Applicable Federal Interest Rates for the Tax Valuation of Life Insurance and Annuity Products
The Revenue Act of 1987 amended section 807(d)(2)(B) of the Internal Revenue Code. It established the interest rate used in the calculation of tax reserves to be the greater of the applicable federal interest rate or the prevailing maximum statutory valuation rate for the contract’s calendar year of issue. The amendment is effective for contracts issued in tax years beginning after December 31, 1987. The Applicable Federal Interest Rate is determined annually by the Secretary of the Treasury. Applicable Federal Interest Rates Issue Year Rates 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 7.77% 8.16% 8.37% 8.42% 8.40% 8.10% 7.45% 6.99% 6.63% 6.33% 6.31% 6.30% 6.09% 6.00% 5.71% 5.27% 4.82% 4.44% 3.98%