Annualized Income Installment Method Calculator 2026

How we calculate it

This calculator fills in Schedule AI of the 2026 Form 2210 and then runs the same Penalty Worksheet as our estimated tax penalty calculator, once with the regular 25% installments and once with the Schedule AI amounts. The law (26 U.S.C. § 6654(d)(2)) lets each installment be the lower annualized income installment, as long as any reduction is recaptured in the next installments.

1. Four cumulative periods. Jan 1 – Mar 31, Jan 1 – May 31, Jan 1 – Aug 31 and the full year, matching the Apr 15, Jun 15, Sep 15, 2026 and Jan 15, 2027 due dates. Income is counted when received (cash method).
2. Self-employment tax (Part II). Net profit × 92.35% (zero if under $400). Social Security: the smaller of that amount or the prorated wage base ($46,125, $76,875, $123,000, $184,500) minus your wages, × 0.496, 0.2976, 0.186 or 0.124. Medicare: × 0.116, 0.0696, 0.0435 or 0.029. These factors are 12.4% and 2.9% already annualized, so line 36 is a full-year SE tax.
3. AGI and annualizing (lines 1–3). Line 1 = profit + wages + other income − the SE tax deduction for the period (line 36 ÷ 8, 4.8, 3 or 2, as in Pub. 505 Worksheet 2-9). Line 3 = line 1 × 4, 2.4, 1.5 or 1.
4. Deductions (lines 7–13). The full 2026 standard deduction in every column ($16,100 single or married filing separately, $32,200 joint, $24,150 head of household); it is not annualized. Optional simplified QBI: 20% of annualized (profit − SE tax deduction), capped at 20% of annualized income after the standard deduction, with the $400 minimum when that QBI is at least $1,000 (IRC 199A(i)), the same rule as our Form 1040-ES calculator.
5. Tax (lines 14–21). 2026 Tax Rate Schedules on line 13, plus the annualized SE tax, plus the 0.9% Additional Medicare Tax on annualized SE earnings over the threshold, minus credits (limited to the income tax). Enter only credits you're entitled to because of events in each period (Form 2210 instructions, line 18); this calculator uses the same amount in every column. Line 21 = that tax × 22.5%, 45%, 67.5% or 90%.
6. Required installment (lines 22–27). Line 23 = line 21 minus the earlier line 27 amounts. Line 24 = 25% of the required annual payment (the smaller of 90% of the column (d) tax or 100%/110% of your 2025 tax). Line 26 = line 24 plus what earlier columns saved (line 26 − line 27). Line 27 = the smaller of line 23 or line 26. When a later line 23 is larger, the earlier savings are recaptured.
7. Penalty. Withholding is spread evenly over the four due dates; each payment goes to the earliest installment still short; each short amount accrues simple interest at the IRS quarterly rate from its due date until paid or Apr 15, 2027 (26 U.S.C. § 6622(b)), each line rounded to the cent. Rates: 6% Apr 16 – Jun 30, 2026, then 7%; the Jan 1 – Apr 15, 2027 rate is not announced, so we assume 7% (editable).

If you use Schedule AI for one due date you must use it for all of them, check box C in Form 2210 Part II and attach Schedule AI to your return. The 2026 Form 2210 is still a draft and the latest final instructions are for 2025; we will recheck when the final 2026 versions are out. Not covered: farmers and fishermen, alternative minimum tax (line 16), itemized deductions (lines 4–6), Schedule 1-A deductions (line 9b), capital gains and qualified dividend rates, net investment income tax, refundable credits beyond what you net out yourself, credits that must be figured per period, the election to treat withholding as paid when actually withheld, estates and trusts, nonresident aliens and state estimated taxes.

Worked example

Single freelancer, no wages, simplified QBI. Cumulative 2026 net profit: $6,000 by March 31, $12,000 by May 31, $30,000 by August 31 and $90,000 for the year. 2025 return: 12 months, filed, total tax $14,000, AGI $70,000. Payments: $1,000 on Apr 15, $1,000 on Jun 15, $3,000 on Sep 15, 2026 and $9,000 on Jan 15, 2027. These are the default inputs above.

The required annual payment is $14,000 (100% of the 2025 tax, lower than 90% of the $19,315.94 tax for 2026), so the regular method wants $3,500 by each date. Schedule AI asks for only $874.68 and $1,340.46 by April and June. The September and January amounts are higher than $3,500 because the earlier savings are recaptured; the four line 27 amounts still add up to $14,000.

With these payments, $215.14 of the June installment is paid on Sep 15 ($3.71 of penalty) and $791.16 of the September installment on Jan 15 ($18.52). Penalty with Schedule AI: $22.23, against $239.92 with the regular method: a $217.69 saving. $2.28 of the Schedule AI penalty uses the assumed 7% rate for 2027.

Related

• Estimated tax penalty calculator: the regular Form 2210 method, day by day
• Safe harbor estimated tax calculator: the 90% vs 100%/110% minimum for each due date
• Q4 estimated tax payment calculator: what to pay by January 15, 2027
• Form 1040-ES calculator: the 2026 Estimated Tax Worksheet line by line
• Self-employment tax calculator: the full-year SE tax behind line 36

FAQ

Sources

• IRS Form 2210 (2026 draft), Schedule AI: annualized income installment method
• IRS: Instructions for Form 2210 (regular method and Penalty Worksheet)
• 26 U.S.C. § 6654 (estimated tax penalty)
• IRS Publication 505: Tax Withholding and Estimated Tax
• IRS: Underpayment of estimated tax by individuals penalty
• IRS: Quarterly interest rates (2026: 7%, 6%, 7%, 7%)
• IRS IR-2026-98: rates for the fourth quarter of 2026
• 26 U.S.C. § 6622(b) (no daily compounding for § 6654)
• IRS Rev. Proc. 2025-32: 2026 tax brackets and standard deduction
• SSA: 2026 Social Security wage base $184,500

Last reviewed November 4, 2026 by the Self Employed Math editorial team against the sources above.