Question 1

Which states require landlords to pay interest on security deposits?

Accepted Answer

12 states legally require interest on security deposits: Connecticut (2%/year), Massachusetts (5%/year), New Jersey (7.25%/year or bank rate), Maryland (3%/year), Minnesota (savings rate), Illinois (5%/year for 25+ unit buildings), Pennsylvania (savings rate after 2 years), Virginia (savings rate for 13+ month tenancies), Rhode Island (3.5%/year), Alaska (savings rate after 1 year), Wisconsin (1.5%/year after 1 year), and Ohio (5%/year for deposits over $50 after 6+ months).

Question 2

How is security deposit interest calculated?

Accepted Answer

Security deposit interest is calculated as: Interest = Deposit Amount × Annual Rate × (Months Held ÷ 12). For example, a $2,000 deposit in Massachusetts (5%/year) held for 24 months earns $2,000 × 0.05 × 2 = $200 in interest. The landlord must return the deposit plus this interest at the end of the tenancy.

Question 3

When does a landlord have to pay security deposit interest?

Accepted Answer

It depends on the state. Massachusetts and Connecticut require annual interest payments during the tenancy. New Jersey requires the landlord to either pay interest annually or credit it toward rent. Maryland and Rhode Island require interest at the end of the tenancy when the deposit is returned. Always check your state's specific statute.

Question 4

What happens if a landlord doesn't pay security deposit interest?

Accepted Answer

Failing to pay required interest can have serious consequences for landlords. In Massachusetts, failing to pay interest means the landlord loses the right to keep any of the deposit for damages. In Connecticut, the landlord may owe the tenant double the deposit amount as a penalty. Always comply with your state's security deposit interest law.

Question 5

Does California require security deposit interest?

Accepted Answer

California state law does not require security deposit interest, but several cities have local rent control ordinances that do  -  including San Francisco, Berkeley, and West Hollywood. If you live in a rent-controlled city, check local ordinances for applicable rates.

Question 6

Can I use this calculator for Illinois security deposit interest?

Accepted Answer

Yes. Illinois requires 5% annual interest, but only in municipalities where the building has 25 or more residential units. Chicago has additional protections under the Chicago Residential Landlord Tenant Ordinance (RLTO). If your Chicago building has 6 or more units, the RLTO applies.

State	Required?	Rate	Return Deadline
Alaska	Required	Savings rate (approx. 1.5%)	14 days
California	Not Required	Not required	21 days
Colorado	Not Required	Not required	60 days
Connecticut	Required	2% per year	30 days
Florida	Not Required	Optional (if interest-bearing account used)	15 days
Georgia	Not Required	Not required	30 days
Illinois	Required	5% per year (25+ unit buildings)	30 days
Massachusetts	Required	5% per year	30 days
Maryland	Required	3% per year (1.5% per 6 months)	45 days
Minnesota	Required	Bank savings rate (approx. 1%)	21 days
North Carolina	Not Required	Not required	30 days
New Jersey	Required	7.25% per year (or bank rate)	30 days
New York	Not Required	Not required (non-stabilized)	14 days
Ohio	Required	5% per year (deposits >$50, tenancy 6+ months)	30 days
Pennsylvania	Required	Bank savings rate (approx. 1%)	30 days
Rhode Island	Required	3.5% per year	20 days
Texas	Not Required	Not required	30 days
Virginia	Required	Bank savings rate (tenancy 13+ months)	45 days
Washington	Not Required	Not required	21 days
Wisconsin	Required	1.5% minimum per year	21 days

Security Deposit Interest Calculator

Example: Connecticut ($2,000 deposit, 18 months)

Example: Massachusetts ($1,500 deposit, 24 months)