The IRS has released the Applicable Federal Rate for the month of December 2024. Each month the Service surveys hundreds of interest rates for various financial instruments and publishes the rate that is applicable for charitable deduction calculations. The rate for December is 5.0%. The rates will look like this:
October
4.4%
November
4.4%
December (current)
5.0%
When calculating the tax deduction for a charitable gift, the IRS permits use of the Applicable Federal Rate for the current month or one of the two prior months. For charitable remainder unitrusts, annuity trusts and gift annuities, the highest Applicable Federal Rate will produce the largest charitable tax deduction. However, for seniors who create gift annuities and do not itemize, the lowest Applicable Federal Rate will produce the highest tax-free payout. For lead trusts and life estates reserved, the lowest Applicable Federal Rate is most favorable.
