The September Section 7520 Rate Is 5.4%. That One Number Prices Every Annuity, Life Estate and Remainder Interest Written This Month.

Every month the IRS publishes a short table of interest rates that most taxpayers never see and a narrow group of tax practitioners plan their entire month around. September's table is Revenue Ruling 2026-17, carried in Internal Revenue Bulletin 2026-37, dated September 8. This article explains what the numbers govern. It does not recommend any transaction.

The rates

The applicable federal rates, by compounding period - annual, semiannual, quarterly, monthly:

• Short-term (terms of three years or less): 4.18%, 4.14%, 4.12%, 4.10%
• Mid-term (over three years, up to nine years): 4.49%, 4.44%, 4.42%, 4.40%
• Long-term (over nine years): 5.12%, 5.06%, 5.03%, 5.01%

The adjusted rates, used where tax-exempt obligations are involved, are lower: 3.16% short-term, 3.40% mid-term and 3.88% long-term, on annual compounding.

Section 7520: 5.40%

The section 7520 rate is the single figure with the widest reach. It is the discount rate used to value an annuity, an interest for life or a term of years, and any remainder or reversionary interest. By statute it is 120% of the annual federal mid-term rate, rounded to the nearest two-tenths of one percent. This month's mid-term AFR of 4.49% produces 5.388%, which rounds to the published 5.40%.

Anything whose value depends on splitting an asset between a present interest and a future one runs through that rate: grantor retained annuity trusts, charitable lead and charitable remainder trusts, qualified personal residence trusts, and the valuation of retained life estates. The rate that applies is generally the one in effect for the month the transfer is made, which is why the monthly publication is a scheduling matter and not a curiosity.

Section 7872: the floor under family loans

The AFRs also set the minimum interest rate for loans between related parties under section 7872. A loan charging less than the applicable AFR is a below-market loan, and the difference between the AFR and the stated rate is treated as transferred from lender to borrower and then paid back as interest. The term of the loan picks the rate: three years or less takes the short-term rate, up to nine years the mid-term, longer than nine years the long-term.

Section 382 and section 42

The same ruling sets the adjusted federal long-term rate at 3.88% and the long-term tax-exempt rate - the figure that caps how much of an acquired company's net operating losses a buyer can use each year after an ownership change - at 3.88%.

For low-income housing, the section 42 credit percentages are 8.12% for the 70% present value credit and 3.48% for the 30% present value credit.

The list of provisions it touches

Revenue Ruling 2026-17 states that its rates apply for purposes of sections 42, 280G, 382, 467, 468, 482, 483, 1288, 7520, 7702 and 7872. That range - golden parachutes, deferred rent, related-party pricing, life insurance contract testing - is why a single monthly ruling gets read so widely.