Tax Planning
IRS Interest Rates & Inflation Adjustments: Key 2026 Numbers to Know
As 2025 closes, the IRS has released inflation-adjusted figures, interest rates, and retirement contribution limits for 2026. Here’s what taxpayers and businesses need to budget for now, including investment rates and retirement account changes.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## What IRS Released Recently
In **Internal Revenue Bulletin 2025-45** and related releases, the IRS published the tables and rates that will apply to **2026** for various tax provisions. These include interest rates for overpayments and underpayments, applicable federal rates (AFRs), and other inflation-adjusted amounts. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai)) Further, **Revenue Procedure 2025-32**, issued in Bulletin 2025-45, provides the inflation adjustment schedule for more than 60 tax items. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
## Key Adjustments for 2026
- **AFRs (Applicable Federal Rates)** for short, mid, and long-term obligations, relevant to loans, sales, transfers, etc., have been updated. Example: short-term AFR for November 2025 is ~3.69% annual and long-term ~4.62%. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- **Tax-exempt rates and Section 382 adjusted AFRs** updated. These affect business valuations, NOL limits, and transfer pricing. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- **Section 7520 rates** (for annuities, life interests, etc.): November’s rate is ~4.60% annually. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- **401(k) contribution limits** increased for **tax year 2026**, up to $24,500 for individuals. ([irs.gov](https://www.irs.gov/newsroom/topics-in-the-news?utm_source=openai))
## Practical Impacts & Planning Opportunities
### For Individuals & Estate Planning
- AFRs influence how low-interest or no-interest loans are treated. If you make intra-family loans or installment sales, these new AFRs determine imputed interest.
- Section 7520 rate changes affect present value calculations for annuities or charitable giving vehicles—higher rates may reduce the value of deductions.
### For Businesses & Financial Professionals
- Corporate transactions, especially involving related parties, need to use updated AFRs for transfer pricing and debt vs equity determinations.
- Section 382 measures limit net operating loss (NOL) usage after ownership changes; adjusted rates may affect valuation thresholds.
- Retirement plan administrators must ensure new contribution limits are correctly reflected in payroll systems and plan documents.
## Sample Scenarios
- A *family loan* made in one calendar year with no interest: under 2026’s short-term AFR (~3.7%), you might need to impute interest at that rate for tax purposes.
- A business providing deferred purchase of a year’s worth of goods might use mid-term AFR to calculate discount or interest.
- Advisors structuring estate gifts using Section 7520 must update their models depending on announced ANN. rates.
## Bottom Line & Action Steps
- **Review all contracts** now—loans, payment terms, or related-party arrangements should reflect current AFRs.
- **Update retirement planning** contributions to maximize 2026 limits.
- **Use new IRS tables** for estate planning, valuation, and charitable deductions, not outdated data.
- **Seek professional advice**, particularly when dealing with IRS-governed valuation or discounting arrangements.
Being prepared for these 2026 inflation adjustments will smooth tax compliance, reduce surprises, and allow strategic financial moves early in the new year.