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AFR Family Loan Calculator

Calculate minimum interest for family loans using AFR rates

Loan Details

$

Principal amount of the family loan

Determines which AFR rate applies

How long the loan will be outstanding

Interest Rate

%

Rate you plan to charge on the loan (can be 0%)

Minimum AFR Rate: 4.24% (annual compounding)

AFR rates for January 2025. Update monthly at IRS.gov.

Tax Year: 2025 | Annual Gift Exclusion: $18,000.00

AFR Analysis

Enter your details and click Calculate

Fill in the form to analyze your family loan

Understanding AFR and Family Loans

Current AFR Rates (Jan 2025)

Short-term (up to 3 years)4.34%
Mid-term (3-9 years)4.24%
Long-term (over 9 years)4.53%

Loan Amount Thresholds

Up to $10,000Generally exempt*
$10,001 - $100,000Limited to investment income
Over $100,000Full imputed interest applies

*If not used to purchase income-producing assets

Key Points:
  • AFR rates are published monthly by the IRS
  • Using a rate below AFR triggers imputed interest (treated as a gift)
  • Proper documentation protects both parties from IRS scrutiny
  • Consider using a promissory note for loans over $10,000
  • Interest income is taxable to the lender, deductible to the borrower (if qualified)

Disclaimer: This calculator is for informational purposes only and should not be considered financial, tax, or legal advice. Results are estimates based on the information provided and current tax laws. Consult a qualified professional for advice specific to your situation.

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