The IRS Applicable Federal Rates for January 2026, annual compounding, are 3.63% short-term (loans up to 3 years), 3.81% mid-term (over 3, up to 9 years) and 4.63% long-term (over 9 years), from IRS Rev. Rul. 2026-02.
Applicable Federal Rates for January 2026
The IRS AFRs for January 2026, annual compounding, from Table 1 of IRS Rev. Rul. 2026-02.
Short-term
3.63%
Loans up to 3 years
Mid-term
3.81%
Over 3, up to 9 years
Long-term
4.63%
Over 9 years
Source: Rev. Rul. 2026-02, Table 1, annual compounding.
General information, not tax, legal or financial advice. Tax rules depend on your country and your situation; a qualified professional can tell you how they apply to you.
Which rate goes with which loan
The tier follows the loan's term as written, not how long repayment actually takes. A 5-year loan made in January 2026 falls in the mid-term tier (3.81%); a 15-year family mortgage falls in the long-term tier (4.63%). Demand loans, which the lender can call at any time, are generally measured against the short-term rate as it changes over time, not against a single month's rate.
What the AFR is used for
In the US, the IRS publishes the Applicable Federal Rates every month under section 1274(d) of the Internal Revenue Code, based on Treasury yields. Section 7872 uses them for loans between individuals: under those rules, a loan that charges less than the applicable AFR can be treated as a below-market loan, with the forgone interest treated as income to the lender and, for a gift loan, as a gift to the borrower. Loans of $10,000 or less are generally exempt, and loans of $100,000 or less have a limit on the income side.
For a fixed-term loan, the applicable rate is generally the AFR for the month the loan is made; the rates of later months do not change it. A tax advisor can tell you how these rules apply to your loan.
Compare your loan's rate
The AFR calculator shows which term applies to your loan and, if your rate is below the AFR, how much more interest the AFR would mean in the first year.
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General information, not tax, legal or financial advice. The rates on this page are copied from the IRS revenue rulings; check the ruling itself before relying on a figure. Family Loan Tracker does not guarantee that this page is complete or current.