The §7520 Rate — August 2026.

For August 2026, Revenue Ruling 2026-13 sets the §7520 rate — the rate used to value annuities, life and term interests, and remainder and reversionary interests — at 5.20%, unchanged from July.

The applicable federal rates (AFRs), on an annual compounding basis, are 4.10% short-term (loans up to three years), 4.35% mid-term (over three years and up to nine), and 4.92% long-term (over nine years). The §382 adjusted federal long-term rate for the month is 3.72%, and the long-term tax-exempt rate for ownership changes during the month is 3.77%.

The movement since July is modest and, in a way, instructive: the short-term AFR rose ten basis points, the long-term fell six, and the mid-term — the rate from which §7520 is derived, at 120% of the mid-term rate compounded annually, rounded to the nearest two-tenths of a percent — did not move at all. Hence a §7520 rate that sits exactly where it sat last month.

These are not abstractions. The §7520 rate is the discount rate the law assumes when it values a stream of payments or a future interest, and it quietly decides which planning techniques are in season. A higher §7520 rate favors the strategies that improve as the assumed return rises: qualified personal residence trusts (QPRTs), charitable remainder trusts, and, in the right posture, charitable lead annuity trusts. A lower rate favors the opposite camp — grantor retained annuity trusts (GRATs), intra-family loans, and installment sales to grantor trusts, each of which works best when the hurdle the assets must clear is low. At 5.20%, the balance is where it was in July; a client who modeled a technique last month need not re-run the assumption this month.

The AFRs do quieter work, but work no less real: they set the minimum interest a family member may charge on a loan to another without the difference being treated as a gift. A nine-year note priced at August’s mid-term AFR of 4.35% is a loan; the same note at no interest is a transfer the IRS can recharacterize. Note that the long-term rate has eased from July’s 4.98% — a small but genuine argument for pricing a long-dated intra-family note this month rather than waiting. As always, the right technique turns on the client’s facts; the rate only tells you which way the wind is blowing.