Tax bracket changes could mean your paycheck is slightly bigger in 2025 — here's what to know

In the United States, the deadline for filing the fourth-quarter estimated tax payment for the year 2024 is January 15, 2025. Taxpayers who miss this payment could face unexpected penalties and fees when they file their returns. The IRS emphasizes that estimated taxes are generally applicable to income without withholdings, such as freelance work, small businesses, and investment income. Various scenarios, including year-end bonuses and capital gains, could also result in additional tax liabilities if adequate taxes have not been withheld throughout the year. Taxpayers can avoid late penalties by adhering to the IRS's "safe harbor" rules, which stipulate that they must pay at least 90% of their estimated tax liability for 2024 or utilize the previous year's tax amount if lower. For those with adjusted gross income of $150,000 or more in 2023, the safe harbor threshold increases to 110%. Understanding how these provisions work can help individuals manage their tax obligations and prevent an unexpected tax bill when filing time arrives. Furthermore, the IRS recommends making quarterly payments via online platforms, which allow for tracking and ease of processing. Taxpayers can also pay directly through IRS Direct Pay or utilize the Electronic Federal Tax Payment System. Multiple options are available for making these payments, including debit or credit cards, aiding users in fulfilling their tax responsibilities timely. As the clock ticks down to the January 15 deadline, both small businesses and individual freelancers must act swiftly to assess their tax withholdings and estimate their payments accordingly. Delaying or neglecting these final estimated tax payments can result in compounding penalties, which could significantly impact one’s financial situation in the long run.