The fourth and final estimated tax payment for 2026 is due Friday, January 15, 2027, for both the IRS and California. It is the last payment that counts toward the 2026 tax year, which makes it the last chance to clean up an underpayment before the penalty math is locked in.
It is also the payment people most often get wrong, usually by paying the same amount they paid in September without looking at how the year actually ended.
What the January payment covers
The federal estimated tax year is split into four uneven periods. The January 15 payment covers income earned from September 1 through December 31, a four-month stretch, which is the longest of the four. If your business had a strong fall, or you sold an asset in November, this is the payment that has to absorb it.
Sizing it: start with the safe harbor
You generally avoid a federal underpayment penalty if your withholding and timely estimated payments add up to the smaller of 90% of your 2026 tax or 100% of your 2025 tax. That second number rises to 110% if your 2025 adjusted gross income was more than $150,000 ($75,000 married filing separately). If you expect to owe less than $1,000 after withholding and refundable credits, you generally do not need to make estimated payments at all.
We went through how to choose between the current-year and prior-year tests in our post on the September estimated payment. In January the question is simpler: add up what you have paid so far, compare it to the safe harbor amount, and pay the difference.
California does not follow the same pattern
California uses the same due dates but not the same percentages. The FTB schedule for 2026 is:
- April 15, 2026: 30%
- June 15, 2026: 40%
- September 15, 2026: 0%
- January 15, 2027: 30%
So the January California payment is a real payment even if September was zero. A few other California rules are worth knowing:
- The threshold is lower. California estimates generally apply if you expect to owe at least $500 ($250 married/RDP filing separately).
- The 110% rule applies if your prior-year California AGI was more than $150,000 ($75,000 married/RDP filing separately).
- If your 2026 California AGI is $1,000,000 or more ($500,000 married/RDP filing separately), you cannot use the prior-year safe harbor. Your estimates have to be based on 90% of your 2026 tax. That matters most in a year with a large one-time gain, such as the sale of a practice or a business.
Withholding can do what estimates cannot
Here is the option most people miss. For federal penalty purposes, income tax withheld from your pay is treated as if one-fourth of it was paid on each due date, unless you choose to show otherwise. Estimated payments, by contrast, count only from the date you make them.
That means extra withholding in December can cover a shortfall from earlier in the year. If you or your spouse receive W-2 wages, including wages from your own S corporation, raising withholding on the last paychecks of the year can fix an April or June underpayment in a way a January estimated payment cannot. It takes some lead time to set up, so look at it in early December rather than the week of Christmas.
The file-early alternative
You do not have to make the January 15 federal payment if you file your 2026 return by February 1, 2027 (January 31 falls on a Sunday) and pay the full balance with it. In practice this works for very few business owners. Brokerage statements, K-1s and corrected forms often arrive later than that. Treat it as a fallback, not a plan.
Farmers and fishermen have their own rule
In the Central Valley this one comes up. If at least two-thirds of your gross income for 2025 or 2026 is from farming or fishing, the federal rules are different. You can either pay all of your 2026 estimated tax by January 15, 2027, or file your 2026 return by March 1, 2027 and pay the total tax due, in which case no estimated payments are required to avoid a penalty. The required percentage for farmers and fishermen is 66 2/3% instead of 90%, and California’s 110% rule does not apply to farmers or fishermen.
If your income was uneven
If most of your 2026 income arrived late in the year, the regular four-equal-payments method may overstate what you owed in the early periods. The annualized income installment method, figured on Form 2210 Schedule AI, matches the required payments to when the income was actually earned. If you use it, Form 2210 with Schedule AI has to be filed with your return even if no penalty is owed. It depends on records that show when income came in, which is one more argument for books that are closed every month.
Pay electronically, and do not trust the postmark
The IRS has clarified that, for the timely-mailing rule, the postmark date is the date the payment is processed at a postal facility, which may not be the day you drop it in the mailbox. Pay online instead. Federal options include IRS Direct Pay, EFTPS and your IRS online account. For California, use FTB Web Pay. Keep the confirmation numbers with your tax records, because your preparer will need the dates and amounts for both the federal and state returns.
Use December as the checkpoint
The right January number comes from a year-end projection, not from last quarter’s check. By early December you know most of the year. That is enough to estimate the 2026 tax, see where you stand against the federal and California safe harbors, and decide whether the fix is a January payment, extra December withholding or a planning move that reduces the tax in the first place. A projection run in December still has options. One run in March only explains the bill.
Get the January number right
We have helped Fresno and Clovis business owners and professionals with estimated taxes for more than eight years, and we run projections before each payment so the amount is deliberate rather than a guess. If you want a second look before January 15, book a free 30-minute call through our contact page, or read more about our business tax planning and personal tax planning services. We are happy to meet in person at our Fresno office.
Harlan Willow Accounting Group · 7257 N Maple Ave STE 107, Fresno, CA 93720 · 559-372-9213
This post is general information, not tax advice for your specific situation. Figures and dates are for tax year 2026 as published by the IRS and FTB.
