What is the IRS safe harbor rule for quarterly estimated taxes?

If you receive 1099 freelance income, business profits, or significant investment dividends, taxes are not automatically withheld from your checks. To avoid IRS underpayment penalties under IRC § 6654, you must make quarterly estimated payments that satisfy the 'Safe Harbor Rule': You must pay at least 90% of your current tax year's total liability, OR 100% of your prior year's tax liability (whichever is smaller). If your Adjusted Gross Income (AGI) on the prior year's return exceeded $150,000 ($75,000 if married filing separately), the prior-year safe harbor requirement increases from 100% to 110%.