Quarterly Estimated Taxes and the One Big Beautiful Bill Act (OBBBA): What You Need to Know
- Steve Julal
- Sep 9
- 2 min read
If you pay quarterly estimated taxes, the new One Big Beautiful Bill Act (OBBBA), effective July 4, 2025, has introduced deductions, credits, and rules that may change your tax obligations.
Understanding Estimated Taxes
Estimated tax payments help those without enough tax withheld on their income, such as from self-employment, investments, or pensions. Individuals must pay 25% of their required annual payment by April 15, June 15, September 15, and January 15 (next business day if a holiday). For 2025, the third payment is due Monday, September 15 using Form 1040-ES.
The required annual payment is typically the lower of:
90% of the tax owed for the current year, or
100% of the prior year’s tax (110% if your prior-year AGI exceeded $150,000, or $75,000 if married filing separately).
Most wage earners meet this requirement through employer withholding, while others make quarterly payments in equal amounts or use the annualized income method for variable income.
Penalties for Underpayment
You may face an IRS underpayment penalty if you don’t make enough estimated payments, but there are exceptions. The penalty doesn’t apply if:
You owe less than $1,000 after withholding,
Had no tax liability last year (as a full-year U.S. resident),
File your return and pay in full by January 31 rather than January 15, or
Are a qualifying farmer or fisherman meeting special deadlines.
Penalties may also be waived for disasters, unusual circumstances, or reasonable cause, such as the first two years after retirement or disability.
How OBBBA Changes the Rules
The OBBBA introduces several temporary provisions for the period 2025–2028 that may directly affect quarterly estimated tax payments:
New Senior Deduction: An additional $6,000 deduction is available for taxpayers aged 65 and older.
Expanded Above-the-Line Deductions: Taxpayers can now deduct overtime pay, tips, and auto loan interest without itemizing.
Higher SALT Cap: Eligible taxpayers can benefit from an increased state and local tax deduction.
Enhanced Child Tax Credit: Families with qualifying children are eligible for greater benefits.
As these changes reduce both taxable income and tax liability, it is advisable to recalculate your estimated tax payments to ensure they accurately reflect your obligations and avoid potential overpayment or underpayment.
Take Action Now
The introduction of new OBBBA provisions, alongside standard estimated tax regulations, makes 2025 an important year for comprehensive tax planning. Taxpayers who make estimated payments should carefully review their circumstances prior to the September 15 deadline to ensure appropriate payment amounts.
For Assistance: Please contact our office to discuss how these regulatory changes may affect your situation and to optimize your estimated tax strategy.
