IRS AFRs are Starting to Tumble

The October Applicable Federal Rates from the IRS are the lowest since November 2022

The IRS issues each month the Applicable Federal Rates (AFRs). The rates the determine the minimum interest rate that needs to be in a contract to prevent the IRS from imputing interest.

There is no requirement to have any interest in a contract. Rather, if the interest rate in the contract is not at least as high as the AFR, then you must impute the difference.

There are three different interest rates listed:

• Short-Term - 3 years or less

• Mid-Term - 3-9 years

• Long-Term - More than 9 years

For October, the annual interest rates for each is as follows:

• Short-Term - 4.21%

• Mid-Term - 3.70%

• Long-Term - 4.10%