Q3 Estimated Taxes Without the Panic

September 15 is the Q3 2026 estimated tax deadline, and every year it catches a predictable group of business owners off guard: not the ones who forgot, but the ones who paid based on last year's numbers in a year that turned out very different.

The rule that decides whether you owe a penalty. The IRS gives you three ways to avoid an underpayment penalty, and you only need to satisfy one: pay 100% of last year's total tax liability (110% if last year's adjusted gross income was over $150,000), pay 90% of this year's actual tax liability, or owe less than $1,000 after withholding and credits are applied.

Why “last year's numbers” isn't always safe. That first option is the one most owners default to, because it's the easiest to calculate without doing any extra work. It's also the one that quietly fails anyone having a materially better year than last year. Growth is good news until the resulting tax bill shows up as an underpayment penalty instead of a paid balance.

The 15-minute check that prevents it. Pull this year's profit through the end of Q3 and compare it, proportionally, to last year's full-year profit. If this year is tracking meaningfully ahead, a Q3 payment sized to last year's tax bill probably isn't enough, and adjusting it now, before the deadline, avoids interest that compounds for however long the shortfall sits unpaid.

What the penalty actually costs. It isn't a flat fee. It's calculated like interest, on the amount you were short, for the number of days you were short. On a strong year, that adds up faster than the number on the notice makes it look like it should.

The short version: if this has been a good year, don't let last year's estimate be the only thing deciding this year's payment.