Underpayment Penalty Calculator 2026

Safe harbors — IRC §6654(d)(1)(A)–(C). The required annual payment is the smaller of 90% of 2026 tax or 100% of 2025 tax. The prior-year alternative requires a filed return covering 12 months. The statute says: “If the adjusted gross income shown on the return of the individual for the preceding taxable year beginning in any calendar year exceeds $150,000, clause (ii) of subparagraph (B) shall be applied by substituting ‘110 percent’ for ‘100 percent’.” The cutoff is $75,000 for married filing separately. Equality does not trigger 110%. See the enacted IRC §6654 and 2026 Form 1040-ES, General Rule / Higher income taxpayers (p. 1). “Tax” means the Form 2210 tax basis after applicable credits, including refundable credits, but before withholding or estimated payments; enter this basis rather than your refund or balance due.

Installments and deadlines — IRC §6654(c), (d)(1)(A). Each regular installment is 25% of the required annual payment. 2026 Form 1040-ES, Payment Due Dates (p. 4) lists April 15, 2026; June 15, 2026; September 15, 2026; and January 15, 2027. These are installment deadlines, not four equal calendar quarters. The January installment can be avoided by filing the 2026 return and paying the entire balance by February 1, 2027; this early-filing exception is not modeled.

Published rates — IRC §6654(a), §6621(a)(2), (b). The penalty uses the rounded federal short-term rate plus 3 percentage points, not the short-term rate alone. Rev. Rul. 2025-22, 2025-48 I.R.B. 719: January–March 2026, short-term 4%, underpayment 7% (no 2026 installment is due yet). Rev. Rul. 2026-5, 2026-8 I.R.B. 542: April–June, short-term 3%, underpayment 6%. Rev. Rul. 2026-10, 2026-22 I.R.B. 1515: July–September, short-term 4%, underpayment 7%. Rev. Rul. 2026-15, 2026-36 I.R.B. 216: October–December, short-term 4%, underpayment 7%. Each ruling expressly applies its rate to §6654 estimated-tax underpayments. Cross-check: IRS quarterly interest-rate table. No unpublished 2027 rate is used: calculation dates stop at December 31, 2026, so this is an accrued estimate, not a complete 2026 filing-season penalty.

Daily installment method — Form 2210, Part III, Sections A/B. The Form 2210 instructions, “Section B—Figure the Penalty” and “Worksheet for Form 2210, Part III, Section B,” state: “Your payments are applied first to any underpayment balance on an earlier installment even if you designate a payment for a later period.” For every unpaid installment, each rate segment is unpaid principal × days late ÷ 365 × that segment's annual underpayment rate. Count days after the deadline through the payment/as-of date, inclusive; a payment on the deadline has no penalty. Split at every payment and calendar-quarter boundary. This is simple daily estimated-tax penalty, not daily-compounded balance-due interest. The latest final Form 2210 instructions checked are for 2025; the regular-method mechanics are applied with the independently published 2026 deadlines and rates. No draft 2026 filing parameters are assumed.

Withholding, payments and exceptions — IRC §6654(b)(3), (e)(1)–(2), (g)(1). Projected full-year withholding is deemed paid equally on the four due dates; the actual-withholding-date election is outside scope. Dated estimated payments go to the oldest outstanding installment, and advance overpayments carry forward. Only payments dated on or before the as-of date count. Include a prior-year refund applied to estimates as a dated payment; the April 15 credit date assumes that prior return was fully paid by April 15. No penalty is modeled when current-year tax minus withholding is less than $1,000, or when the full-year prior-year no-tax-liability/citizen-or-resident exception applies. Exactly $1,000 is not below the exception. Amount inputs and installment allocations retain cents; daily charges remain unrounded until displayed totals are rounded to cents.

The decision. “Pay due installments now” is only the remaining principal on installments already due. It excludes accrued penalty, future installments and any remaining return balance. Paying that principal stops further §6654 accrual on those overdue dollars; it does not erase the penalty already accrued. The wait-versus-pay comparison holds only today's unpaid overdue principal constant through December 31 at the published rates; future installments/withholding and future payments are excluded from that comparison. The per-day figure uses the rate on the selected as-of date.

Scope. Regular, equal-installment method for calendar-year individuals only. Schedule AI annualized-income relief, farmers/fishers, nonresident special schedules, changed joint/separate filing status, disasters, waivers and actual-date withholding elections are not modeled. Uneven income may produce a lower penalty under Schedule AI. This is an educational estimate, not a Form 2210 filing or tax advice.