The October Section 7520 Rate Is 5.6%, a Full Point Above January's
One number published each month prices every annuity, life estate, term interest and remainder interest created that month. Rev. Rul. 2026-19 has set it at its highest level this year.
The short answer
- Rev. Rul. 2026-19 sets the October 2026 section 7520 rate at 5.6%, up from 5.4% in September and 4.6% in January.
- The rate is 120% of the annual mid-term applicable federal rate, rounded to the nearest two-tenths of a percent: October's mid-term AFR of 4.61% gives 5.54%, which rounds to 5.6%.
- October's annual applicable federal rates are 4.25% short-term, 4.61% mid-term and 5.22% long-term.
- The adjusted annual AFRs, used for tax-exempt obligations, are 3.23% short-term, 3.49% mid-term and 3.95% long-term.
Every month the IRS publishes a revenue ruling containing the applicable federal rates. Buried in it is the section 7520 rate, and that single figure determines how the tax code values a stream of future payments created that month. For October 2026, Rev. Rul. 2026-19 sets it at 5.6%. That is the highest reading of the year, and a full percentage point above January's 4.6%.
How the rate is built
Section 7520 does not set an independent rate. It takes 120% of the annual mid-term applicable federal rate for the month and rounds the result to the nearest two-tenths of one percent. October's annual mid-term AFR is 4.61%; 120% of that is 5.54%; rounded, 5.6%.
The mid-term AFR is itself derived from average market yields on US government obligations with remaining maturities of more than three and up to nine years. So the chain runs from the Treasury market, through the AFR, to the number used to value a charitable remainder trust.
The 2026 path
The IRS publishes the series, and this year it has moved in one direction.
- January: 4.6%
- February: 4.6%
- March: 4.8%
- April: 4.6%
- May: 5.0%
- June: 5.0%
- July: 5.2%
- August: 5.2%
- September: 5.4%
- October: 5.6%
What the number actually does
The section 7520 rate is the discount rate the code assumes when it splits a single pot of money into a payment stream and whatever is left at the end. Mechanically, a higher rate raises the assumed return on the assets, which increases the computed present value of an annuity or income interest and reduces the computed present value of the remainder that follows it. A lower rate does the reverse.
That arithmetic reaches a wide set of instruments: grantor retained annuity trusts, charitable remainder annuity and unitrusts, charitable lead trusts, private annuities, retained life estates, and the valuation of gifts of term interests. Which rate applies is fixed by when the interest is created, not by when it is reported, so an instrument signed in October is valued at 5.6% whatever happens next month.
The other rates in the same ruling
The AFRs in Rev. Rul. 2026-19 do other work in the code: they set the minimum interest a lender must charge on an intra-family or below-market loan before imputed-interest rules apply, and they are used in a number of deferred-payment and original issue discount calculations.
- Short-term annual AFR: 4.25%
- Mid-term annual AFR: 4.61%
- Long-term annual AFR: 5.22%
- Adjusted short-term annual AFR: 3.23%
- Adjusted mid-term annual AFR: 3.49%
- Adjusted long-term annual AFR: 3.95%
The ruling also publishes each of those rates for semiannual, quarterly and monthly compounding, along with the multiples of the AFR (110%, 120%, 130% and higher) that specific code sections call for.
This article is for general information and is not legal or tax advice. How any particular rate affects a specific gift, trust or loan depends on facts this article does not have; consult a qualified tax adviser or attorney.
Sources
- Rev. Rul. 2026-19 — Applicable Federal Rates, October 2026 — Internal Revenue Service
- Section 7520 interest rates (monthly table) — Internal Revenue Service
- Applicable Federal Rates — index of monthly revenue rulings — Internal Revenue Service
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- Published:
- 4 Oct 2026, 05:10 UTC
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- 4 Oct 2026, 05:10 UTC
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