The §7520 Rate — October 2026.

For October 2026, Revenue Ruling 2026-19 sets the §7520 rate — the rate used to value annuities, life and term interests, and remainder and reversionary interests — at 5.60%, up from 5.40% in September.

The applicable federal rates (AFRs), on an annual compounding basis, are 4.25% short-term (loans up to three years), 4.61% mid-term (over three years and up to nine), and 5.22% long-term (over nine years). The §382 adjusted federal long-term rate for the month is 3.95%, and the long-term tax-exempt rate for ownership changes during the month is also 3.95%.

Every rate in the table rose again, and this month the move is spread fairly evenly across the curve: the short-term AFR is up seven basis points from September’s 4.18%, the mid-term up twelve from 4.49%, and the long-term up ten from 5.12%. The mid-term rate is the one that matters most for the headline figure, because §7520 is derived from it — 120% of the mid-term rate compounded annually, rounded to the nearest two-tenths of a percent. At 4.61%, that calculation yields 5.532%, which rounds to 5.60%: a second consecutive twenty-basis-point step.

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.

October compounds the direction September set. Two months ago the rate was 5.20%; it is now 5.60%. Forty basis points is not a regime change, but it is no longer noise either: a GRAT modeled against the summer’s assumption is now being asked to outrun a hurdle four-tenths of a point higher, while the QPRT and the charitable remainder trust have quietly improved twice in a row. For anyone who has been holding a decision open in either camp, the drift has a cost, and the cost now runs in a consistent direction.

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 three-year note struck this month prices at 4.25%; a nine-year note at 4.61%; anything longer at 5.22%. The point worth holding onto is that the rate is fixed when the note is struck, and it governs for the life of the note — so the timing of the decision is part of the decision. As always, the right technique turns on the client’s facts; the rate only tells you which way the wind is blowing.