What penalties apply if you miss the 2025 safe-harbor thresholds and how can you request a waiver?
Executive summary
If you miss the 2025 individual estimated‑tax safe‑harbor thresholds the IRS can assess an underpayment penalty calculated by applying the federal short‑term rate plus 3% to each quarterly shortfall until it’s paid; penalty rates have been around 7–8% recently (public summaries cite ~7% for 2025 and roughly 8% in 2024–25 commentary) [1][2]. You can avoid that penalty by meeting one of the safe‑harbor tests—paying either 90% of current‑year tax or 100% of prior‑year tax (110% if AGI > $150,000)—or by using withholding to “true up” late in the year; specific waiver processes for other kinds of safe harbors exist in non‑tax programs, but available sources do not describe an IRS general waiver process to excuse an underpayment penalty beyond the ordinary exceptions and administrative notices [3][2][4].
1. What the penalty looks like—shortfalls charged each quarter
Tax pros and advisory sites explain the mechanics: the IRS compares required annual payments (based on whichever safe‑harbor test you choose) to what you actually paid by each quarterly deadline; any quarter with a shortfall picks up interest/penalty on the underpaid amount until you catch up, and the statutory calculation uses the federal short‑term rate plus 3 percentage points, producing the multi‑percent annual penalty rates referenced in recent commentary [2][1]. Those writeups emphasize that timing matters: even if total year payments eventually meet a safe harbor, backloading payments can still trigger per‑quarter penalties [2].
2. The safe‑harbor thresholds that avoid penalties
Multiple practitioner sources state the same bright‑line targets for individuals: pay at least 90% of this year’s tax or 100% of last year’s tax (the prior‑year requirement rises to 110% for taxpayers with AGI over $150,000) and you will not face the underpayment penalty [3][4][5]. Those guides repeatedly note the practical point: safe harbor prevents penalties but does not eliminate an income tax bill due at filing time [4].
3. Common ways taxpayers “fix” shortfalls during the year
Advisors recommend two practical workarounds reported in tax guidance: increase year‑end withholding (including on bonuses) to cover earlier quarter shortfalls, or make timely estimated payments tied to liquidity events; both strategies can eliminate or reduce the per‑quarter penalty because the IRS counts withholding and estimated payments together for safe‑harbor tests [2][4]. Authors warn that typical payroll withholding often fails for taxpayers with large non‑W‑2 income (equity, rental, etc.), so proactive quarterly projections matter [2][3].
4. Can you request a waiver of underpayment penalties? What the sources say
Available reporting details administrative waivers and relief in specific contexts—e.g., special IRS notices tied to certain taxes (like CAMT guidance) or agency‑specific programs—but none of the provided tax guidance describes a broad, standard IRS “waiver” that simply erases underpayment penalties for missing the 2025 safe harbor; instead, relief usually comes through meeting safe‑harbor tests, IRS administrative relief notices specific to a program, or reasonable‑cause penalty abatements handled case‑by‑case [6]. For non‑IRS programs the sources do show formal waiver‑request processes (for HUD MTW waivers, state program waivers, etc.), but those are program‑specific and not a substitute for IRS penalty relief procedures [7][8].
5. When administrative relief has appeared—examples and limitations
The IRS has issued targeted notices that change safe‑harbor calculations or provide temporary relief in narrowly defined situations (for example, Notice 2025‑27 dealing with CAMT issues) but such notices do not eliminate the legal obligation to pay taxes when due and do not necessarily waive penalties for failure to pay except where the notice explicitly states relief [6]. Tax advisers caution that while rule changes or administrative relief can reduce exposure, taxpayers should not count on ad‑hoc waivers; guidance stresses planning to meet safe harbors or using withholding as the reliable avoidance strategy [3][4].
6. Practical next steps reporters and taxpayers should know
Calculate your projected 2025 tax liability and compare quarterly payments and withholdings to the 90%/100%/110% thresholds; if you are short, either increase withholding before year‑end or make catch‑up estimated payments tied to the quarter in question because the penalty is assessed per quarter [2][3]. If an unusual event (disaster, illness) causes the shortfall, document reasonable cause and consult a preparer: IRS reasonable‑cause abatements are adjudicated case‑by‑case and require substantiation—available sources do not provide a turnkey IRS waiver form or universal waiver standard [6].
Limitations: this analysis uses practitioner and advisory summaries provided in the search results; the sources explain thresholds, penalty mechanics, and some targeted relief notices but available sources do not supply a single IRS waiver procedure to automatically excuse missing the safe harbor [3][6].