 15, 2026 |
| 2nd | 40% | June 15, 2026 |
| 3rd | 0% (no payment required) | September 15, 2026 |
| 4th | 30% | January 15, 2027 |
No payment is required for the third installment; the cumulative requirement after the second installment is 70 percent of the required annual payment. Withholding is treated as paid ratably throughout the year for both federal and California purposes, so year-end bonus or RSU withholding can satisfy the entire annual safe-harbor requirement.
California taxpayers whose current-year AGI reaches or exceeds $1,000,000 ($500,000 MFS/RDP) are prohibited from using the prior-year safe harbor. They must satisfy the 90 percent current-year test. Omitting this limitation exposes the taxpayer to a California underpayment penalty calculated under §19136 at the rate prescribed by §19521.
3. Interaction of Federal and California Rules and Common Pitfalls
Federal and California underpayment penalties are computed independently. Satisfaction of the federal safe harbor does not automatically satisfy the California safe harbor, and vice versa. The differing installment percentages mean that a taxpayer who makes four equal federal payments may still underpay California's 30/40/0/30 schedule unless additional California payments are made by June 15.
The annualized-income method is available for California on Form FTB 5805 and may be used in tandem with the federal Form 2210 annualized method when income is concentrated in later quarters.
For related mid-year planning considerations, see the firm's prior insight Mid-Year Tax Check-Up 2026 – A Strategic Guide for Business Owners. Additional California-specific estimated-tax detail appears in California Estimated Tax Payments 2026 – Safe Harbor Rules & Deadlines.
Compliance Resources and Tools
Official worksheets and forms for computing the required annual payment and each installment are published by the IRS and the Franchise Tax Board:
- The 2026 Form 1040-ES and its accompanying worksheets provide the federal calculation (accessed July 13, 2026).
- The 2026 Form 540-ES and the California Estimated Tax Worksheet in its instructions provide the state calculation (accessed July 13, 2026).
- Form 2210 (federal) and Form FTB 5805 (California) are used when the annualized-income installment method is elected or when a penalty must be computed.
These official IRS and FTB publications and forms are available free of charge on the respective agency websites and contain the complete statutory worksheets, interest-rate tables, and exception criteria.
- Federal safe harbor for 2026 is the lesser of 90 percent of current-year tax or 100 percent (110 percent if prior AGI > $150,000) of prior-year tax; the $1,000 de-minimis rule continues to apply.
- California safe harbor follows the same percentages except that taxpayers with current-year AGI of $1,000,000 or more ($500,000 MFS/RDP) must use 90 percent of current-year tax and cannot rely on the prior-year amount.
- Federal installments are equal 25 percent shares due April 15, June 15, September 15, and January 15; California uses a 30/40/0/30 schedule with no September payment.
- Withholding is treated as paid evenly throughout the year for both jurisdictions.
- The annualized-income method (Form 2210 Schedule AI / FTB 5805) may be used when income is received unevenly.
- Farmers and fishermen remain subject to the special one-payment rule under IRC §6654(i) and the corresponding California provision.
References
- Internal Revenue Service. Topic no. 306, Penalty for underpayment of estimated tax. Available at: https://www.irs.gov/taxtopics/tc306 (accessed July 13, 2026).
- Internal Revenue Service. Underpayment of estimated tax by individuals penalty. Available at: irs.gov (accessed July 13, 2026).
- Internal Revenue Service. About Form 1040-ES, Estimated Tax for Individuals (2026). Available at: https://www.irs.gov/forms-pubs/about-form-1040-es (accessed July 13, 2026).
- Franchise Tax Board. Estimated tax payments. Available at: https://www.ftb.ca.gov/pay/estimated-tax-payments.html (accessed July 13, 2026).
- Franchise Tax Board. Due dates – personal. Available at: ftb.ca.gov (accessed July 13, 2026).
- Franchise Tax Board. 2026 Instructions for Form 540-ES. Available at: ftb.ca.gov (accessed July 13, 2026).
The information contained in this publication is provided for educational and general informational purposes only. It does not constitute tax advice, accounting advice, legal advice, or any other form of professional advice and does not create a client-professional relationship.
The content reflects tax law and regulations applicable on the date of publication only and is subject to change without notice. Examples and illustrations are hypothetical and do not represent any specific taxpayer situation. Past results or referenced positions do not guarantee future outcomes.
No reader should act or refrain from acting on the basis of this publication without first obtaining specific written advice from a licensed CPA based on the reader's individual facts and circumstances.
Any federal tax advice contained herein is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
Parsi Team Specific Notice: This publication was prepared by non-licensed content personnel under the direct supervision and final approval of a licensed CPA. The reviewing CPA assumes professional responsibility for the technical accuracy and compliance of the content. All other limitations stated in the disclaimer above remain fully applicable.