The §7520 Rate — September 2026.

For September 2026, Revenue Ruling 2026-17 sets the §7520 rate — the rate used to value annuities, life and term interests, and remainder and reversionary interests — at 5.40%, up from 5.20% in July and August.

The applicable federal rates (AFRs), on an annual compounding basis, are 4.18% short-term (loans up to three years), 4.49% mid-term (over three years and up to nine), and 5.12% long-term (over nine years). The §382 adjusted federal long-term rate for the month is 3.88%, and the long-term tax-exempt rate for ownership changes during the month is also 3.88%.

Every rate in the table rose this month, and the long end rose most: the long-term AFR is up twenty basis points from August’s 4.92%, crossing back above five percent for the first time since spring. The mid-term rate — the one from which §7520 is derived, at 120% of the mid-term rate compounded annually, rounded to the nearest two-tenths of a percent — moved from 4.35% to 4.49%. That fourteen-basis-point step was enough to carry 120% of it (5.40%) past a rounding boundary, which is why the §7520 rate broke a two-month plateau.

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 transferred assets must clear is low. September’s move is therefore directional, not neutral: the QPRT and the charitable remainder trust got modestly better this month, and the GRAT got modestly worse. A client who modeled a GRAT against August’s 5.20% assumption is now modeling against a hurdle two-tenths of a point higher.

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 September’s mid-term AFR of 4.49% is a loan; the same note at no interest is a transfer the IRS can recharacterize. The practical note this month is at the long end, where a rate above 5.12% is now the price of a long-dated intra-family note — a reminder that the timing of when a note is struck fixes its rate for its whole life, and that the cost of deferring a decision is not always zero. As always, the right technique turns on the client’s facts; the rate only tells you which way the wind is blowing.