IRS sets May 2026 AFR, §382, §42, and §7520 rates
Rev. Rul. 2026-9
IRS has issued the May 2026 federal tax rates for use in below-market loans, debt instruments, loss limitation calculations, low-income housing credits, and estate and gift valuation work.
IRS Action
Rev. Rul. 2026-9 provides the prescribed federal rates for May 2026. The ruling updates the applicable federal rates, adjusted applicable federal rates, §382 rates, §42 credit percentages, and the §7520 valuation rate.
Why It Matters
This is routine monthly guidance, but it affects live transactions closing in May 2026.
The AFRs matter for loans between related parties, installment sales, and debt issued for property.
The §7520 rate matters for estate planning, charitable transfers, annuities, life estates, and remainder interests.
The §382 rate matters for corporations with ownership changes that must calculate limits on pre-change tax losses.
The §42 percentages affect low-income housing credit calculations for buildings placed in service during May 2026.
Key May 2026 Rates
The short-term AFR is 3.82% annually.
The mid-term AFR is 4.08% annually.
The long-term AFR is 4.83% annually.
The adjusted federal long-term rate under §382 is 3.65%.
The long-term tax-exempt rate under §382 is 3.65%.
The §42 low-income housing credit percentage is 8.04% for the 70% present value credit and 3.44% for the 30% present value credit.
The §7520 rate is 5.00%.
Practical Effect
Tax professionals should use the May 2026 rates for transactions, valuations, and credit calculations governed by the monthly rate tables. The ruling does not change the law. It supplies the numbers needed to apply existing rules.