The cost of paying the IRS late went up this month. If you pay quarterly, this is a good week to make sure you're not the one footing that bill.
The IRS raised its interest rate on underpaid taxes back up to 7% for the quarter running July 1 through September 30, up from 6% last quarter. That rate applies to individuals and businesses alike, and it compounds daily — meaning the longer a balance sits unpaid, the more it costs, not in a straight line but a curve. It's a quiet number that doesn't usually make headlines, but if you pay estimated taxes, it's worth noticing right now, because your next payment is due September 15.
Here's the thing about quarterly estimated taxes: most freelancers already know the deadlines exist, but it's easy to treat them like a suggestion rather than a real cutoff. A rate increase is the IRS's way of making that gap more expensive. If you underpay for the year, the IRS doesn't just ask for the difference at tax time — it charges interest on whatever you were short, calculated quarter by quarter, back to when the payment was originally due. At 7%, compounding daily, an underpayment sitting for several months adds up faster than most people expect.
The general rule hasn't changed: if you expect to owe $1,000 or more for the year after subtracting withholding and credits, you're generally expected to make estimated payments. The safe harbor is paying in at least 90% of what you'll owe for 2026, or 100% of what you owed for 2025 — bumped up to 110% of last year's tax if your 2025 adjusted gross income was over $150,000. Meeting either one protects you from the penalty even if you end up owing more at filing time.
Pull your income and expenses from June through August and run a rough estimate of what you'll owe for that period. Compare it to what you've actually set aside. If there's a gap, you have until September 15 to close it — closing it now, at 7%, is a lot cheaper than discovering the gap in April.
Whether you're required to pay quarterly, how much your specific safe harbor number is, and whether last year's income puts you in the 110% bracket depends on your actual numbers — this is exactly the kind of thing that depends on your situation rather than a flat rule. This is general, educational information, not individualized tax advice. If you're not sure where you stand, it's worth a real look at your numbers rather than guessing.
Estimated taxes are one of the easiest things to let slide when you're busy running the actual business. If you want a calm, guided way to get your whole tax picture in order before September 15, The Calm & Confident Tax Prep Kit walks you through it step by step. Or start with the free Mid-Year Tax Reset and see exactly where you stand in one sitting.
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