IRS Blended Annual Rate Calculator (2026)
The rate the IRS makes you charge on an interest-free loan. Pick a tax year to get the official published figure, then see the interest the IRS imputes on your loan under Internal Revenue Code § 7872.
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The 2026 IRS blended annual rate is 3.82%
Published in Rev. Rul. 2026-12, Table 6, under IRC § 7872(e)(2). It applies to demand loans and variable-rate gift loans outstanding for the entire 2026 calendar year. For 2025 the rate was 4.22%.
How the blended annual rate is calculated
Rev. Rul. 86-17 sets the method. The IRS takes the semiannual short-term AFR from January and from July of the same year and compounds them:
For 2026 the January semiannual short-term AFR was 3.61% and the July figure 3.96%, so the blended rate is (1.01805 × 1.01980) − 1 = 3.82% — exactly the figure published in Rev. Rul. 2026-12.
It is not a simple average. Averaging those same two rates gives 3.78%, which is wrong by four basis points. The gap widens as rates rise, so on a large note the shortcut produces a materially different imputed-interest figure.
IRS blended annual rate by year, 1985–2026
Every rate the IRS has published under § 7872(e)(2). A loan outstanding across multiple years uses each year's own rate for that year's imputed interest.
| Tax year | Blended annual rate | Source |
|---|---|---|
| 2026 | 3.82% | Rev. Rul. 2026-12 |
| 2025 | 4.22% | Rev. Rul. 2025-13 |
| 2024 | 5.03% | IRS annual revenue ruling |
| 2023 | 4.65% | IRS annual revenue ruling |
| 2022 | 1.40% | IRS annual revenue ruling |
| 2021 | 0.13% | IRS annual revenue ruling |
| 2020 | 0.89% | IRS annual revenue ruling |
| 2019 | 2.42% | IRS annual revenue ruling |
| 2018 | 2.03% | IRS annual revenue ruling |
| 2017 | 1.09% | IRS annual revenue ruling |
| 2016 | 0.73% | IRS annual revenue ruling |
| 2015 | 0.45% | IRS annual revenue ruling |
| 2014 | 0.28% | IRS annual revenue ruling |
| 2013 | 0.22% | IRS annual revenue ruling |
| 2012 | 0.22% | IRS annual revenue ruling |
| 2011 | 0.40% | IRS annual revenue ruling |
| 2010 | 0.59% | IRS annual revenue ruling |
| 2009 | 0.82% | IRS annual revenue ruling |
| 2008 | 2.80% | IRS annual revenue ruling |
| 2007 | 4.92% | IRS annual revenue ruling |
| 2006 | 4.71% | IRS annual revenue ruling |
| 2005 | 3.11% | IRS annual revenue ruling |
| 2004 | 1.98% | IRS annual revenue ruling |
| 2003 | 1.52% | IRS annual revenue ruling |
| 2002 | 2.78% | IRS annual revenue ruling |
| 2001 | 4.98% | IRS annual revenue ruling |
| 2000 | 6.24% | IRS annual revenue ruling |
| 1999 | 4.94% | IRS annual revenue ruling |
| 1998 | 5.63% | IRS annual revenue ruling |
| 1997 | 5.85% | IRS annual revenue ruling |
| 1996 | 5.77% | IRS annual revenue ruling |
| 1995 | 6.58% | IRS annual revenue ruling |
| 1994 | 4.80% | IRS annual revenue ruling |
| 1993 | 4.16% | IRS annual revenue ruling |
| 1992 | 4.98% | IRS annual revenue ruling |
| 1991 | 7.11% | IRS annual revenue ruling |
| 1990 | 8.19% | IRS annual revenue ruling |
| 1989 | 8.94% | IRS annual revenue ruling |
| 1988 | 7.72% | IRS annual revenue ruling |
| 1987 | 6.81% | IRS annual revenue ruling |
| 1986 | 7.77% | IRS annual revenue ruling |
| 1985 | 9.24% | IRS annual revenue ruling |
The 2026 rate of 3.82% is down from 4.22% in 2025, and well below the 5.03% peak of the recent tightening cycle in 2024 — but still far above the 0.13% floor of 2021, when interest-free family loans cost almost nothing in imputed tax.
Worked example: a $100,000 interest-free family loan
You lend your daughter $100,000 as a demand loan on 1 January 2026 and charge no interest. The loan is still outstanding on 31 December.
- Required interest at the blended rate: $100,000 × 3.82% = $3,820.00
- Interest actually charged: $0
- Imputed interest: $3,820.00
That amount is treated as interest income you must report, and simultaneously as a gift from you to her. It sits comfortably inside the annual gift-tax exclusion, so in most cases no gift tax is due and no Form 709 is required — but the interest income is still reportable. Charging the blended rate outright avoids the whole exercise.
When the blended rate applies — and when it doesn't
The blended annual rate is a convenience for one specific situation. Use it only when it fits:
- Use it for a demand loan, or a gift loan with a variable rate, that was outstanding for the entire calendar year. Without it you would have to track the short-term AFR month by month.
- Don't use it for a term loan. Term loans are tested once, at issue, against the AFR for the matching term — short-term up to 3 years, mid-term 3 to 9, long-term over 9.
- Don't use it for a loan made or repaid part-way through the year. Prorate against the actual short-term AFRs for the months it was outstanding instead.
- Check the exceptions first. The $10,000 gift-loan de minimis rule may remove the problem entirely.
Related calculators and reading
- Blended tax rate calculator — the effective federal rate on the imputed interest once it lands on your return.
- Blended rate calculator — weighted average rate across two or more loans.
- Blended rate mortgage calculator — combine a first mortgage and a second.
- Blended rate FAQ — definitions and common mix-ups.
Frequently asked questions
What is the IRS blended annual rate for 2026?
The blended annual rate for 2026 is 3.82%. The IRS published it in Rev. Rul. 2026-12, Table 6. Use it for demand loans and gift loans with a variable rate that stayed outstanding for the whole of 2026.
What was the blended annual rate for 2025?
4.22%, published in Rev. Rul. 2025-13. Each year has its own rate, so a loan outstanding across several years uses a different blended rate for each of those years — see the full table above for every year back to 1985.
How is the section 7872(e)(2) blended annual rate calculated?
Under Rev. Rul. 86-17 the rate is (1 + January semiannual short-term AFR ÷ 2) × (1 + July semiannual short-term AFR ÷ 2) − 1. It is not the simple average of the two rates: the semiannual figures compound, so the true blended rate is always slightly higher than the average of the two.
When does the IRS publish the blended annual rate?
Each June or July, in the revenue ruling that sets the July applicable federal rates. The rate cannot be published earlier because it depends on the July semiannual short-term AFR, which is not known until then.
What is a below-market loan under IRC § 7872?
A below-market loan is any loan where the stated interest rate is less than the applicable federal rate (AFR) set by the Treasury. The shortfall is treated as imputed interest — income to the lender, and usually a gift from lender to borrower.
Does the IRS exempt small family loans from imputed interest?
Largely, yes. IRC § 7872(c)(2) provides a $10,000 de minimis exception for gift loans between individuals, provided the proceeds are not used to buy income-producing assets. A separate $100,000 limit caps imputed interest at the borrower's net investment income, and eliminates it entirely if that income is $1,000 or less.
Rates verified 8 September 2026. The 2026 blended annual rate of 3.82% is taken from Rev. Rul. 2026-12, Table 6; 2025 from Rev. Rul. 2025-13. This calculator computes imputed interest for a full-year demand loan at the published blended rate. It does not apply the $10,000 or $100,000 de minimis exceptions, prorate part-year loans, handle term loans, or compute gift or estate tax. It is not tax advice — consult a qualified tax professional before relying on it for a filing position.
Need the tax on that imputed interest?
Imputed interest is ordinary income. See what it actually costs you at your effective federal rate.