Security Deposit Interest by State (2026): Who Owes It, Verified

A tenant in Boston and a tenant in Austin can hand over the same $2,000 deposit and walk away with different math. One of them is owed interest every year, on a schedule a statute spells out. The other is owed nothing, ever, no matter how long the landlord holds the money. Which side of that line you live on is pure geography.

Interest is the deposit rule almost nobody checks. Caps and return deadlines get the attention, and our security deposit limits by state page covers those in full. The interest layer is thinner ground: most roundups list a few states, skip the fine print, and go stale. So we built the security deposit interest by state answer the same way we built the limits table: every statute, all 50 states plus DC, read in July 2026.

The 2026 Security Deposit Interest Table: All 50 States + DC

Here is the full security deposit interest by state picture. “Yes” means interest is owed as a matter of course. “Conditional” means a threshold decides, read the conditions cell closely, because that is where the rule actually lives. “No” means the state statute imposes no interest duty at all, whatever a lease might voluntarily promise.

Key Findings From the 2026 Data

The headline number in the security deposit interest by state data surprises most people: 36 states impose no deposit-interest duty at all. The rule, nationally, is that the landlord keeps whatever the money earns. Interest states are the exception, and they cluster hard in the Northeast and upper Midwest, with Maryland the outlier to the south.

Among states that do require it, no two use the same math. Minnesota picks a flat number, 1 percent simple, and applies it to everyone. Massachusetts says 5 percent unless the bank actually paid less. Maryland splits the difference with a floor: the one-year Treasury yield or 1.5 percent, whichever is greater. Connecticut delegates the whole question to an annually published deposit index. Four approaches, four different checks for the same $2,000.

The conditional states hide the most traps. A New York tenant in a five-unit building has no statutory interest right; a neighbor in a six-unit building does. An Illinois tenant’s right turns on whether the complex has 25 units. In Iowa the account earns interest from day one, and for the first five years all of it belongs to the landlord. Florida may be the strangest of the group: the landlord picks the account type, and that private bookkeeping choice decides whether the tenant ever sees a cent.

How to Read These Rules

The conditions cell matters more than the rate. A rate means nothing until the threshold is met, and the thresholds are where claims fall out, a tenancy that ran too short here, a building one unit too small there. Ohio’s 5 percent sounds generous until you notice it applies only to the slice of a deposit above one month’s rent or $50, whichever is greater, and only after six months of tenancy. A standard one-month deposit in Ohio earns nothing.

Account rules are a separate thing from interest rules, and the two get conflated constantly. Several states, Georgia and North Carolina among them, force the deposit into a trust account without giving the tenant any of what it earns. An escrow requirement protects the principal; it says nothing about sharing the yield. Our landlord-tenant compliance table tracks those custody rules separately.

One more habit: remember who sets the number in the index states. Connecticut’s index, New York’s bank rate, Chicago’s city rate, San Francisco’s Rent Board number: these move every year, which is exactly why this page carries statute citations instead of hard-coding this year’s decimals. The mechanism is stable law. The percentage is weather.

The Six States Where Interest Is Automatic

New Jersey runs the strictest regime. Under N.J.S.A. 46:8-19, the deposit goes into an insured money-market fund or interest-bearing account, and everything the money earns belongs to the tenant, paid in cash or credited against rent, with an annual accounting. The landlord is a custodian, nothing more.

Massachusetts sets the highest fixed benchmark: 5 percent a year, or the bank’s actual rate if lower, on deposits held a year or longer, paid at the end of each tenancy year under M.G.L. c. 186, section 15B. Minnesota is the simplest: 1 percent simple, every deposit, no thresholds, under Minn. Stat. 504B.178, with amounts under a dollar excused.

Maryland’s Real Property 8-203 owes interest on deposits of $50 or more at the greater of the one-year Treasury yield or 1.5 percent. Connecticut pays whatever the state’s published deposit index says that year, credited each tenancy anniversary. New Hampshire keeps it local under RSA 540-A:6: whatever regular savings pays at the New Hampshire bank actually holding the deposit, once the landlord has held it a year.

The Conditional Nine: Thresholds and Fine Print

Nine jurisdictions put a gate in front of the interest right, and each gate is different. Building size gates New York (six or more units, under GOL 7-103) and Illinois (25 or more units under the Security Deposit Interest Act). Tenancy length gates North Dakota (nine months) and DC (twelve months). Time gates Pennsylvania twice over: the escrow-interest duty starts only after the deposit’s second anniversary, and the landlord skims 1 percent a year as an administrative fee before the tenant sees the rest. New York’s landlord takes the same 1 percent cut.

Dollar amounts gate Ohio and New Mexico. Ohio pays 5 percent, but only on the portion of a deposit above $50 or one month’s rent, and only for tenancies of six months or more. New Mexico’s duty switches on when an annual lease carries a deposit bigger than one month’s rent, at which point the excess earns the passbook rate yearly.

Iowa and Florida gate the question in stranger ways. Iowa’s statute is blunt about it: interest earned during the first five years of a tenancy is the landlord’s property, so the right exists mostly on paper for a typical renter. Florida hands the decision to the landlord, who may choose a non-interest account, an interest-bearing account, or a surety bond under Fla. Stat. 83.49(1). Choose the interest-bearing route and the tenant collects at least 75 percent of the account’s average rate, or 5 percent simple, at the landlord’s election. Choose either other route and no interest is owed at all.

City Rules on Top of State Law

Three of the country’s biggest rental markets sit in “No” states and flipped the answer locally. California has no statewide interest duty, yet Los Angeles requires annual interest on deposits held at least a year for rent-stabilized units, at a rate the city’s Rent Adjustment Commission sets, and San Francisco requires it for deposits held over a year citywide, at a rate the Rent Board publishes each spring, 4.2 percent for the year beginning March 1, 2026.

Chicago is the third, and the oldest story. The city’s Residential Landlord and Tenant Ordinance obliges a landlord who holds a deposit more than six months to pay interest at a rate the comptroller announces each year, derived from actual savings and CD rates at Chicago banks. Illinois state law would only reach a 25-unit building; the RLTO reaches nearly everything in the city limits.

The practical rule for tenants: a “No” in the state table is not the end of the question if you rent in a large city, and rent-controlled or rent-stabilized status usually decides which local rule applies. Check the city ordinance before concluding nobody owes you anything.

What the Interest Actually Comes To

Honest expectations help here, because deposit interest is protection money, not investment income. One worked example: a $1,500 deposit in Minnesota earns 1 percent simple, which is $15 a year. The same deposit under Massachusetts’ 5 percent benchmark would be $75 a year. Real money over a five-year tenancy, not life-changing in either state.

The reason these statutes matter is not the size of the check. It is what the duty forces: a named account, an annual accounting, a paper trail, a number the tenant can check against a bank statement. In the states that mandate interest, deposits rarely vanish into a landlord’s operating cash, because the law makes commingling visible. The interest is the receipt.

Methodology: How Every Row Was Verified

Every “Yes” and “Conditional” row in this security deposit interest by state table was verified directly against the state statute in July 2026, with the rate mechanism, the payment timing, and each condition traced to statutory text. Official legislature sites were used wherever they permit access; where a state’s site blocks automated readers, the statute text was verified in a browser and cross-checked against a legal database reproduction of the same section.

The “No” rows rest on two layers. Each state’s deposit statute was already read in full for our limits-and-deadlines dataset, the sibling page to this one, in July 2026; for this page we additionally re-read the deposit statutes of the six most populous “No” states, California, Texas, Washington (RCW 59.18.280), Colorado, Georgia, and Arizona, confirming no interest provision exists, and confirmed that Virginia’s former interest rule has dropped out of the current code. Index-based rates are deliberately cited by mechanism rather than this year’s percentage, since those numbers reset annually. This dataset joins our January refresh cycle alongside the limits page.

Cite or Download This Data

Reporters, housing researchers, property managers, and anyone building a rent tool are welcome to this table. The security deposit interest by state dataset is published under a CC-BY 4.0 license: reuse it freely, in any format, with a link back to this page as the source.

Collecting the Interest You Are Owed, or Paying It Right

Tenants first. If your state or city is in the Yes or Conditional group and the checks never came, the ask starts on paper: a short written request citing the statute from the table above, with your tenancy dates and deposit amount. What happens in practice: most landlords pay once the statute is quoted at them, because the amounts are small and the penalties for deposit games in these states are not. If the deposit itself is being held past your state’s deadline, that is the bigger fight, and our security deposit demand letter covers it.

Landlords, the compliance version is short. Find your row. If interest is owed, open the account type your statute names, calendar the payment date, the anniversary in Connecticut, year-end in Massachusetts, and keep the accounting with the lease file. Write the arrangement into the lease itself, from the account type through the payment schedule, so nobody reconstructs it from memory at move-out. A residential lease with the deposit terms spelled out, paired with a clean return letter at the end, closes the loop the way these statutes intend.

None of this is glamorous law. It is bookkeeping with a statute behind it. But deposit interest is also the rare rule where compliance costs a landlord almost nothing and the failure mode, an angry tenant with a statute citation and a small-claims form, costs far more than the check ever would have. Six states and a growing list of cities have decided the tenant’s money should work for the tenant. The table above tells you, in one look, whether yours is one of them.

Frequently Asked Questions

Which states require landlords to pay interest on security deposits?

The security deposit interest by state split has three tiers. Six states require it outright: New Jersey, Massachusetts, Minnesota, Maryland, Connecticut, and New Hampshire. Nine more jurisdictions attach conditions, New York (buildings of six or more units), Illinois (25-plus units), Pennsylvania (after the second year), Ohio (only the excess over $50 or a month’s rent), North Dakota (nine-month tenancies), the District of Columbia (twelve months), New Mexico (annual leases with deposits over a month’s rent), Iowa (only after five years), and Florida (only when the landlord picks an interest-bearing account). The remaining 36 states require nothing statewide, though Chicago, Los Angeles, and San Francisco impose interest by city ordinance.

How much interest does a landlord owe on a security deposit?

The rate depends entirely on the statute. Minnesota fixes it at 1 percent simple per year. Massachusetts benchmarks 5 percent, or the bank’s actual rate if lower. Maryland owes the greater of the one-year Treasury yield or 1.5 percent. Connecticut publishes a deposit index annually, New Hampshire uses the holding bank’s regular-savings rate, and New Jersey passes through whatever the required account earns. On a typical deposit the dollars are modest; the accounting duty that travels with them is the real teeth of these laws.

When does deposit interest have to be paid?

Timing is statutory too, and it varies. Connecticut credits or pays on each tenancy anniversary. Massachusetts pays at the end of each year of the tenancy. New Jersey requires an annual accounting, with interest paid in cash or applied to rent. The District of Columbia pays out at the end of the tenancy, once it has lasted twelve months or more, and Ohio computes and pays annually on the qualifying excess. Where a statute is silent on timing, the safe practice is an annual payment with a written statement, then a final reconciliation when the deposit goes back.

Do small landlords have to pay interest on deposits?

Sometimes the building answers it. New York’s duty reaches buildings of six or more units, and Illinois’ statute reaches only buildings or complexes of 25 or more, so a single-family rental in either state carries no statutory interest duty. Other interest states draw no such line: Minnesota, Massachusetts, Maryland, Connecticut, New Hampshire, and New Jersey apply to landlords generally, whatever the portfolio size. City ordinances tend to sweep broadly as well. The conditions column of the table is the place to check before assuming an exemption.

My state has no interest law. Can my city require it anyway?

Yes, and three big ones do. California has no statewide rule, yet Los Angeles requires annual interest on rent-stabilized deposits held a year, and San Francisco requires it for deposits held over a year, at a rate the Rent Board resets each March. Chicago sits in the same pattern: Illinois state law reaches only 25-unit buildings, while the city’s landlord-tenant ordinance obliges interest on deposits held more than six months at an annually announced rate. Renters in large cities should read the local ordinance before accepting a No from the state table.

What should a tenant do if the landlord never paid deposit interest?

Start with a short written request that cites your state’s statute from the table, your tenancy dates, the deposit amount, and any interest already received, and ask for the balance with the next rent cycle or the deposit return. Most landlords pay at that point, because the statute does the arguing. If the deposit itself is overdue, fold the interest into a formal demand letter, since the remedies for withheld deposits generally cover the whole amount owed. Small claims court is the backstop, and in interest states the citation carries most of the case.

Elena Rodriguez

Elena Rodriguez writes about real estate and landlord-tenant law for ClearLegalTips. She focuses on making leases, security deposits, and rental rules understandable for tenants and small landlords handling them without a lawyer.