The AFR is published monthly by the IRS based on US marketable debt market yields, including US Treasury bills. It is divided into three categories: short-term, mid-term, and long-term. The short-term rate covers demand loans and instruments extending up to three years; the mid-term rate covers loans extending from three to nine years; and the long-term rate applies to loans that extend past nine years. These rates are used to determine original issue discounts, unstated interest, and gift and income taxes on below-market loans. The AFR is also used when a sale-leaseback (or sale-and-leaseback) transaction involves selling an asset and then leasing it back for use. Proceed to benefit from the updated table of AFR Rates for June 2023.
The AFR rate is the minimum rate that must be charged on private loans, including those between family members. This minimum rate is significantly lower than commercial lending rates and can result in significant tax consequences for lenders and borrowers. AFRs are a great tool for families that wish to make low-interest loans to each other and reduce their estate taxes. For example, the AFR rates can be used to discount cash flows for a grantor-retained annuity trust (GRAT) to reduce estate taxes. For more information about the AFR rates, contact our Trusts and Estates group member.
The table below also provides the numbers for the June 2023 AFR Rates and the previous months’ AFR rates.
Short-Term AFR Rates for June 2023
| Month | Year | Annual | Semiannual | Quarterly | Monthly |
| January | 2023 | 4.50% | 4.45% | 4.43% | 4.41% |
| February | 2023 | 4.47% | 4.42% | 4.40% | 4.38% |
| March | 2023 | 4.50% | 4.45% | 4.43% | 4.41% |
| April | 2023 | 4.86% | 4.80% | 4.77% | 4.75% |
| May | 2023 | 4.30% | 4.25% | 4.23% | 4.21% |
| June | 2023 | 4.43% | 4.38% | 4.36% | 4.34% |
Mid-Term AFR Rates for June 2023
| Month | Year | Annual | Semiannual | Quarterly | Monthly |
| January | 2023 | 3.85% | 3.81% | 3.79% | 3.78% |
| February | 2023 | 3.82% | 3.78% | 3.76% | 3.75% |
| March | 2023 | 3.70% | 3.67% | 3.65% | 3.64% |
| April | 2023 | 4.15% | 4.11% | 4.09% | 4.08% |
| May | 2023 | 3.57% | 3.54% | 3.52% | 3.51% |
| June | 2023 | 3.56% | 3.53% | 3.51% | 3.50% |
Long-Term AFR Rates for June 2023
| Month | Year | Annual | Semiannual | Quarterly | Monthly |
| January | 2023 | 3.84% | 3.80% | 3.78% | 3.77% |
| February | 2023 | 3.86% | 3.82% | 3.80% | 3.79% |
| March | 2023 | 3.74% | 3.71% | 3.69% | 3.68% |
| April | 2023 | 4.02% | 3.98% | 3.96% | 3.95% |
| May | 2023 | 3.72% | 3.69% | 3.67% | 3.66% |
| June | 2023 | 3.79% | 3.75% | 3.73% | 3.72% |