Updated July 28, 2026. Quick answer: Often you do not need to make an estimated payment at all — you need to land inside a safe harbor. Reaching 100% of last year’s total tax (110% if prior-year AGI topped $150,000) generally avoids the underpayment penalty even if you still owe at filing.
Owing money and being penalised are different problems
A large vest usually produces a balance due, because the flat 22% withholding was short. That by itself is not a penalty. The penalty is a separate test, and it is about whether you paid enough, soon enough across the year.
The two safe harbors
| Test | What you must reach |
|---|---|
| Current-year | 90% of this year’s total tax |
| Prior-year | 100% of last year’s total tax — 110% if your prior-year AGI was over $150,000 |
The prior-year test is the useful one, because you already know the number. The current-year test requires forecasting a year that includes an unpredictable vest.
Withholding beats estimates on timing
Estimated payments are credited when made, so a Q4 catch-up does not cure an earlier quarter’s shortfall. Withholding is generally treated as paid evenly across the year regardless of when it actually happened — which is why raising salary withholding late in the year can fix a gap that a Q4 estimate cannot.
The four due dates, and why they are not quarters
Estimated payments are due 15 April, 15 June, 15 September and 15 January. Those periods cover three, two, three and four months respectively — they are not equal quarters, and a vest landing just after a due date gives you longer to fund the payment than one landing just before.
The annualised income method
If your income is lumpy — which is exactly what a large vest makes it — the regular method can create a penalty for early quarters in which you genuinely had not yet earned the income. The annualised installment method under IRC §6654(d)(2) lets you match payments to when income was actually received. It is more work and it is often worth it in a single-large-vest year.
Sources
IRC §6654(d)(1)(B), (C); IRC §6654(g) (withholding treated as paid ratably); IRC §3402(g)(1)(A).
This states what the cited authority says. It is not tax advice, and equity compensation interacts with the rest of your return in ways a single page cannot see.