How to Use an Annuity Table: Present and Future Value

To use an annuity table, you match your interest rate per period to the column, your total number of periods to the row, and multiply the factor at the intersection by your payment amount. That product is either the present value of the payment stream (what it is worth today) or its future value (what it will grow to), depending on which table you opened. The rest is picking the correct table and feeding it inputs that use consistent time units.

What You Need Before You Open the Table

Three numbers come out of your loan agreement, settlement decree, or retirement plan document:

The interest rate per period. If the document states an annual rate but payments are monthly, divide by 12. A 6% annual rate on a monthly annuity means 0.5% per period.
The total number of periods. Multiply years by payment frequency. A 10-year annuity paid monthly has 120 periods, not 10.
The payment amount, usually spelled out in the contract or court order.

Mismatched time units are the most common mistake. If the table uses monthly increments and you enter 10 instead of 120, the answer will be wildly off. Confirm that the rate per period and the number of periods refer to the same unit before you look anything up.

Pick the Right Table

Two choices determine which grid to open. Get either wrong and the number will be wrong.

Present Value or Future Value

A present value table tells you what a future stream of payments is worth in today’s dollars. It is the table used most often for legal settlements, pension buyouts, and estate tax valuations, where someone needs to know what a future income stream would cost to replace right now.

A future value table tells you what a series of payments will accumulate to by the end of the term. Retirement planning is the standard use: how much annual contributions will be worth in 30 years.

Ordinary Annuity or Annuity Due

An ordinary annuity pays at the end of each period. Rent due on the last day of the month or a bond coupon paid at the end of each six-month cycle fits this pattern. An annuity due pays at the beginning of the period, like lease payments due on the first of the month.

Because annuity-due payments arrive one period sooner, each earns one extra period of interest. The adjustment is a single multiplication: take the ordinary annuity factor and multiply by (1 + i), where i is the interest rate per period. An ordinary present value factor of 7.7217 at 5% becomes 7.7217 × 1.05 = 8.1078 for an annuity due. Skipping this step understates the value, and the gap widens at higher rates and longer terms.

A Worked Example

Suppose you need the present value of an annuity that pays $1,000 per year for 10 years at a 5% annual discount rate.

Confirm your inputs: PMT = $1,000, rate per period = 0.05, periods = 10.
Find the factor. Open a present value of ordinary annuity table. Move across the top row to 5%, then down to the row for 10 periods. The factor is 7.7217.
Multiply: $1,000 × 7.7217 = $7,721.70. That is the lump sum that, invested at 5%, would replicate the 10-year payment stream exactly.

If you needed the future value instead, you would use the future value table. At 5% and 10 periods, the factor is 12.5779, so $1,000 × 12.5779 = $12,577.90.

When Your Rate Falls Between Two Columns

Tables print factors at fixed rate increments, and your actual rate will sometimes land between them. If the table jumps from 5.0% to 5.5% and you need 5.2%, use linear interpolation: take the factor at 5.0%, then add the fraction of the way your rate sits between the two columns times the difference between the two factors. At 5.2%, you are 40% of the way from 5.0% to 5.5%, so add 40% of the gap between the two factors to the 5.0% figure.

When Payments Start Later

Not every annuity begins paying immediately. When the first payment is delayed, the annuity is deferred, and the valuation adds one step. Calculate the present value as if payments started right away, then discount that result back to today by the number of deferral periods.

In practice, multiply the standard annuity factor by 1 ÷ (1 + i)^k, where k is the number of periods deferred. A 10-year ordinary annuity at 5% deferred by 3 years: take 7.7217, then multiply by 1 ÷ (1.05)^3 = 0.8638. The adjusted factor is 6.6706, giving a present value of $6,670.60 on a $1,000 annual payment. Ignoring the deferral overstates the annuity’s value because it treats payments as arriving sooner than they do.

Life Annuities Use a Different Lookup

The tables described above are term-certain: they assume a fixed number of payments regardless of whether anyone is alive to receive them. IRS Publication 1457 (Version 4A) contains these factors in Table B.¹

Life annuities work differently. Payments continue only as long as a specific person is alive, so the factor has to account for mortality. The IRS uses Table S, built on Table 2010CM mortality data, to generate life-contingent annuity factors. Instead of looking up a number of periods, you look up the annuitant’s age at the nearest birthday and the applicable Section 7520 rate. Age has an outsized effect: a life annuity factor for a 40-year-old is much larger than for a 75-year-old, because the younger person is statistically expected to collect for many more years. Publication 1457 also provides Table R(2) for two-life arrangements such as a joint-and-survivor annuity, along with Tables K and J for timing adjustments.¹

For Federal Tax Valuations, the Rate Is Not Yours to Pick

If you are valuing an annuity for federal estate tax, gift tax, or a charitable deduction, you don’t choose whatever discount rate seems reasonable. The IRS publishes a mandatory rate each month under Section 7520 of the Internal Revenue Code, equal to 120% of the federal midterm rate and rounded to the nearest two-tenths of one percent.² For early 2026, the Section 7520 rate ranged from 4.6% in January and February to 4.8% in March.³ A shift of two-tenths of a percent can move the present value of a long-term annuity by thousands of dollars.

For a charitable contribution, the taxpayer can elect to use the 7520 rate from either of the two months preceding the valuation date. When more than one interest in the same property is being valued, the same rate applies to all of them.²

Situations Where the Standard Table Doesn’t Govern

Standard tables assume predictable payments at a fixed rate over a known timeframe. A few situations break those assumptions.

Under 26 CFR § 20.2031-7, the IRS requires Section 7520 factors for valuing annuities, life estates, and remainder interests in estates, but the regulation points to exceptions in § 20.7520-3(b) that limit prescribed tables in certain circumstances.⁴ Chapter 14 of Title 26 overrides standard table valuations in specific family-transfer situations: a retained trust interest that doesn’t qualify as a fixed annuity or fixed percentage of trust value is treated as worth zero rather than whatever the table would produce, and certain below-market purchase options and lapsing liquidation restrictions are disregarded when valuing the transferred interest.⁵

Standard tables also lose reliability when the annuitant is terminally ill, since the mortality assumptions no longer hold, or when payments are contingent on events other than survival or the passage of time. A custom actuarial calculation typically replaces the published factor in those cases.

Where to Find Current Tables

The IRS publishes the current actuarial tables, effective for valuation dates on or after June 1, 2023, on its Actuarial Tables page, with downloadable spreadsheets for Table S, Table B, Table R(2), and the adjustment tables.¹ Publication 1457 (Version 4A) collects the annuity, life estate, and remainder factors with worked examples.⁶ The published tables cover Section 7520 rates from 0.2% to 20% at two-tenths-of-a-percent intervals.⁴

For non-tax uses like retirement planning or loan analysis, most finance textbooks print present and future value annuity tables in their appendices. Financial calculators and spreadsheet functions such as Excel’s PV and FV use the same underlying formulas and are worth running against the table factor whenever accuracy matters for a legal filing or insurance claim.

1
Internal Revenue Service. Actuarial Tables
2
Office of the Law Revision Counsel. 26 USC 7520 – Valuation Tables
3
Internal Revenue Service. Section 7520 Interest Rates
4
eCFR. 26 CFR 20.2031-7 – Valuation of Annuities, Interests for Life or Term of Years, and Remainder or Reversionary Interests
5
Office of the Law Revision Counsel. 26 USC Chapter 14 – Special Valuation Rules
6
Internal Revenue Service. Publication 1457 – Actuarial Valuations Version 4A