The Internal Revenue Service (IRS) has updated its applicable federal rates (AFRs) used for a variety of IRS calculations, such as the minimum interest rate for intra-family loans. For calendar year 2017, AFRs for short-term loans have increased from 0.96 percent to 1.52 percent, AFRs for mid-term loans have fluctuated around 2 percent, and AFRs for long-term loans have fluctuated between 2.6 percent and 2.82 percent.

Additionally, the IRS announced that interest rates will not change for the quarter beginning January 1, 2018. The rates for individuals and non-corporate entities will be four (4) percent for overpayments and four (4) percent for underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

The interest rates announced today are computed from the federal short-term rate determined during Oct. 2017 to take effect Nov. 1, 2017, based on daily compounding.

Revenue Ruling 2017-25, announcing the rates of interest, will appear in Internal Revenue Bulletin 2017-52, dated Dec. 26, 2017.