The Section 7520 Rate: What It Is, Where It Is Published, and What It Values

What is the section 7520 rate?

The section 7520 rate is the interest rate used, with IRS actuarial tables, to value an annuity, an interest for life or a term of years, or a remainder or reversionary interest. It equals 120 percent of the federal midterm rate for the month of the valuation date, rounded to the nearest two-tenths of one percent (IRC § 7520(a)). The IRS publishes it monthly. The rate for November 2026 is 6.2% (Rev. Rul. 2026-21).

A valuation under § 7520 has two parts: the interest rate, and a mortality table for any interest measured by a life (Treas. Reg. § 25.7520-1(b)). The “valuation date” is the date as of which the valuation is made (§ 7520(d)), and the statute’s “tables” include formulas (§ 7520(e)). The rule applies across the income, estate, and gift taxes, because § 7520(a) opens with the words “for purposes of this title.”

How the rate is set

The starting point is the federal mid-term rate, one of the three applicable federal rates. Each calendar month the Treasury determines the short-, mid-, and long-term rates that will apply during the following month, based on average market yields on outstanding marketable obligations of the United States (IRC § 1274(d)(1)).

The regulations then fix the arithmetic. The section 7520 rate is 120 percent of the applicable federal mid-term rate, compounded annually, rounded to the nearest two-tenths of one percent. A figure exactly midway between two steps is rounded up: the regulation’s example is 10.30, which becomes 10.4 (§ 25.7520-1(b)(1)(i)).

For November 2026, 120 percent of the annual mid-term rate is 6.11%, and the section 7520 rate is 6.2% (Rev. Rul. 2026-21, Tables 1 and 5).

September 2026 to November 2026

Source: the revenue ruling named in each row (Table 1 for 120 percent of the mid-term rate, Table 5 for the section 7520 rate) and the IRS page Section 7520 interest rates. Figures run through November 2026; later months are published by the IRS.

The rate appears in two places. Each month’s revenue ruling on the applicable federal rates carries it in Table 5; the IRS links those rulings from its applicable federal rates index. The IRS also keeps a running table of the year’s section 7520 rates, naming the ruling for each month, on the page linked above.

Which month applies

The rate is the one for the month in which the valuation date falls. The valuation date depends on the tax:

• Income tax: the date the transaction takes place (Treas. Reg. § 1.7520-1(b)(1)(ii)).
• Gift tax: the date the gift is complete (§ 25.7520-1(b)(1)(ii)).
• Estate tax: the date of death, or the alternate valuation date if the executor elects it (Treas. Reg. § 20.7520-1(b)(1)(ii)).

Charitable transfers have a choice. If an income, estate, or gift tax charitable contribution is allowable for any part of the property transferred, the taxpayer may elect to use the federal midterm rate for either of the two months preceding the month of the valuation date (§ 7520(a)). Where more than one interest in the same property is transferred, the same rate must be used for each.

The regulations set the mechanics (Treas. Reg. § 1.7520-2; § 25.7520-2):

• The election is made by attaching a statement to the return that says the prior-month election under § 7520(a) is being made and identifies the month elected.
• It can be made on the original return, or on an amended return filed within 24 months after the later of the date the original return was filed or its due date. It can be revoked within the same period.
• All of the actuarial computations for the transfer use the interest rate and the mortality table of the month elected.

For a charitable transfer with a valuation date in November 2026, the rates available are the valuation month’s and, by election, either of the two before it:

• September 2026: 5.4%
• October 2026: 5.6%
• November 2026: 6.2%

A transfer with no charitable part has no election. It uses the rate for its own valuation month.

What the rate values

Any transfer that splits property into a stream of payments or a period of use and a later remainder needs a value for each piece. The common cases:

• Charitable remainder trusts. The remainder interest in a charitable remainder annuity trust is the value of the property placed in trust less the present value of the annuity (Treas. Reg. § 1.664-2(c)). See charitable remainder and lead trusts.
• Charitable lead trusts. Annuities and term interests for which a charitable deduction is allowable are valued at their present value under the same rules (§ 1.7520-2(a)(1); § 25.7520-2(a)(1)).
• Charitable gift annuities. The deduction for an annuity bought from a charity is the excess of the amount paid over the value of the annuity (Treas. Reg. § 1.170A-1(d)), and that value is found with the tables in Treas. Reg. § 20.2031-7. See charitable gift annuities.
• Grantor retained annuity trusts. A retained interest that is a “qualified interest,” such as a right to fixed amounts payable at least annually, is valued under § 7520 (IRC § 2702(a)(2)(B), (b)).
• Qualified personal residence trusts. The special valuation rule of § 2702 does not apply to a trust whose only property is a residence used as a personal residence by the holders of the term interests (§ 2702(a)(3)(A)(ii)); on its terms, that leaves the retained term to be valued under the general rule of § 7520.
• Life estates, term interests, and remainders. The value is the value of the property multiplied by the factor for the interest (§ 20.2031-7(d)(2)).

Section 7520 does not reach everything. It does not apply to the qualified-plan rules (§ 7520(b)), and the regulations list other provisions outside it, including the income taxation of annuity contracts under § 72 and below-market loans under § 7872, unless the regulations under those sections say otherwise (Treas. Reg. § 1.7520-3(a)).

Effect of a higher rate

The direction depends on the kind of interest. The regulations give the relationships for interests that last a fixed number of years (§ 20.2031-7(d)(2)):

• The remainder factor is the present value of $1.00 due at the end of the term. The IRS prints it in Table B.
• The income factor is 1 minus the remainder factor.
• The annuity factor is 1 minus the remainder factor, divided by the section 7520 rate.

The following is a hypothetical illustration of the arithmetic, not advice. Property worth $1,000,000 is split over a 10-year term. The two rates, 5.4% and 6.2%, are chosen only to show the direction. The Table B remainder factors for 10 years are 0.591009 at 5.4% and 0.547968 at 6.2% (§ 20.2031-7(d)(6)).

Hypothetical illustration. At 5.4%: 1 less 0.591009 is 0.408991; divided by 0.054 it is 7.5739; $50,000 times 7.5739 is $378,695; $1,000,000 less $378,695 is $621,305. At 6.2%: 1 less 0.547968 is 0.452032; divided by 0.062 it is 7.2908; $50,000 times 7.2908 is $364,540; $1,000,000 less $364,540 is $635,460. The income and remainder rows are $1,000,000 times the income and remainder factors.

On this arithmetic, a higher rate:

• lowers the value of a fixed annuity and raises the value of the remainder that follows it; and
• raises the value of a right to income or use for a term and lowers the value of the remainder that follows it.

A lower rate does the reverse. Interests measured by a life follow the same relationships, with remainder factors that also reflect mortality (Table S).

When the tables cannot be used

The standard factors assume an ordinary interest and a measuring life in normal health. The regulations withdraw them in several situations (Treas. Reg. § 25.7520-3(b); § 20.7520-3(b); § 1.7520-3(b)):

• Terminal illness. The mortality component may not be used if an individual who is a measuring life is terminally ill. A person known to have an incurable illness or other deteriorating physical condition is treated as terminally ill if there is at least a 50 percent probability of death within one year. A person who survives 18 months or longer is presumed not to have been terminally ill unless the contrary is shown by clear and convincing evidence.
• Restricted interests. A standard factor generally may not be used for an interest subject to a contingency, power, or other restriction. A special factor may be needed.
• Annuities that may exhaust the fund. A standard annuity factor may be used only if the annuity is expected to be paid for the whole period. The regulation tests this by assuming each measuring life could survive to age 110. An annual payment that is no more than the section 7520 rate, as a percentage of the initial fund, is assumed to be safe.

Where the section 7520 components do not apply, the interest is valued at its actual fair market value on all the facts and circumstances (§ 25.7520-3(b)(1)(iii)).

The mortality table. The statute requires the tables to be revised at least once every 10 years for the most recent mortality experience (§ 7520(c)(2)). The table now in use is Table 2010CM, which applies to valuation dates on or after June 1, 2023 (§ 25.7520-1(b)(2)). The factors built from it are posted on the IRS actuarial tables page and explained in IRS Publications 1457 and 1458.

Section 7520 and the AFR

The section 7520 rate is derived from the applicable federal rate but does a different job. The AFR is a set of minimum interest rates for loans and other debt. The section 7520 rate is a single discount rate for valuing split interests. Both come out of the same monthly revenue ruling.

The applicable federal rate page covers the AFR tiers and their use in family loans. It also shows a section 7520 figure, dated to that page’s own as-of month. Where the two pages show different months, each figure is correct for the month it names.

Related pages: trusts, the lifetime exemption, and the charitable planning overview.

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