Which Federal Employees and Retirees Have to Make Estimated Tax Payments During 2025?

Those federal employees and retirees who owe additional federal income taxes when they file their 2024 federal income tax returns may have to make federal estimated tax payments during 2025.

Federal employees can use the general rule below as a guide to determine if they have enough federal income tax withholding or should increase federal income tax withholding from their salaries or retirement income (CSRS or FERS annuities, Thrift Savings Plan withdrawals and Social Security monthly benefit payments) whether or not to make federal estimated tax payments during 2025.

General rule for making federal estimated tax payments.

An individual should make federal estimated tax payments during 2025 if both of the following circumstances apply:

1. The individual expects to owe at least $1,000 in federal income taxes for 2025 after subtracting the individual’s federal income tax withholding and tax credits.
2. The individual expects their federal income tax withholding and tax credits to be less than the smaller of: (a) 90 percent of their 2025 federal income tax liability; or (b) 100 percent of their 2024 federal income tax liability as shown on their 2024 federal income tax return.

Note that if most of an individual’s  potentially taxable income - this includes salary income, pension income, traditional IRA income and Social Security income - will be subject to federal income tax withholding, then the individual probably does not have to make federal estimated tax payments.

Married individuals

If an individual is married and therefore qualifies to make joint estimated tax payments, then the rules discussed here apply to the joint income of the individual and their spouse. The individual and their spouse can make joint estimated tax payments even if they are not living together.

However, an individual and their spouse cannot make joint estimated tax payments if any of the following circumstances apply:

• They are legally separated under a decree of divorce or separate maintenance.
• They have different tax years, or
• Either spouse is a nonresident alien, unless that spouse has elected to be treated as a resident alien for tax purposes.

Note that individuals who are in registered domestic partnerships, civil unions, or other similarly formed relationships that are not marriages under state law cannot make joint estimated tax payments. These individuals can take credit only for the estimated tax payments that he or she makes.

“Household” employers

Those individuals who are “household” employers – they employ a caretaker, a babysitter or as a nanny – should include household employment taxes (federal income tax, Social Security and Medicare Part A payroll taxes) they withhold,  if either of the following applies:

• The individual will have insufficient federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income in order to pay the household employment federal taxes.
• The individual would be required to make estimated tax payments to avoid a penalty even if the individual did not include household employees when figuring their federal estimated tax payments.

Higher income individuals

If an individual’s adjusted gross income (AGI) was more than $150,000 ($75,000 if an individual’s filing status for 2025 is married filing a separate return), then the 100 percent of the federal income tax liability shown on their 2024 federal income tax liability should be replaced with 110 percent.

For 2024, AGI is the amount shown on IRS Form 1040 or Form 1040-SR, line 11.

How to figure 2025 estimated tax payments

To calculate federal estimated tax payments, an individual must calculate their expected AGI for the year, taxable income for the year, federal income taxes deducted and any federal tax credits. When computing 2025 estimated tax, it may be helpful to use 2024 federal income tax deductions and federal tax credits as a starting point. An individual’s 2024 federal income tax return therefore should be used as a guide.