Estimated Tax Payments for 2025: Don’t Forget Capital Gains from a Big Stock Market Year

The 2025 stock market has been unusually strong, with major indexes hitting multi‑year highs. While that’s good news for investors, it also means many taxpayers will face significant capital gains if they sold appreciated stock this year. If you sold shares and made a profit, the IRS expects you to pay estimated taxes to avoid penalties.

Why 2025 is Different

Capital gains taxes are triggered when you sell investments at a profit. With the market up substantially in 2025, anyone who realized gains by selling stock, mutual funds, or ETFs may owe more in federal taxes than usual. If you haven’t already adjusted withholding or made estimated payments, you could face a surprise tax bill in 2026.

Estimated Tax Payments: The Basics

The IRS requires four quarterly estimated tax payments for taxpayers who expect to owe at least $1,000 in tax beyond withholding. The standard schedule is:

• Q1 2025: April 15, 2025

• Q2 2025: June 17, 2025

• Q3 2025: September 16, 2025

• Q4 2025: January 15, 2026

For many investors, the Q4 2025 payment due January 15, 2026 is the largest, because it captures capital gains realized late in the year.

How to Calculate Estimated Taxes on Capital Gains

1. Determine your net gains: Add up all profits from stock, ETF, and mutual fund sales in 2025. Subtract any capital losses to get your net capital gain.

2. Apply the correct tax rate: Long‑term gains (assets held over one year) have preferential rates; short‑term gains are taxed at ordinary income rates.

3. Include other income: Factor in wages, interest, dividends, and other taxable income to estimate your total tax liability.

4. Subtract withholding: Reduce your estimated payment by any taxes already withheld from paychecks or other sources.

The result is the estimated tax you should pay each quarter. If most of your capital gains occurred in the second half of 2025, the Q4 payment due January 15, 2026 may represent the bulk of your obligation.

Avoiding Penalties

The IRS can impose penalties for underpayment of estimated taxes, especially when gains push your total tax owed above $1,000. Making timely payments, particularly for late‑year gains, keeps you compliant. Many investors use IRS Form 1040‑ES or online IRS payment tools to submit estimated taxes.

Strategic Considerations

• Bunching gains: If you can defer sales into early 2026, you may delay some estimated tax liability.

• Adjusting withholding: If you have a W‑2 or other income subject to withholding, increasing it late in the year can offset some estimated payments.

• State taxes: Remember that some states also require quarterly payments for capital gains.

Bottom Line

2025 has been a banner year for the stock market. While investors have enjoyed strong returns, selling appreciated investments means estimated tax payments are unavoidable. The Q4 2025 payment due January 15, 2026 is critical for anyone who realized gains late in the year. Ignoring it can lead to penalties and interest, so calculate carefully and submit on time.