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Rev. Proc. 2026-13, 2026-09 I.R.B. 563

activein force · 2026-02-23 – presentact-effective-date

SECTION 1. PURPOSE

This revenue procedure provides discount factors for the 2025 accident year for use by insurance companies in computing discounted unpaid losses under § 846 of the Internal Revenue Code1 and discounted estimated salvage recoverable under § 832. This revenue procedure also provides, for convenience, discount factors for losses incurred in the 2024 accident year and earlier accident years for use in taxable years beginning in 2025. The discount factors for accident years before 2025 were provided in earlier revenue procedures. See, e.g., Rev. Proc. 2025-15, 2025-11 I.R.B. 1090. See Rev. Proc. 2023-10, 2023-3 I.R.B. 411, for background concerning the loss payment patterns and application of the discount factors. This revenue procedure also requests comments relating to the composite method described in this revenue procedure and a 2024 change by the National Association of Insurance Commissioners (NAIC) to Schedule P (Analysis of Losses and Loss Expenses) of the annual statement.

SECTION 2. SCOPE

This revenue procedure applies to any insurance company that is required to discount unpaid losses under § 846 for a line of business using the discount factors published by the Secretary of the Treasury or the Secretary’s delegate (Secretary) and also applies to any insurance company that is required to discount estimated salvage recoverable under § 832.

SECTION 3. DISCOUNT FACTORS FOR THE 2025 ACCIDENT YEAR

.01 The tables in this section 3 present separately for each line of business the discount factors for losses incurred in the 2025 accident year for use by insurance companies in computing discounted unpaid losses under § 846 and estimated salvage recoverable under § 832. The discount factors presented in this section are generally determined by using the applicable interest rate for 2025 under § 846(c), which is 3.57 percent, compounded semiannually. The exceptions are the discount factors for long-tail lines of business determined using the composite method described in section V of Notice 88-100, 1988-2 C.B. 439. See section 3.02 of this revenue procedure. All discount factors are determined by assuming all loss payments occur in the middle of the calendar year.

.02 Section V of Notice 88-100 sets forth a composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. Tables 1 and 2 separately provide discount factors for insurance companies that have elected to use the composite method of Notice 88-100. See Rev. Proc. 2002-74, 2002-2 C.B. 980. The discount factors computed using the composite method are unrelated to the composite discount factors referred to in § 1.846-1(b)(1)(ii) and (4), which apply to lines of business for which the Secretary has not published discount factors. The composite discount factors for use with respect to such lines of business are labelled “Short-Tail Composite” (in Table 1, part B) and “Long-Tail Composite” (in Table 2, part B). The “Miscellaneous Casualty” discount factors referenced in § 1.846-1(b)(2) are not set forth in tables but are equivalent to the “Short-Tail Composite” discount factors.

Discount Factors for 2025

2025 Interest Rate (using semi-annual compounding): 3.57%

Table 1 (part A)

Discount Factors Under Section 846 (percent)

For Losses Incurred in Accident Year 2025 in Short-Tail Lines of Business

Taxable Year Beginning in

Auto Physical Damage

Fidelity/Surety

Financial Guaranty/ Mortgage Guaranty

International

Other*

2025

98.0171

94.8069

94.2020

94.9732

96.3288

2026

96.5385

Taxpayer Not Using Composite Method

Years after 2026

98.2463

Taxpayer Using the Composite Method

2027

98.2463

Years after 2027

Use composite method discount factors published for the accident year that is two years prior to the specified taxable year.

* For the Accident and Health line of business (other than disability income or credit disability insurance), the discount factor for taxable year 2025 is 98.2463 percent. This is also the discount factor used in later taxable years for taxpayers not using the composite method. For taxpayers using the composite method, the discount factor for losses incurred in 2025 is the discount factor published for the Accident and Health line of business for losses incurred in the accident year coinciding with the taxable year.

Table 1 (part B)

Discount Factors Under Section 846 (percent)

For Losses Incurred in Accident Year 2025 in Short-Tail Lines of Business

Taxable Year Beginning in

Reinsurance - Nonproportional Assumed Financial Lines

Reinsurance - Nonproportional Assumed Liability

Reinsurance - Nonproportional Assumed Property

Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Burglary, Theft, Pet)

Warranty

Short-Tail Composite

2025

94.9406

93.8058

95.3714

97.0553

98.0069

96.6054

2026

96.5385

Taxpayer Not Using Composite Method

Years after 2026

98.2463

Taxpayer Using the Composite Method

2027

98.2463

Years after 2027

Use composite method discount factors published for the accident year that is two years prior to the specified taxable year.

Table 2 (part A)

Discount Factors Under Section 846 (percent)

For Losses Incurred in Accident Year 2025 in Long-Tail Lines of Business

Taxable Year Beginning in

Commercial Auto/Truck Liability/Medical

Medical Professional Liability - Claims-Made

Medical Professional Liability - Occurrence

Multiple Peril Lines

Other Liability - Claims-Made

Other Liability - Occurrence

2025

92.7912

89.9549

84.2073

94.4611

89.6344

87.9606

2026

93.5133

91.2521

86.4746

92.5690

90.7627

88.9863

2027

94.1823

91.6347

88.1348

92.6080

90.8107

89.8289

2028

94.5524

92.6662

89.7767

92.5264

91.0559

90.2447

2029

94.4332

92.4552

90.7378

92.2615

90.9686

90.6061

2030

93.8646

93.2174

91.1974

92.5637

91.0111

89.3763

2031

93.8845

92.6918

91.6531

92.6495

90.5663

89.3393

2032

94.4510

93.7328

91.4746

94.7671

92.5852

90.2206

2033

95.6118

95.3263

93.6570

95.7661

95.6185

91.4060

2034

97.8620

97.0999

95.6841

97.5155

96.3278

93.6044

Taxpayer Not Using Composite Method

2035

98.2463

97.2501

98.2463

97.9703

95.2097

2036

98.2463

96.8131

Years after 2036

98.2463

Taxpayer Using the Composite Method

2035

98.2463

97.5177

98.2463

98.0050

96.3273

Years after 2035

Use composite method discount factors published for the accident year that is ten years prior to the specified taxable year.

Table 2 (part B)

Discount Factors Under Section 846 (percent)

For Losses Incurred in Accident Year 2025 in Long-Tail Lines of Business

Taxable Year Beginning in

Private Passenger Auto Liability/ Medical

Products Liability - Claims-Made

Products Liability - Occurrence

Workers’ Compensation

Long-Tail Composite

2025

94.9556

86.9550

86.1793

86.7823

92.0262

2026

94.5489

88.5282

87.8134

85.0171

91.1814

2027

94.6490

88.8084

89.1375

84.3111

90.8933

2028

94.5543

87.6563

89.8227

83.7305

90.1230

2029

93.4742

89.4311

90.2047

84.0629

89.7600

2030

92.7233

91.3355

90.7591

83.3153

89.1923

2031

93.4032

93.4192

91.8587

83.9937

89.4663

2032

93.5712

93.9397

92.1985

85.7493

91.0189

2033

94.4679

95.4488

93.4239

87.4231

92.6313

2034

97.0779

97.4692

95.8540

88.5091

94.1737

Taxpayer Not Using Composite Method

2035

98.2463

97.4244

90.0263

95.7770

2036

98.2463

91.5785

97.3442

2037

98.2463

93.1661

98.2463

2038

98.2463

94.7893

98.2463

2039

98.2463

96.4458

98.2463

2040

98.2463

98.1221

98.2463

Years after 2040

98.2463

Taxpayer Using the Composite Method

2035

98.2463

98.3230

97.6204

93.4950

96.8705

Years after 2035

Use composite method discount factors published for the accident year that is ten years prior to the specified taxable year.

SECTION 4. DISCOUNT FACTORS FOR TAXABLE YEARS BEGINNING IN 2025

.01 The tables in this section 4 present separately for each line of business discount factors for losses incurred in the 2025 accident year and earlier accident years for use by insurance companies in computing discounted unpaid losses under § 846 and estimated salvage recoverable under § 832 in taxable years beginning in 2025.

.02 Tables 3 and 4 separately provide discount factors for insurance companies that have elected to use the composite method of Notice 88-100. See Rev. Proc. 2002-74. The discount factors computed using the composite method are unrelated to the composite discount factors referred to in § 1.846-1(b)(1)(ii) and (4), which apply to lines of business for which the Secretary has not published discount factors. The composite discount factors for use with respect to such lines of business are labelled “Short-Tail Composite” (in Table 3, part B) and “Long-Tail Composite” (in Table 4, part B). The “Miscellaneous Casualty” discount factors referenced in § 1.846-1(b)(2) are not set forth in tables but are equivalent to the “Short-Tail Composite” discount factors.

Table 3 (part A)

Discount Factors Under Section 846 (percent)

For Taxable Years Beginning in 2025

Short-Tail Lines of Business

Accident Year

Auto Physical Damage

Fidelity/Surety

Financial Guaranty/ Mortgage Guaranty

International

Other*

2025

98.0171

94.8069

94.2020

94.9732

96.3288

2024

96.9063

Taxpayer Not Using Composite Method

2023

98.5707

2022

98.6826

2021

98.5999

2020

98.4834

2019

98.4785

Years before 2019

98.5513

Taxpayer Using the Composite Method

Years before 2024

98.5707

* For the Accident and Health line of business (other than disability income or credit disability insurance), the discount factor for taxable year 2025 is 98.2463 percent.

Table 3 (part B)

Discount Factors Under Section 846 (percent)

For Taxable Years Beginning in 2025

Short-Tail Lines of Business

Accident Year

Reinsurance - Nonproportional Assumed Financial Lines

Reinsurance - Nonproportional Assumed Liability

Reinsurance - Nonproportional Assumed Property

Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Burglary, Theft, Pet)

Warranty

Short-Tail Composite

2025

94.9406

93.8058

95.3714

97.0553

98.0069

96.6054

2024

96.9063

Taxpayer Not Using Composite Method

2023

98.5707

2022

98.6826

2021

98.5999

2020

98.4834

2019

98.4785

Years before 2019

98.5513

Taxpayer Using the Composite Method

Years before 2024

98.5707

Table 4 (part A)

Discount Factors Under Section 846 (percent)

For Taxable Year(s) Beginning in 2025

Long-Tail Lines of Business

Accident Year

Commercial Auto/Truck Liability/Medical

Medical Professional Liability - Claims-Made

Medical Professional Liability - Occurrence

Multiple Peril Lines

Other Liability - Claims-Made

Other Liability - Occurrence

2025

92.7912

89.9549

84.2073

94.4611

89.6344

87.9606

2024

94.1807

92.1360

87.8094

93.3234

91.6872

90.0762

2023

95.2185

93.1025

90.1803

93.9066

92.4061

91.5784

2022

95.8620

94.4096

92.1748

94.3016

93.1601

92.5186

2021

95.3575

93.4953

92.9976

91.6759

92.3482

90.9746

2020

94.8262

93.0034

93.2158

91.2360

92.2753

90.3502

2019

95.0988

93.9636

94.0439

90.9051

92.7450

90.3437

2018

94.9804

95.1291

94.9993

91.0177

93.8378

91.9830

2017

96.4102

96.0160

96.1220

93.5200

94.9264

92.6228

2016

98.3585

97.7503

97.7902

94.8530

96.6876

94.4974

Taxpayer Not Using the Composite Method

2015

98.5513

96.1895

98.0033

95.8511

2014

98.5513

97.5045

98.5513

97.2176

Years before 2014

98.5513

Taxpayer Using the Composite Method

Years before 2016

98.5513

96.9185

98.0920

96.7300

Table 4 (part B)

Discount Factors Under Section 846 (percent)

For Taxable Year(s) Beginning in 2025

Long-Tail Lines of Business

Accident Year

Private Passenger Auto Liability/ Medical

Products Liability - Claims-Made

Products Liability - Occurrence

Workers’ Compensation

Long-Tail Composite

2025

94.9556

86.9550

86.1793

86.7823

92.0262

2024

95.1115

89.6632

89.0194

86.4322

92.0595

2023

95.6012

90.7369

91.0112

86.8945

92.4617

2022

95.8576

90.5530

92.2079

87.3806

92.4240

2021

94.4178

85.5424

90.1962

83.9002

89.0997

2020

94.0255

85.8393

89.4917

82.1898

88.1551

2019

94.2553

87.2412

90.4215

82.5155

88.0992

2018

95.0550

89.0388

91.8072

84.1036

89.1661

2017

95.6473

90.2969

92.1992

84.7150

90.3858

2016

97.7282

91.5785

94.4133

86.5946

92.1457

Taxpayer Not Using the Composite Method

2015

98.5513

92.8838

95.7739

87.8065

93.4541

2014

98.5513

94.2124

97.1571

89.0414

94.7812

2013

98.5513

95.5629

98.5513

90.2995

96.1195

2012

98.5513

96.9299

98.5513

91.5813

97.4421

2011

98.5513

98.2868

98.5513

92.8867

98.5513

2010

98.5513

94.2154

98.5513

2009

98.5513

95.5661

98.5513

2008

98.5513

96.9334

98.5513

2007

98.5513

98.2913

98.5513

Years before 2007

98.5513

Taxpayer Using the Composite Method

Years before 2016

98.5513

94.7288

96.6903

91.2579

95.0968

SECTION 5. REQUEST FOR COMMENTS

.01 Effect of NAIC Change on Composite Method. Section V of Notice 88-100 sets forth a composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. Beginning in 2024, the NAIC changed Schedule P of the annual statement to require ten years of data (and a “prior” row) to be reported for all lines of business. Previously, only two years of data were required to be reported for some lines of business. As described in Rev. Proc. 2025-15, the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) expect that composite method discount factors, which apply with respect to accident years not separately reported on the annual statement, will be of limited use to insurance companies with respect to the lines of business set forth in Tables 1 and 3 following the 2024 NAIC change. This is because the 2024 NAIC change generally increases the number of accident years being separately reported on the annual statement for these lines of business. Nonetheless, in Rev. Proc. 2025-15, the Treasury Department and the IRS made no change to the determination and application of composite method discount factors to reflect the 2024 NAIC change to Schedule P. The Treasury Department and the IRS instead requested comments regarding composite method discount factors with respect to the lines of business set forth in Tables 1 and 3 following the NAIC change. No comments were received.

.02 Plans Regarding Composite Method. The Treasury Department and the IRS are making no change to the determination and application of composite method discount factors to reflect the 2024 NAIC change to Schedule P in this revenue procedure. Accordingly, like Rev. Proc. 2025-15, this revenue procedure provides composite method discount factors for accident years that were separately reported on the annual statement due to the 2024 NAIC change to Schedule P, although section V of Notice 88-100 provides the composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. Beginning with the revenue procedure providing discount factors for use by insurance companies in computing discounted unpaid losses under § 846 and discounted estimated salvage recoverable under § 832 for taxable years beginning in 2026, the Treasury Department and the IRS expect to provide composite method discount factors only for accident years not separately reported on the annual statement. Accordingly, with respect to the lines of business set forth in Tables 1 and 3, the Treasury Department and the IRS expect to require that, for accident years separately reported on the annual statement, taxpayers using the composite method must use the same discount factors used by taxpayers not using the composite method. Consistent with prior practice, although the annual statement does not distinguish between cancellable accident and health insurance and other insurance designated as “Other,” these two groups of policies would continue to be treated as if their losses were reported separately. Set forth below, for informational purposes only, are Table 1 (parts A and B) for the 2025 accident year and Table 3 (parts A and B) for taxable years beginning in 2025, as they would have appeared if the proposed approach had been required for taxable years beginning in 2025. The composite method discount factors set forth in these tables were derived using the loss payment patterns previously determined for the 2022 determination year under section 846(d)(3)(B)(i). See Rev. Proc. 2023-10 for background concerning the loss payment patterns. The anticipated changes to the discount factors used by insurance companies using the composite method to compute discounted unpaid losses under § 846 and discounted estimated salvage recoverable under § 832 are expected to change the proper time for the inclusion of the item in income or the taking of the item as a deduction. Accordingly, affected insurance companies are expected to have a change in method of accounting subject to § 446(e) and § 1.446-1. The Treasury Department and the IRS anticipate providing simplified procedures for insurance companies to change their method of accounting to use such factors in their first taxable year beginning after December 31, 2025. For example, the Treasury Department and the IRS are considering implementing the change on a cut-off basis, providing automatic change request procedures, and limiting the information that must be provided on Form 3115, Application for Change in Accounting Method.

Table 1 (part A)

Discount Factors Under Section 846 (percent)

For Losses Incurred in Accident Year 2025 in Short-Tail Lines of Business

(Informational Purposes Only)

Taxable Year Beginning in

Auto Physical Damage

Fidelity/Surety

Financial Guaranty/ Mortgage Guaranty

International

Other*

2025

98.0171

94.8069

94.2020

94.9732

96.3288

2026

96.5385

2027–2034

98.2463

Taxpayer Not Using Composite Method

Years after 2034

98.2463

Taxpayer Using the Composite Method

2035

98.2463

Years after 2035

Use composite method discount factors published for the accident year that is two years prior to the specified taxable year.

* For the Accident and Health line of business (other than disability income or credit disability insurance), the discount factor for taxable years 2025 - 2034 is 98.2463 percent. This is also the discount factor used in taxable years after 2034 for taxpayers not using the composite method. For taxpayers using the composite method, the discount factor for losses incurred in accident year 2025 for taxable years after 2034 is the discount factor published for the Accident and Health line of business for losses incurred in the accident year coinciding with the taxable year.

Table 1 (part B)

Discount Factors Under Section 846 (percent)

For Losses Incurred in Accident Year 2025 in Short-Tail Lines of Business

(Informational Purposes Only)

Taxable Year Beginning in

Reinsurance - Non-proportional Assumed Financial Lines

Reinsurance - Non-proportional Assumed Liability

Reinsurance - Non-proportional Assumed Property

Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Burglary, Theft, Pet)

Warranty

Short-Tail Composite

2025

94.9406

93.8058

95.3714

97.0553

98.0069

96.6054

2026

96.5385

2027–2034

98.2463

Taxpayer Not Using Composite Method

Years after 2034

98.2463

Taxpayer Using the Composite Method

2035

98.2463

Years after 2035

Use composite method discount factors published for the accident year that is two years prior to the specified taxable year.

Table 3 (part A)

Discount Factors Under Section 846 (percent)

For Taxable Years Beginning in 2025

Short-Tail Lines of Business

(Informational Purposes Only)

Accident Year

Auto Physical Damage

Fidelity/Surety

Financial Guaranty/ Mortgage Guaranty

International

Other*

2025

98.0171

94.8069

94.2020

94.9732

96.3288

2024

96.9063

2023

98.5707

2022

98.6826

2021

98.5999

2020

98.4834

2019

98.4785

2018

98.5513

2017

98.5513

2016

98.5513

Taxpayer Not Using Composite Method

Years before 2016

98.5513

Taxpayer Using the Composite Method

Years before 2016

98.5707

* For the Accident and Health line of business (other than disability income or credit disability insurance), the discount factor for taxable year 2025 is 98.2463 percent.

Table 3 (part B)

Discount Factors Under Section 846 (percent)

For Taxable Years Beginning in 2025

Short-Tail Lines of Business (Informational Purposes Only)

Accident Year

Reinsurance - Non-proportional Assumed Financial Lines

Reinsurance - Non-proportional Assumed Liability

Reinsurance - Non-proportional Assumed Property

Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Burglary, Theft, Pet)

Warranty

Short-Tail Composite

2025

94.9406

93.8058

95.3714

97.0553

98.0069

96.6054

2024

96.9063

2023

98.5707

2022

98.6826

2021

98.5999

2020

98.4834

2019

98.4785

2018

98.5513

2017

98.5513

2016

98.5513

Taxpayer Not Using Composite Method

Years before 2019

98.5513

Taxpayer Using the Composite Method

Years before 2024

98.5707

.03 Comments Regarding Composite Method.

The Treasury Department and the IRS request comments on the plans described in section 5.02 of this revenue procedure, including:

(1) comments on whether the Treasury Department and the IRS should permit taxpayers using the composite method to use discount factors determined using the approach described in section 5.02 of this revenue procedure in taxable years beginning in 2024 or 2025, and also provide simplified procedures for taxpayers using the composite method to change their method of accounting to use such factors in such taxable years;

(2) comments regarding any alternative approaches the Treasury Department and the IRS should consider, including elimination or alteration of the composite discount method described in Section V of Notice 88-100, either for short-tail lines of business only or for both short-tail and long-tail lines of business; and

(3) comments on what, if any, additional guidance regarding composite method discount factors insurance companies require.

.04 Procedures for Submitting Comments.

(1) Deadline. Written comments should be submitted by May 22, 2026.

(2) Form and manner. The subject line for the comments should include a reference to Revenue Procedure 2026-13. All commenters are strongly encouraged to submit comments electronically. However, comments may be submitted in one of two ways:

(a) Electronically via the Federal eRulemaking Portal at www.regulations.gov (type IRS-2026-0134 in the search field on the regulations.gov homepage to find this revenue procedure and submit comments); or

(b) By mail to: Internal Revenue Service, CC:PA:01:PR (Revenue Procedure 2026-13), Room 5503, P.O. Box 7604, Ben Franklin Station, Washington, D.C., 20044.

(3) Publication of comments. The Treasury Department and the IRS will publish for public availability any comment submitted electronically or on paper to its public docket on regulations.gov.

SECTION 7. DRAFTING INFORMATION

The principal author of this revenue procedure is Grace Chang of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure, contact Ms. Chang at (202) 317-4286 (not a toll-free call).

1 Unless otherwise specified, all “section” or “§” references are to sections of the Internal Revenue Code or the Income Tax Regulations (26 CFR part 1).

History

Revenue Procedure published in Internal Revenue Bulletin 2026-09, February 23, 2026, at page 563. It states no effective date of its own; this row opens at the bulletin's publication date.

Provenance

Source: irs.gov
Retrieved: 2026-09-20
Edition: irs-irb-2026-09-20
Content hash: c069083a2731235dc07eded81eca39e8c5dc8bb9a7ae811641410626f0f53ee2

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