On February 9, 2026, the Internal Revenue Service (IRS) issued Rev. Proc. 2026-13 prescribing discount factors for the 2025 accident year. Insurance companies should use the factors published in Rev. Proc. 2026-13 to discount their unpaid losses under IRC § 846 and discounted estimated salvage recoverable under IRC § 832.
The 2025 factors were determined by using the 2025 applicable interest rate of 3.57%, compounded semiannually. The Revenue Procedure also summarizes the previously issued discounted factors for accident years beginning before 2025.
The Revenue Procedure also requests public comments on the continued use of the composite method discount factors described in Notice 88-100. The IRS seeks input on whether insurers using the composite method should be permitted to apply alternative discounting approaches for taxable years beginning in 2024 or 2025, whether the composite method should be modified or eliminated for certain lines of business, and whether additional guidance is needed. Written comments are due by May 22, 2026, and any changes to the composite method would be addressed through future published guidance.
