Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
Comparison tables scroll horizontally on smaller screens.
Updated August 3, 2026. Quick answer: the minimum is the applicable federal rate, the IRS publishes it every month, and which of three rates applies depends on how long the loan runs. For October 2026 that is 4.21%, 4.56% and 5.15% compounded semiannually (Rev. Rul. 2026-19); September 2026 was 4.14%, 4.44% and 5.06% (Rev. Rul. 2026-17). Because a rate is true of one month only, it is published here with the month and the ruling attached, and re-read from the ruling every month. Every 2026 month is here, the full year in one table is here, and the calculator turns the rate into dollars and applies the $10,000, $100,000 and $1,000 tests. September and October each have their own page: September 2026 and October 2026.
Related 2027 figures: 2027 Section 1274A limits.
AFR rates by month: the February 2026 AFR rates, the March 2026 AFR rates, the April 2026 AFR rates and the May 2026 AFR rates.
The rates for the months ahead, before they are published: the January 2027 AFR rates when the IRS publishes them and the 2027 AFR rates as the IRS publishes them.
Writing the loan down? State by state, the interest limit and the time limit to sue on a private promissory note: promissory note by state.
The next two months’ rates: the November 2026 AFR rates, now published, and the December 2026 AFR rates when the IRS publishes them.
Last year’s rates: the 2025 AFR table.
The rates for the spring of 2027, before they are published: the February 2027 AFR rates when the IRS publishes them, the March 2027 AFR rates when the IRS publishes them and the April 2027 AFR rates when the IRS publishes them.
The rates for the autumn of 2027, before they are published: the September 2027 AFR rates when the IRS publishes them, the October 2027 AFR rates when the IRS publishes them and the November 2027 AFR rates when the IRS publishes them.
Which of the three rates applies
Section 1274(d)(1)(A) sets three maturity tiers: not over 3 years uses the federal short-term rate; over 3 but not over 9 years the mid-term rate; over 9 years the long-term rate.
| Loan term | Which rate |
|---|---|
| Not over 3 years | Federal short-term rate |
| Over 3 years, not over 9 | Federal mid-term rate |
| Over 9 years | Federal long-term rate |
Where to get the current figure
The statute requires it: “During each calendar month, the Secretary shall determine the Federal short-term rate, mid-term rate, and long-term rate which shall apply during the following calendar month.”
And the IRS says where: “These rates, known as Applicable Federal Rates (AFRs), are regularly published as revenue rulings.” The index is at IRS.gov/applicable-federal-rates.
Every figure has a month attached or it is worthless, including ours. A rate quoted without its month is a snapshot of a month that has passed. One warning about the index itself: when we read it on August 25, 2026 it was missing the September 2026 ruling entirely and misdating one earlier ruling by a month, so the newest row it showed was August 2026. Our month-by-month table is built from the numbered rulings instead, and links each one.
The term you choose is the term the document has to state
Which of the three rates applies depends on the maturity, and a demand loan is re-tested every year while a fixed term is settled on the day you sign. That choice only exists on paper: the document is what fixes the term, the rate and the repayment schedule that the section 1274(d) tiers are read against. LawDepot builds a state-specific loan agreement.
LawDepot pays us a commission if you buy through this link — it costs you nothing extra. We are not a law firm and this is not legal advice. Affiliate Disclosure.
The difference between a demand loan and a term loan
This is the structural choice, and it is not obvious:
Demand or open-ended: A demand or gift loan is treated as recurring ANNUALLY. Each year the deemed transfers happen on the last day of the calendar year, and the imputed amount is redetermined against that year’s rate – so the rate risk resets every year.
Fixed term: A term loan is treated as a SINGLE lump-sum transfer at origination: the loan amount minus the present value of all scheduled payments, discounted at the rate in effect on the loan date. That amount becomes original issue discount, reported by the lender and potentially deducted by the borrower over the loan’s life. The figure is locked in once.
In plain terms: a fixed-term loan locks in the rate on the day you sign, and a demand loan re-tests every year. Which is better depends entirely on what rates do afterwards, which nobody knows — but the choice is worth making deliberately rather than by default. The commonest fixed-term version is a house, and it is worth doing properly: an intra-family mortgage is the recorded, secured version of the same loan.
Why charging the rate is usually the simplest answer
Charge at least the applicable rate for the right term and section 7872 stops applying: the loan is not below-market, so nothing is imputed and there is no gift to consider. The lender does have real interest income to report, which is the honest cost of the simplicity.
Charging nothing is also usually fine, for a different reason — the exceptions often reduce the imputed amount to zero. Which depends on the borrower’s investment income. And where the money was never really going to come back, the cleaner route is to stop imputing anything and forgive the loan deliberately, which is a gift in the year it happens rather than a calculation that repeats every year.
The whole picture · where the line between a loan and a gift actually falls.
Figures verified against IRS Rev. Rul. 2026-17 and Rev. Rul. 2026-19 and 26 U.S.C. 1274 and 7872 on September 30, 2026.
General information drawn from IRS, Medicare, HUD and state statute and regulation, not legal, tax or financial advice. Continuing-care law is state law and differs materially between states; every figure here is year-labelled and every source named. Powers of attorney, guardianship and trusts are governed by STATE law and differ change, and interest rates published by the IRS change every month – never rely on a rate quoted on any page, including this one. We are not a law firm or a tax adviser, and this is not legal or tax advice.