If I apply my 2025 refund to 2026 estimated taxes, can I reduce my first quarterly payment?

Yes. If you elect to apply part of your 2025 overpayment to 2026 estimated taxes, that credited amount counts toward your 2026 estimated tax and can reduce what you need to send with your first payment.

Example: if your required Q1 2026 estimated payment is $5,000 and you applied a $1,500 overpayment from your 2025 return to 2026, you generally only need to send $3,500 for that installment.

The IRS explicitly allows this. The estimated tax rules say to reduce the installment by any overpayment from the prior year that you applied to that installment. The overpayment is treated like an estimated payment for the next tax year.

A few important details:

• It will not show up like a separate bank payment, so keep a copy of your filed 2025 return
• On your 2026 Form 1040, include it with your other estimated payments
• If you applied the overpayment to 2026, you generally cannot later ask for that amount back as a cash refund from your 2025 return
• Make sure you apply the refund to the correct tax year when filing, otherwise the IRS will issue it to you instead of crediting it forward

This is usually helpful for self-employed taxpayers who want to conserve cash in April. Just remember that the carryforward only reduces your required payment by the amount you actually elected to apply forward.