AFR Rates April 2023
The April Applicable Federal Rates (AFRs) have been released by the Internal Revenue Service (IRS), and they have changed slightly from the previous month. This article provides the April AFR Rates for the tax year 2023.
These rates are used to determine the minimum interest rates that must be charged for certain transactions, such as loans between family members or the sale of the property on an installment basis. Here is what you need to know about the April AFR rates: The Table below shows the AFR rates for each month of 2023 up to April, including the Short-Term AFR, Mid-Term AFR, and Long-Term AFR. As you can see, the rates have fluctuated slightly over the first few months of the year. The April rates represent a slight increase in the Short-Term AFR compared to the previous month.
Short-Term Rates
| 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% |
Mid-Term Rates
| 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% |
Long-Term Rates
| 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% |
These rates may seem low, but they are important because they can have significant tax implications. For example, if you lend money to a family member at a rate below the AFR, the IRS may view the difference between the AFR and the actual interest rate as a gift. This could trigger gift tax consequences or reduce the lender’s lifetime gift tax exemption.
Similarly, if you sell property on an installment basis and charge an interest rate below the AFR, the IRS may treat the difference between the AFR and the actual interest rate as imputed interest. This imputed interest must be reported as taxable income, even if you did not actually receive the interest payments.
In conclusion, if you are considering making a loan to a family member or selling property on an installment basis, it is important to be aware of the current AFR rates. You should consult with a tax professional to ensure that you comply with all applicable tax laws and regulations.
