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The Annualized Income Method (Form 2210 Schedule AI)
Schedule AI recomputes each required installment from income actually received through March 31, May 31, August 31 and December 31 — periods, not quarters.
The four estimated tax periods are not quarters. Form 2210, Schedule AI1 recomputes each required installment from income actually received through March 31, May 31, August 31 and December 31.
That is the method to reach for when income arrived late in the year. The estimated tax calculator offers it as an alternative to four equal installments and shows the difference side by side.
The periods, and why they are uneven
Schedule AI on the 2025 Form 2210 heads its four columns with these dates, written as they appear on the form: 1/1/25–3/31/25, 1/1/25–5/31/25, 1/1/25–8/31/25 and 1/1/25–12/31/25. Each column is cumulative from January 1. The second covers five months, not three.
Line 2 of the schedule is labeled “Annualization amounts”, and line 20 “Applicable percentage”. The four column values on the 2025 revision are these.
| Column, 2025 Form 2210 | Income period | Annualization amount (line 2) | Applicable percentage (line 20) |
|---|---|---|---|
| (a) | January 1 – March 31 | 4 | 22.5% |
| (b) | January 1 – May 31 | 2.4 | 45% |
| (c) | January 1 – August 31 | 1.5 | 67.5% |
| (d) | January 1 – December 31 | 1 | 90% |
The annualization amounts are simply 12 divided by the months in the period: 12 ÷ 3, 12 ÷ 5, 12 ÷ 8 and 12 ÷ 12. Estates and trusts use period ending dates of 2/28, 4/30, 7/31 and 11/30 and the amounts 6, 3, 1.71429 and 1.09091, which is the same arithmetic over 2, 4, 7 and 11 months.
Where the percentages come from
The applicable percentages are quarters of the current-year safe harbor. 90% of this year's total tax2 is the annual target, and 25%, 50%, 75% and 100% of it give 22.5%, 45%, 67.5% and 90%. The schedule is therefore not a different standard; it is the same standard measured against income that has actually arrived.
Two more lines complete the mechanism. Line 24 reads “Enter 25% (0.25) of line 9 on page 1 of Form 2210 in each column”, which is the regular equal installment. Line 27 takes the smaller of the two figures, so the annualized route can lower an installment but never raise it above the regular quarter.
What it costs to use
The instructions state the commitment plainly: “If you use Schedule AI for any payment due date, you must use it for all payment due dates.” There is no using it for the first quarter alone.
The filing consequence follows: “Attach Form 2210, Parts I, II, III, and Schedule AI to your return.” The IRS will not compute the penalty for you once you take this route, and the schedule wants adjusted gross income, itemized deductions and self-employment income cut at four dates. Bookkeeping that stops at the annual total will not support it.
Withholding is unaffected by the choice. It is still credited under the even rule described in withholding instead of estimated tax payments, which is why a late-year withholding increase and Schedule AI address different halves of the same problem.
This page covers the federal schedule only; a state with its own estimated tax may have a different annualization form or none at all.
What is the annualized income installment method?
It is the alternative in IRC §6654(d)(2), worked on Schedule AI of Form 2210. Each required installment is recomputed from income received up to that period’s end date, instead of assuming income arrived in four equal parts.
When does Schedule AI help?
When income was genuinely back-loaded. The instructions give the case: “If your income varied during the year because, for example, you operated your business on a seasonal basis or had a large capital gain late in the year, you may be able to lower or eliminate the amount of one or more required installments.”
Are the estimated tax periods really quarters?
No. They run 3, 5, 8 and 12 months from January 1. The second period is five months long, so the second installment covers April and May on top of the first quarter.
Do I have to use Schedule AI for all four periods?
Yes. The Form 2210 instructions state that if you use Schedule AI for any payment due date you must use it for all payment due dates. Mixing the two methods across the year is not permitted.
Where do the 22.5%, 45%, 67.5% and 90% percentages come from?
They are 25%, 50%, 75% and 100% of 90% of this year's total tax2. The schedule spreads the same annual safe harbor across the four cumulative periods rather than across four equal dates.
Is there a 2026 revision of Form 2210?
Not as of September 7, 2026. The most recent revision posted by the IRS is the 2025 form and its instructions, so the figures on this page are read from that revision. The 2026 form is normally released with the filing season that follows the tax year.
Does Schedule AI change the due dates?
No. The four installment dates are set by IRC §6654(c)(2) and are unchanged. Schedule AI changes how much is required at each of them, not when they fall — those are listed on the estimated tax due dates.
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Information, not advice. This is the reading version; the interactive calculator and the full page are at https://thresholds.pages.dev/estimated-taxes/annualized-income/.