If estimated tax payments equal or exceed 100% of the actual tax liability for the prior year,there is generally (assuming AGI less than or equal to $150,000)no penalty for underpayment of estimated taxes.

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This is known as the safe harbor rule and applies to most taxpayers whose AGI is less than or equal to $150,000. If their estimated tax payments for the current year are equal to or exceed 100% of the actual tax liability for the prior year (110% if AGI is over $150,000), there is no penalty for underpayment of estimated taxes.

If Estimated Tax Payments Equal or Exceed 100% of the Actual