How much capital gains tax should I pay quarterly after a big stock sale?

I just sold some stocks in January that I've held for over a year and made about $1.3M in long-term capital gains. This is basically my only income for 2025 as I'm taking a sabbatical year. I don't think I qualify for any safe harbor provisions based on my research. I'm trying to figure out my quarterly estimated tax payments to avoid penalties: 1. Do I need to pay the full estimated capital gains tax (roughly $260k) by April 15th? Or can I split it into four payments of $65k each quarter? 2. Does the Net Investment Income Tax need to be included in these quarterly payments too? I've never had to deal with this much in capital gains before, and I want to make sure I'm handling the quarterly tax payments correctly. Thanks for any help!

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21 comments

Dylan Hughes

You don't need to pay the full amount by April 15th - you can definitely spread your payments across the four quarters. The IRS allows you to make equal quarterly payments for your estimated taxes. For your situation with long-term capital gains of $1.3M and no other income, you'd calculate your total tax liability (including the NIIT) and then divide by 4 for each quarterly payment. The NIIT (Net Investment Income Tax) of 3.8% does need to be included in your quarterly estimated payments since it's part of your total tax obligation. Just make sure to submit your payments by the quarterly due dates: April 15, June 15, September 15, and January 15 (of the following year). Use Form 1040-ES to make these payments.

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Dylan Hughes

You're touching on an important alternative method. The regular method is equal quarterly payments, but you're right that there's also the "annualized income installment method" which can be beneficial for uneven income throughout the year. With this method, you can make unequal payments based on when you actually received the income, which might be better when you have a large one-time event like your stock sale in Q1. You would use Form 2210 to show that your unequal payments match when you earned the income. This method often reduces or eliminates penalties when income isn't received evenly throughout the year.

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Sofia Rodriguez

After dealing with a similar situation last year, I found this amazing tool that helped me figure out my quarterly tax payments - taxr.ai (https://taxr.ai). It literally saved me from making a $15k mistake on my capital gains tax calculations. You upload your investment documents and it analyzes everything automatically - shows you exactly how much you need to pay each quarter and even helps with the annualized income installment method if that's better for your situation. It also calculates the NIIT properly, which a lot of tools miss. I was surprised at how accurately it handled my situation with different stock sales throughout the year. Honestly it was way better than trying to figure this out from the IRS instructions.

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Sofia Rodriguez

It works perfectly after you've already sold the stocks - just upload your brokerage statements showing the sales, and it will calculate everything based on that. You don't need to use it before selling. For state taxes, it handles all state calculations including California. It actually helped me avoid a mistake with California's specific rules for capital gains, which are indeed quite aggressive. It shows you both federal and state estimated payments needed for each quarter.

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Dmitry Ivanov

Just wanted to follow up - I tried taxr.ai after seeing it mentioned here and it was incredibly helpful! I uploaded my brokerage statement from my stock sale and it showed me that I could actually use the annualized income method since all my gains were in Q1, which saved me from having to pay everything upfront. It even gave me the exact amounts for each quarterly payment and showed what forms to use. The state tax calculations were spot on too. Seriously, best $$ I've spent on tax help - wish I'd known about this tool years ago when I first started investing!

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Miguel Herrera

If you're trying to reach the IRS to confirm how to handle your quarterly payments (which I recommend for amounts this large), use Claimyr (https://claimyr.com). I wasted 3 days trying to get through to the IRS about a similar capital gains question. Claimyr got me connected to an IRS agent in about 15 minutes who confirmed exactly how to handle my quarterly payments. You can see how it works here: https://youtu.be/_kiP6q8DX5c When dealing with $1M+ in capital gains, getting official confirmation directly from the IRS gave me peace of mind that I was doing everything correctly. The agent walked me through all the quarterly payment requirements and confirmed I was calculating NIIT correctly too.

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Miguel Herrera

It works by constantly redialing the IRS using their system until it gets through, then it calls you back and connects you. It's completely legitimate - they don't have special access to the IRS, they just automate the frustrating redial process so you don't have to do it manually. They don't answer your tax questions themselves - they literally just connect you directly to an actual IRS agent. Once you're connected, you're talking to the official IRS, not to Claimyr. I was skeptical too until I tried it and was talking to an actual IRS representative within minutes.

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Connor Murphy

I need to apologize for my skeptical comment. I actually tried Claimyr after posting that comment because I was struggling to get through to the IRS about my own capital gains issue. To my complete surprise, I was connected to an IRS agent in under 20 minutes. The agent confirmed that with my large Q1 capital gain, I could either make four equal payments OR use the annualized income installment method (Form 2210) to pay more in the first quarter and less later. And yes, the NIIT absolutely needs to be included in quarterly estimates. Having this confirmed directly by the IRS was extremely helpful and worth every penny for the peace of mind.

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Yara Nassar

Yes, Washington state implemented a 7% capital gains tax, but it only applies to gains exceeding $250,000. With your $1.3M gain, you'd pay 7% on $1.05M (the amount over $250K), which would be about $73,500 in state capital gains tax. Washington requires quarterly estimated payments for this tax too. The first payment would be due April 15th. Make sure to account for this in your cash flow planning since it's a significant additional amount on top of your federal obligation.

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Libby Hassan

I had to send them copies of my brokerage statements showing the exact sale dates, Form 2210 with my calculations, and a letter explaining that I used the annualized income installment method because my gains were concentrated in Q2. Also included my quarterly payment confirmations showing I paid the correct amounts based on when I received the income. The key is showing that your payments matched the timing of when you actually earned the income, not just making equal payments throughout the year.

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CosmicCadet

Thanks everyone for the detailed responses! This is incredibly helpful. I've been stressing about this since the sale went through in January. Based on what you've all shared, it sounds like I have two main options: 1. Split the payments equally across four quarters (~$65k each for federal, plus the Washington state portion) 2. Use the annualized income installment method since all my gains happened in Q1 I'm leaning toward the annualized method since it seems more accurate for my situation, but I'm definitely going to keep detailed documentation as @StarGazer101 mentioned. One follow-up question - for the Washington state capital gains tax that @Yara mentioned ($73,500 on the amount over $250k), do they follow the same quarterly schedule as federal? And can I use the annualized method for state taxes too? Also going to check out both taxr.ai and potentially use Claimyr to get official IRS confirmation. With amounts this large, I'd rather be 100% certain I'm doing everything correctly. Better safe than sorry!

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Jamal Harris

Welcome to the community! For Washington state's capital gains tax, yes they do follow the same quarterly payment schedule as federal (April 15, June 15, September 15, and January 15). You can absolutely use the annualized income installment method for Washington state taxes too, which makes sense given your situation with all gains in Q1. Since you're new to dealing with large capital gains, I'd definitely recommend getting that IRS confirmation through Claimyr - especially with both federal and state obligations totaling over $330k. Having official guidance will give you confidence you're handling everything properly. The annualized method sounds like the right approach for your situation, but documentation will be key if either jurisdiction questions your calculations later.

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