Applicable Federal Rate (AFR): current IRS rates
If you're lending money to someone in your family, the AFR is the number that decides whether the IRS treats it as a loan or as something else. It changes every month. Here's this month's, and what it means for you.
Work out your numbers and interest rate
Chipkie’s free family loan calculator uses the rates on this page. Enter the amount and the term and it’ll show you the applicable AFR, the repayments, and what charging below it could cost you.
Family Loan Calculator
Chipkie helps keep the agreed terms and repayment records together. Whether an arrangement is a loan depends on the genuine repayment obligation, the parties’ intentions and what they actually do. Records can help show those facts; a document or interest rate alone does not determine the legal or tax outcome.
AFR for October 2026
These are the rates for October 2026 — the most recent set we hold. The IRS publishes a new ruling every month, so check the current one if you are relying on this for a loan being written today.
| Term of the loan | Annual rate |
|---|---|
| Short-term — up to 3 years | 4.25% |
| Mid-term — over 3 years and up to 9 years | 4.61% |
| Long-term — over 9 years | 5.22% |
Last checked 22 September 2026.
The heading gives the effective month. “Last checked” is the stored review date, not proof of a live refresh today. Advance publication can explain a date before the effective month; this date alone does not establish when the IRS published the ruling. Confirm the effective month in the IRS AFR ruling.
Is the AFR an interest rate I have to pay?
No. It’s a minimum for tax purposes, not a payment. You can charge more than the AFR if you want to — you simply take on the tax treatment described above if you charge materially less.
Which rate applies to a loan with no fixed end date?
A demand loan — repayable whenever the lender asks — is treated differently from a term loan, and the applicable rate can move with each period rather than being fixed at the outset. If your arrangement has no end date, raise it with an accountant before relying on any figure here.
Does a family loan have to be in writing?
There’s no universal written-form requirement for tax purposes, but the burden of showing it was a loan sits with you. A written agreement, a repayment schedule and a record of payments received are the evidence. Chipkie exists to keep exactly that record.
What if the borrower never repays?
An unpaid family loan that’s forgiven is generally treated as a gift at that point, which brings gift-tax reporting into play for larger amounts. Again, the documentation is what determines whether you’re forgiving a debt or were always making a gift.
How often is this page updated?
Every month, automatically, from the same figures Chipkie uses inside the app. The date under the table shows when they were last checked.
Free loan tracking. Optional extras when you need them.
Set up and track your family loan for free, with a shared record of the terms and repayments. Optional loan agreements cost US$4.95 and eligible release documents cost US$7.95 per purchase. Pay each other directly and record repayments in Chipkie.
