The §7520 Rate Drops to 4.6% in April — What It Means for GRATs, CRTs, and Estate Planning

What Changed

On March 16, 2026, the IRS published Revenue Ruling 2026-7, setting the §7520 rate at 4.6% for April 2026. This rate — derived from 120% of the federal midterm rate — is the discount rate used to value annuities, life interests, and remainder interests for estate and gift tax purposes.

For practitioners and families engaged in wealth transfer planning, this rate is not an abstraction. It directly determines the economics of two of the most powerful structural alpha tools available: Grantor Retained Annuity Trusts (GRATs) and Charitable Remainder Trusts (CRTs).

Why the §7520 Rate Matters

For GRATs: A Lower Hurdle

A GRAT works by transferring assets into a trust that pays the grantor an annuity stream. The annuity is sized to "zero out" the taxable gift — meaning the present value of the annuity, discounted at the §7520 rate, equals the full contribution. If the trust's assets outperform the §7520 rate during the trust term, the excess passes to heirs free of estate and gift tax.

The key insight: a lower §7520 rate means a lower hurdle. At 4.6%, a 2-year rolling GRAT funded with $10 million in appreciated stock needs less annual appreciation to generate a meaningful tax-free transfer than it would at 5.0% or higher.

For clients with concentrated equity positions — particularly founders approaching liquidity events — the combination of a low §7520 rate and a short GRAT term can be particularly efficient.

Explore the numbers: Our GRAT calculator lets you model the probability and magnitude of tax-free transfer under different rate assumptions, including stress-testing against a higher future §7520 rate for rolling strategies.

For CRTs: A Larger Deduction

The §7520 rate affects CRTs in the opposite direction. A Charitable Remainder Unitrust (CRUT) provides the donor an immediate income tax deduction equal to the present value of the charitable remainder — the portion of the trust that will eventually pass to charity.

For CRUTs, a lower §7520 rate reduces the present value of the charitable remainder, which means a smaller deduction. Conversely, a higher §7520 rate increases the deduction. This is the inverse of the GRAT dynamic.

However, for families already committed to charitable giving, the current rate environment still supports well-structured CRTs — particularly for those with highly appreciated, low-basis stock where the primary benefit is bypassing immediate capital gains tax on the sale.

Explore the numbers: Our CRT calculator models the charitable deduction, IRS qualification tests, and year-by-year WIFO tax character of distributions.

The Rate in Historical Context

The §7520 rate has moved through a wide range over the past several years:

Period	§7520 Rate	GRAT Environment
2020–2021	0.4%–1.0%	Historically favorable — ultra-low hurdle
2023	5.0%–5.4%	Higher hurdle, but GRATs still effective with volatile assets
Jan 2026	5.0%	Moderate
Apr 2026	4.6%	Declining — favorable trend for GRAT planning

The direction matters as much as the level. A declining rate environment suggests that families considering GRATs should evaluate funding sooner rather than later — particularly if they expect rates to rebound as inflation stabilizes.

What to Consider Now

We offer several observations — not recommendations — for families evaluating their estate planning posture:

For GRAT candidates: The 4.6% rate, combined with elevated equity volatility (the S&P 500 is down nearly 5% from its January highs), creates conditions where short-term GRATs have meaningful outperformance potential. Volatility is not the enemy of a GRAT — it is the engine. A 2-year GRAT funded during a drawdown has asymmetric upside.

For CRT candidates: While the lower rate reduces the charitable deduction slightly, families holding highly appreciated stock should weigh the deduction impact against the capital gains bypass benefit. For a $10 million position with an 80% embedded gain, the tax savings from selling inside the CRT typically dwarf any deduction reduction from rate movements.

For rolling GRAT strategies: Our calculator now supports a separate "future §7520 rate" input for successor GRATs. If you expect rates to remain near 4.6% or decline further, rolling strategies become even more compelling. If you expect rates to rise, stress-testing against a higher future rate is prudent.

Our Perspective

At Altar Rock, we view §7520 rate movements as tactical windows within a structural strategy. The fundamental case for GRATs and CRTs does not depend on rate timing — it depends on the client's asset profile, transfer objectives, and time horizon. But when the rate environment aligns favorably, as it does now, the math becomes even more compelling.

The question for families is not whether to act in April specifically, but whether they have the right structures in place to capitalize when opportunities arise. That requires advance planning — trust drafting, asset valuation, and liquidity analysis — well before any single month's rate is announced.