Pub 17 chapter 4 in plain English: paying tax as you earn
Tax is paid during the year, not just in April. Chapter 4 of Publication 17 explains withholding and estimated tax. These notes cover tax years 2023 to 2025, with planning dates for 2026.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on October 26, 2026.
Chapter 4 covers printed pages 37 to 45 of Publication 17 in the 2023, 2024 and 2025 editions. It matters if you want fewer April surprises or have income with no tax taken out. Each edition looks one year ahead. Think of this page as a friendly summary; the IRS publication has the last word.
- Tax is paid as you go: withholding from pay or estimated tax payments.
- Estimated tax is generally required when you expect to owe $1,000 or more after withholding and refundable credits.
- But if withholding and credits reach the smaller of 90 percent of this year's tax or 100 percent of last year's, you need not pay it.
- Use 110 percent of last year's tax if last year's AGI was over $150,000 ($75,000 married filing separately).
All of this held in each year from 2023 to 2026.
Withholding from pay
Your employer has until the first payroll period that ends at least 30 days after you submit a new Form W-4 to put it into effect. With none on file, the employer must withhold at the top rate, as for a single person. Hand in a new form within 10 days if a change reduces what you may claim on it, and by December 1, 2026 if 2026 events change what you should claim for 2027.
"Exempt" is allowed only if you owed no tax last year and expect none this year; renew by February 15. A flat 24 percent applies to lottery, sweepstakes and similar prizes over $5,000, and to backup withholding when a payee's taxpayer number is missing or wrong. On the 2023 to 2025 Forms 1040, claim withholding on lines 25a to 25c and estimated payments on line 26.
Estimated tax
It covers income with no withholding, such as self-employment, interest, dividends, rent and gains. Installments fall on April 15, June 15, September 15 and January 15, covering periods of 3, 2, 3 and 4 months; weekends and holidays move dates. The IRS usually figures any underpayment penalty; Form 2210 only reduces or removes one.
Numbers by year
| Tax year | 1st | 2nd | 3rd | 4th |
|---|---|---|---|---|
| 2023 | Apr 18 | Jun 15 | Sep 15 | Jan 16, 2024 |
| 2024 | Apr 15 | Jun 17 | Sep 16 | Jan 15, 2025 |
| 2025 | Apr 15 | Jun 16 | Sep 15 | Jan 15, 2026 |
| 2026 planning | Apr 15 | Jun 15 | Sep 15 | Jan 15, 2027 |
You can skip the January payment by filing and paying in full by January 31, 2024 (2023 tax), January 31, 2025 (2024), February 2, 2026 (2025) or February 1, 2027 (2026). The 2026 row is a planning row for the 2026 return: April to September dates come from Pub. 509 (2026), the January dates from Pub. 17 (2025), and Pub. 17 (2026) is not published yet. See our tax calendar.
An invented example
Invented, planning for tax year 2026. Lena's 2025 tax was $18,000 and her 2025 AGI $120,000. She expects $24,000 of tax for 2026 with $2,000 withheld. The smaller of 90 percent of $24,000 ($21,600) or 100 percent of $18,000 is $18,000. After the $2,000 withheld, $16,000 remains, roughly $4,000 per installment.
Mistakes people make
- Skipping a new W-4 after a marriage or a second job.
- Adding an estimated payment to the payment sent with your return.
- Assuming installments are three months apart; June follows April by two.
Quick check
A single filer's 2025 tax was $10,000 and 2025 AGI $200,000; she expects $15,000 of tax for 2026. What is the safe amount? (2026)
Answer: $11,000. 110 percent of $10,000 is $11,000, less than 90 percent of $15,000, or $13,500.
A lottery pays $4,800. Must 24 percent be withheld? (2025)
Answer: No. Withholding on these prizes starts above $5,000. The prize is still taxable.
Sam's first freelance income arrives in July 2026. Which 2026 installments does he owe? (2026)
Answer: September 15, 2026 and January 15, 2027, since July falls in the June to August period.
Common questions
Do I owe a penalty if I skip estimated payments?
Often not: if you owe under $1,000 after withholding and credits, or paid on time at least last year's tax (110 percent for higher incomes).
How do I change my withholding?
Give your employer a new Form W-4; the IRS Tax Withholding Estimator can help.
Should a large refund lead me to lower my withholding?
Pub 17 says it may be worth considering; compare your expected tax first.
Official sources
- IRS Publication 17 (2025), chapter 4
- IRS Publication 17 (2024), chapter 4
- IRS Publication 17 (2023), chapter 4
- IRS Publication 509 (2026), tax calendar; the 2023 to 2025 editions were also read
Keep reading
- Who Must File a Tax Return (Pub 17 Chapter 1)
- Wages and Job Benefits: Pub 17 Chapter 5
- Key Tax Numbers by Year, 2023 to 2026
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