Intrafamily Loan Calculator
Lending money to family? Enter the amount, the years and the month you sign, and get the minimum rate the IRS expects, the payment, the full schedule, and what counts as a gift if you charge less. Rates come straight from each month's IRS Revenue Ruling.
In plain terms: lending $100,000 over 10 years means a payment of $1,061.14 every month at 5.01%, and $27,337 of interest over the life of the loan. That is at or above the 5.01% AFR, so nothing is imputed: the interest you receive is ordinary income and there is no deemed gift.
Show the work — year by year
| Year | Paid | Interest | Principal | Balance | Forgone |
|---|---|---|---|---|---|
| 1 | $12,734 | $4,830 | $7,904 | $92,096 | $0 |
| 2 | $12,734 | $4,425 | $8,309 | $83,788 | $0 |
| 3 | $12,734 | $3,999 | $8,735 | $75,053 | $0 |
| 4 | $12,734 | $3,551 | $9,183 | $65,870 | $0 |
| 5 | $12,734 | $3,080 | $9,653 | $56,217 | $0 |
| 6 | $12,734 | $2,586 | $10,148 | $46,069 | $0 |
| 7 | $12,734 | $2,065 | $10,668 | $35,401 | $0 |
| 8 | $12,734 | $1,518 | $11,215 | $24,185 | $0 |
| 9 | $12,734 | $943 | $11,790 | $12,395 | $0 |
| 10 | $12,734 | $339 | $12,395 | $0 | $0 |
Payment = P × r ÷ (1 − (1 + r)^−n), with r the rate per payment and n the number of payments. Forgone interest each year is the interest the same balances would have carried at the AFR, minus the interest you charge (§7872(e)(2)). For a term loan the whole present-value gap is technically a gift on day one (§7872(b)); the year-by-year view is how most people size it against the annual exclusion, and the first-year figure is the one that matters for that.
Informational only, not tax or legal advice. The loan must be a real loan with a written note and repayment for any of this to hold; a tax professional should look at anything above the annual exclusion. Rates from the IRS Revenue Rulings on this site; rules from IRC §7872 and §1274(d).
How the rate is chosen
The applicable federal rate is the floor the tax code sets for loans between related people. It comes in three terms, short (up to 3 years), mid (over 3 to 9) and long (over 9), each published at annual, semiannual, quarterly and monthly compounding in Table 1 of the month's Revenue Ruling. A term loan may use the lowest rate of the three months ending with the month it is signed (IRC §1274(d)(2)), and keeps that rate for its whole life. The newest ruling on file is November 2026 (Rev. Rul. 2026-21); the calculator offers the last 36 months and the full table since 2000 has every earlier one.
What the IRS imputes
If the rate you charge is below the AFR, IRC §7872 recharacterizes the shortfall. For a gift loan between individuals the lender is treated as giving the borrower the forgone interest and the borrower as paying it back as interest. The forgone interest for a year is the interest the outstanding balance would have carried at the AFR, less the interest actually payable (§7872(e)(2)). The deemed gift uses up the annual exclusion for that borrower ($19,000 for 2026, Rev. Proc. 2025-32); the deemed interest is income to the lender, subject to the $10,000 and $100,000 reliefs in §7872(c)(2) and (d)(1).
Worked example
$100,000 over 10 years with monthly payments, signed in November 2026. Ten years is long-term, so the monthly long-term AFR applies; the lowest of September 2026 to November 2026 is 5.01% (September 2026, Rev. Rul. 2026-17). Charging 3% instead gives a payment of $965.61 (against $1,061.14 at the AFR) and forgone interest of $1,930.23 in the first year, $10,634.84 over the loan. These figures are recomputed from the snapshot on every build; scripts/check-family-loan.mjs checks the arithmetic against a hand-run schedule.
What this leaves out
Demand loans (which use a blended annual rate and are measured every year), balloon or interest-only structures, loans to or from trusts and companies, the present-value single-gift computation for term loans, state law, and whether the borrower may deduct the interest. It does not say whether to make the loan or at what rate; it shows the floor and the consequences of going under it.
Sources: IRC §7872 (below-market loans, de minimis and net-investment-income limits) · IRC §1274(d) (AFR terms, compounding, lowest-of-three-months rule) · IRS applicable federal rates (monthly Revenue Rulings; each row on this site links its PDF) · IRS estate and gift tax, what's new (annual exclusion, Rev. Proc. 2025-32).
Informational only, not tax or legal advice. US federal rules; state gift and usury rules are not covered.
Last reviewed: October 2026 · AFR on file through November 2026; gift exclusion is the 2026 figure.
Frequently asked questions
Which AFR do I use for a family loan?
The term decides it: three years or less uses the short-term AFR, over three and up to nine the mid-term, over nine the long-term (IRC §1274(d)(1)). Within the term, pick the column that matches how often interest compounds, monthly for a monthly-payment loan. For a term loan the rate is the lowest AFR for the three months ending with the month the note is signed (§1274(d)(2)), and it is fixed for the life of the loan.
What happens if I charge less than the AFR, or nothing?
Section 7872 treats the shortfall as if you had given the borrower the difference and they had paid it back to you as interest. The gift side counts against your annual exclusion and, above it, your lifetime exemption, reported on Form 709. The interest side is taxable income to you even though you never received it, with two reliefs for loans between individuals: nothing is imputed if all loans between you total $10,000 or less (unless the money buys investments), and for totals of $100,000 or less the imputed interest is capped at the borrower's net investment income, treated as zero if that income is $1,000 or less.
Is the forgone interest a gift each year or all at once?
For a demand loan it is measured each year. For a term loan the statute treats the lender as making one gift on the day the loan is made, equal to the amount lent minus the present value of all payments at the AFR (§7872(b)). The year-by-year figure the tool shows is how the same gap spreads over the loan and is what most people compare with the annual exclusion; a loan expected to exceed the exclusion should be reviewed by a tax professional before signing.
Does charging the AFR make the loan safe?
Charging at least the AFR removes the imputed-interest problem, but the IRS also looks at whether it was a real loan: a signed note, a schedule, payments actually made and recorded, and a borrower who could reasonably repay. Without those the whole amount can be treated as a gift regardless of the rate. The interest you receive is ordinary income to you, and mortgage interest the borrower pays can be deductible only if the loan is secured by the home and recorded.
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