IRS Publication 505 (2026): Tax Withholding and Estimated Tax

Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. A self-employment loss should not be considered for purposes of this tax. RRTA compensation should be separately compared to the threshold. Your employer is responsible for withholding the 0.9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2026. You should consider this withholding, if applicable, in determining whether you need to make an estimated payment. Net Investment Income Tax (NIIT). The NIIT is 3.8% of the lesser of your net investment income or the excess of your MAGI over the amount listed in the following chart, based on your filing status. Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household $200,000 Qualifying surviving spouse $250,000 Step 6. Subtract your refundable credits (line 11c). These include the earned income credit, additional child tax credit, fuel tax credit, net premium tax credit, refundable American opportunity credit, refundable adoption credit, and section 1341 credit. To figure your expected fuel tax credit, don’t include fuel tax for the first 3 quarters of the year that you expect to have refunded to you. The result of Steps 1 through 6 is your total estimated tax for 2026 (line 11c). Required Annual Payment— Line 12c On lines 12a through 12c, figure the total amount you must pay for 2026, through withholding and estimated tax payments, to avoid paying a penalty. General rule. The total amount you must pay is the smaller of: 90% of your total expected tax for 2026, or 100% of the total tax shown on your 2025 return. Your 2025 tax return must cover all 12 months. Special rules. There are special rules for those who have income from farming and fishing, for certain higher income taxpayers, and for those who make a valid section 1062 election.. Higher income taxpayers. If your AGI for 2025 was more than $150,000 ($75,000 if your filing status for 2026 is Married filing separately), substitute 110% for 100% in (2) above. If at least two-thirds of your gross income for 2025 or 2026 is from farming or fishing, this rule doesn’t apply. For 2025, AGI is the amount shown on Form 1040 or 1040-SR, line 11b. Example. Your total tax on the 2025 return was $42,581, and the expected tax for 2026 is $71,253. Your 2025 AGI was $180,000. Because you had more than $150,000 of AGI in 2025, you figure the required annual payment as follows. You determine that 90% of the expected tax for 2026 is $64,128 (90% (0.90) × $71,253). Next, you determine that 110% of the tax shown on the 2025 return is $46,839 (110% (1.10) x $42,581). Finally, you determine that the required annual payment is $46,839, the smaller of the two. Farming and fishing. If at least two-thirds of your gross income for 2025 or 2026 is from farming or fishing, your required annual payment is the smaller of: 66 2 / 3 % (0.6667) of your total tax for 2026, or 100% of the total tax shown on your 2025 return. (Your 2025 tax return must cover all 12 months.)