Business owners often receive income without automatic tax withholding. This may include income from self-employment, partnerships, S corporations, investments, rental properties, and other business activities.

Estimated tax payments allow taxpayers to pay federal and Indiana income taxes throughout the year instead of waiting until the annual tax return is filed.

For many calendar-year taxpayers, the third federal estimated tax payment for 2026 is due September 15, 2026. Indiana individual estimated tax payments generally follow the same deadline.

Indiana pass-through entity tax payments follow a different schedule, so business owners should first determine which type of payment applies to them.

What Is an Estimated Tax Payment?

The federal and Indiana income tax systems generally operate on a pay-as-you-go basis.

Employees commonly meet this requirement through taxes withheld from their paychecks. Business owners and self-employed individuals may not have enough tax withheld, so they may need to submit estimated payments throughout the year.

Estimated payments may cover:

• Federal income tax
• Self-employment tax
• Indiana state income tax
• Indiana county income tax
• Certain additional taxes
• Taxes resulting from investment or rental income

Estimated tax is not a separate type of tax. It is a method of paying the tax that a taxpayer expects to owe for the current year.

Who May Need to Pay Federal Estimated Taxes?

Individuals generally may need federal estimated tax payments when both of the following conditions apply:

1. They expect to owe at least $1,000 after subtracting withholding and refundable credits.
2. Their withholding and refundable credits are expected to be less than the smaller of:
   • 90% of the tax expected for 2026, or
   • 100% of the tax shown on the 2025 federal return.

For certain higher-income taxpayers, the prior-year percentage generally increases from 100% to 110%.

People who may need estimated payments include:

• Sole proprietors
• Independent contractors
• Freelancers
• Partners
• S corporation shareholders
• Rental-property owners
• Investors
• Individuals with significant interest or dividend income
• Employees whose paycheck withholding is insufficient

Corporations generally may need federal estimated payments when they expect to owe at least $500 when filing the annual return.

Do Indiana Business Owners Need Estimated Payments?

Indiana generally requires individual estimated payments when a taxpayer expects to owe at least $1,000 in combined state and county income tax that will not be covered by withholding.

Indiana’s regular individual installment dates are generally:

• April 15
• June 15
• September 15
• January 15 of the following year

When a due date falls on a weekend or recognized holiday, the payment is generally due on the next business day.

This requirement can affect business owners even when the business itself does not directly make the payment. For example, partnership or S corporation income may pass through to the owner’s individual tax return.

Indiana Pass-Through Entity Tax Has Different Deadlines

Indiana’s pass-through entity tax, commonly called PTET, is different from an owner’s personal estimated income tax.

For calendar-year entities, Indiana PTET estimated payments are generally due:

• April 20
• June 20
• September 20
• December 20

When one of these dates falls on a weekend or holiday, the deadline generally moves to the next business day.

How Are Estimated Payments Calculated?

Estimated payments should be based on the taxpayer’s expected full-year financial situation.

A reasonable calculation may consider:

• Expected annual income
• Year-to-date business profit
• Business expenses
• Adjustments and deductions
• Available tax credits
• Self-employment tax
• Federal withholding
• Indiana withholding
• State and county income tax
• Previous estimated payments
• Significant changes since the prior year

A prior-year tax return can be a useful starting point, but it should not be the only information used when revenue, expenses, compensation, or investments have changed.

What Is the Estimated Tax Safe-Harbor Rule?

A safe harbor may help taxpayers avoid an estimated-tax underpayment penalty even when the final tax balance is higher than expected.

For many individuals, sufficient payments generally equal at least:

• 90% of the current year’s tax, or
• 100% of the previous year’s tax.

The prior-year requirement generally rises to 110% for certain higher-income taxpayers.

Meeting a safe harbor does not necessarily mean that no balance will be due when the tax return is filed. It primarily helps determine whether enough tax was paid during the year to avoid or reduce an underpayment penalty.

What If Business Income Changes During the Year?

Estimated payments do not always need to remain the same throughout the year.

Business owners should consider recalculating when there is a major change in:

• Revenue
• Business expenses
• Owner compensation
• Partnership distributions
• S corporation income
• Capital gains
• Rental income
• Investment income
• Retirement contributions
• Tax credits
• Filing status

When income is earned unevenly, such as in a seasonal business, an annualized-income calculation may allow payments to more closely reflect when the income was actually earned.

Common Estimated Tax Mistakes

Using Last Year’s Numbers Without Updating Them

A prior-year return may not reflect current revenue, expenses, tax credits, investment income, or changes in business operations.

Confusing Business and Personal Payments

A payment made under a business entity’s account may not automatically satisfy the owner’s personal estimated-tax requirement.

Missing Indiana County Income Tax

Indiana individual estimated payments may include both state and county income taxes. The applicable county rate should be included when reviewing the estimated amount.

Paying Late or Paying Too Little

An estimated-tax penalty may apply when payments are late, insufficient, or missing. A penalty may sometimes apply even when the annual tax return ultimately shows a refund.

Failing to Save Payment Confirmation Records

Every payment should be documented with its confirmation number, date, amount, tax year, tax type, and taxpayer or entity account.

How Can Estimated Taxes Be Paid?

Federal estimated payments may generally be made through:

• IRS Online Account
• IRS Direct Pay
• Electronic Federal Tax Payment System
• Electronic funds withdrawal
• Debit card, credit card, or digital wallet
• Form 1040-ES payment voucher

Indiana individual estimated payments may generally be made:

• Online through INTIME
• Using a tax-preparation or software-generated voucher
• By mailing Form ES-40 with payment

Always verify that the payment is applied to the correct taxpayer, tax type, entity, and tax year.

September Estimated-Tax Checklist

Before submitting a payment, review:

• Year-to-date profit-and-loss statement
• Business balance sheet
• Payroll and owner compensation
• Partnership or S corporation distributions
• Federal estimated payments already made
• Indiana payments already made
• Federal and Indiana withholding
• Capital gains and investment income
• Rental-property income and expenses
• Retirement contributions
• Major equipment purchases
• Applicable tax credits
• PTET elections and payments
• Expected income through December
• Confirmation records for earlier payments

Why a Third-Quarter Tax Review Matters

A September tax review gives business owners time to identify potential problems before year-end.

It may help determine:

• Whether previous payments were sufficient
• Whether the September installment should be adjusted
• How much cash should be reserved for taxes
• Whether payroll withholding should be changed
• Whether PTET payments are on schedule
• Whether bookkeeping records need correction
• Whether year-end planning opportunities remain

The goal is not simply to make a payment. The goal is to make an informed payment using current and accurate financial information.