IRS publishes April 2026 AFRs and valuation rates

Rev. Rul. 2026-7

Interest rates for April 2026 remain elevated across all maturities, increasing the cost of related-party loans and reducing the tax efficiency of several estate planning techniques.

Summary of IRS Guidance

The IRS released monthly prescribed rates for April 2026.

These rates apply across a wide range of tax calculations, including:

• Below-market loans under §7872

• Imputed interest on seller-financed transactions under §1274

• Valuation of annuities and remainder interests under §7520

• Limitation calculations for net operating losses under §382

• Low-income housing tax credit calculations under §42

Key Rates

Applicable Federal Rates (AFR)

• Short-term (up to 3 years): 3.59%

• Mid-term (3 to 9 years): 3.82%

• Long-term (over 9 years): 4.62%

These rates increase based on compounding frequency and statutory multipliers, including 110%, 120%, and 130% of the AFR.

Adjusted AFR (for §1288 and other purposes)

• Short-term: 2.72%

• Mid-term: 2.89%

• Long-term: 3.50%

§382 Limitation Rates

• Adjusted long-term rate: 3.50%

• Long-term tax-exempt rate: 3.58%

Low-Income Housing Credit Rates (§42)

• 70% credit: 7.98%

• 30% credit: 3.42%

The statutory 9% floor still applies to certain new, non-subsidized buildings.

§7520 Rate (Valuation Rate)

• 4.6%

This rate applies to the valuation of annuities, life estates, and remainder interests.

Why It Matters

• Routine release, but real impact
  Monthly AFR updates are routine, but they directly affect the pricing of intra-family loans and installment sales.

• Higher rates reduce planning efficiency
  Elevated §7520 rates make GRATs and similar estate planning strategies less effective, as future value discounts are reduced.

• Financing costs remain elevated
  Related-party loans must carry higher minimum interest rates to comply with imputed interest rules.

• §382 limits remain moderate
  The 3.50% rate continues to limit how quickly acquired companies can utilize net operating losses.

Practical Implications

• Use April rates for loans or transactions initiated this month to secure current pricing.

• Review estate planning strategies that rely on low discount rates.

• Carefully model §382 limitations in M&A transactions, especially when NOLs are significant.

• Ensure housing credit calculations reflect current percentages and statutory floors.

The Takeaway

Rates are stable but remain elevated, which gradually reduces the tax advantages of common financing and estate planning strategies.