Applicable Federal Rates (AFRs)
Current-month IRS applicable federal rates for family loans — short, mid, and long term, every compounding period — plus the §7520 rate and 12-month history
Key Numbers
Short-Term (Jun)
3.85%
Mid-Term (Jun)
4.13%
Long-Term (Jun)
4.87%
§7520
5.0%
Applicable federal rates are the IRS’s monthly minimum interest rates for private loans — the floor that keeps a family loan, an installment sale, or an intra-family note from being treated as a below-market loan under § 7872. The IRS publishes them each month in a revenue ruling under § 1274(d); June 2026 rates come from Rev. Rul. 2026-11.
June 2026 AFRs — Rev. Rul. 2026-11
Short-term (3 years or less)
| Rate | Annual | Semiannual | Quarterly | Monthly |
|---|---|---|---|---|
| AFR | 3.85% | 3.81% | 3.79% | 3.78% |
| 110% AFR | 4.23% | 4.19% | 4.17% | 4.15% |
| 120% AFR | 4.62% | 4.57% | 4.54% | 4.53% |
| 130% AFR | 5.01% | 4.95% | 4.92% | 4.90% |
Mid-term (over 3, up to 9 years)
| Rate | Annual | Semiannual | Quarterly | Monthly |
|---|---|---|---|---|
| AFR | 4.13% | 4.09% | 4.07% | 4.06% |
| 110% AFR | 4.55% | 4.50% | 4.47% | 4.46% |
| 120% AFR | 4.97% | 4.91% | 4.88% | 4.86% |
| 130% AFR | 5.39% | 5.32% | 5.29% | 5.26% |
| 150% AFR | 6.23% | 6.14% | 6.09% | 6.06% |
| 175% AFR | 7.29% | 7.16% | 7.10% | 7.06% |
Long-term (over 9 years)
| Rate | Annual | Semiannual | Quarterly | Monthly |
|---|---|---|---|---|
| AFR | 4.87% | 4.81% | 4.78% | 4.76% |
| 110% AFR | 5.36% | 5.29% | 5.26% | 5.23% |
| 120% AFR | 5.85% | 5.77% | 5.73% | 5.70% |
| 130% AFR | 6.35% | 6.25% | 6.20% | 6.17% |
Adjusted AFRs and Other June 2026 Rates
| Rate | Value (annual) |
|---|---|
| Adjusted AFR — short / mid / long (§ 1288(b)) | 2.91% / 3.13% / 3.68% |
| § 382 adjusted federal long-term rate | 3.68% |
| § 382 long-term tax-exempt rate | 3.68% |
| § 42 LIHTC — 70% / 30% present value | 8.05% / 3.45% |
| § 7520 rate | 5.0% |
Lending to family? Paper it like a bank would.
The AFR is the easy part — the note terms, gift-tax interplay, and estate-freeze opportunities are where intra-family loans go right or wrong. WiserAdvisor's free service matches you with up to three vetted advisors versed in family wealth transfers, in about 5 minutes.
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The Section 7520 Rate
The § 7520 rate — 5.0% for June 2026 — values annuities, life estates, remainders, and reversions. It is, by statute, 120% of the mid-term AFR (annual compounding) rounded to the nearest 0.2%: 4.13% × 1.2 = 4.956% → 5.0%.
Planning intuition: GRATs and CLATs work best when the § 7520 rate is low (the trust only has to beat the hurdle rate); CRTs and QPRTs get better deductions when it is high. For charitable interests you may elect the rate for the valuation month or either of the two preceding months.
Trailing 12 Months of AFRs
Annual-compounding AFRs for the last 12 months. Each row carries a stable anchor (e.g. #afr-2026-06) safe for permanent citation.
| Month | Short-term | Mid-term | Long-term | § 7520 | Ruling |
|---|---|---|---|---|---|
| June 2026 | 3.85% | 4.13% | 4.87% | 5.0% | Rev. Rul. 2026-11 |
| May 2026 | 3.82% | 4.08% | 4.83% | 4.8%* | Rev. Rul. 2026-9 |
| April 2026 | 3.59% | 3.82% | 4.62% | 4.6%* | Rev. Rul. 2026-7 |
| March 2026 | 3.59% | 3.93% | 4.72% | 4.8%* | Rev. Rul. 2026-6 |
| February 2026 | 3.56% | 3.86% | 4.70% | 4.6%* | Rev. Rul. 2026-3 |
| January 2026 | 3.63% | 3.81% | 4.63% | 4.6% | Rev. Rul. 2026-2 |
| December 2025 | 3.66% | 3.79% | 4.55% | 4.6%* | IRS monthly ruling |
| November 2025 | 3.69% | 3.83% | 4.62% | 4.6%* | IRS monthly ruling |
| October 2025 | 3.81% | 3.87% | 4.73% | 4.6%* | IRS monthly ruling |
| September 2025 | 4.00% | 4.04% | 4.83% | 4.8%* | IRS monthly ruling |
| August 2025 | 4.03% | 4.06% | 4.82% | 4.8%* | IRS monthly ruling |
| July 2025 | 4.12% | 4.19% | 4.90% | 5.0%* | IRS monthly ruling |
* Computed from the statutory formula (120% of the mid-term AFR, annual compounding, rounded to the nearest 0.2%) — confirm against the IRS § 7520 page before relying on it for a filing.
Using AFRs for Family Loans
- Pick the term by the loan’s length, not its size: short-term ≤ 3 years, mid-term > 3 to 9 years, long-term > 9 years.
- Use the month the loan is made. For a fixed-term loan the rate locks for the life of the note — refinancing into a lower AFR later is possible but is a new loan with its own paperwork.
- Match the compounding column to how the note actually compounds (annual payments → annual column, and so on).
- Paper it: a signed promissory note, a real payment schedule, and actual payments are what separate a loan from a gift if the IRS asks.
Charging at least the AFR avoids § 7872 imputed interest entirely. De minimis relief exists — loans up to $10,000, and a net-investment-income cap on imputation for loans up to $100,000 — but the cleanest structure for any meaningful family loan is simply to charge the AFR. Compare against the $19,000 annual gift exclusion if forgiving interest each year is part of the plan.
Rates this close to the 7520 floor open estate windows.
GRATs, installment sales to grantor trusts, and loan refinancing all key off this month's rates. An advisor can tell you which structure fits your balance sheet — and whether to act this month or wait. WiserAdvisor matches you with up to three local fiduciaries, free, in about 5 minutes.
FinanceWonk earns a referral fee when readers request a match through this link — at no cost to you.
AFR Questions
What are the applicable federal rates for June 2026?
Per Rev. Rul. 2026-11 (annual compounding): short-term 3.85%, mid-term 4.13%, long-term 4.87%. The Section 7520 rate is 5.0%. The IRS publishes new rates each month in a revenue ruling, usually about two weeks before the month begins.
Which AFR term applies to my loan?
It is set by the loan’s term, not its size: short-term for loans of 3 years or less, mid-term for more than 3 up to 9 years, long-term for more than 9 years. A demand loan generally uses the short-term rate (or the blended annual rate for a fixed-principal loan outstanding all year). Use the rate for the month the loan is made — it stays locked for a fixed-term loan.
What happens if I charge less than the AFR on a family loan?
Section 7872 treats the foregone interest as if it happened anyway: the lender is taxed on imputed interest income and is treated as having gifted that amount back to the borrower. Common exceptions: loans up to $10,000, and for loans up to $100,000 imputed interest is capped at the borrower’s net investment income (zero if that income is $1,000 or less).
What is the Section 7520 rate and how is it set?
It is the rate used to value annuities, life estates, remainders, and reversions — the engine behind GRATs, CRTs, CLTs, and QPRTs. By statute it equals 120% of the mid-term AFR (annual compounding) rounded to the nearest 0.2%. For June 2026 that is 5.0%. Estate planners can elect the rate for the valuation month or either of the two preceding months for charitable interests.
Which compounding column do I use?
Match the loan’s actual compounding: a loan with annual payments uses the annual column, monthly compounding uses the monthly column, and so on. The columns are economically equivalent versions of the same rate, so the choice never changes the substance — only the stated number.
This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Consult a qualified professional for guidance tailored to your situation.