Which States Require Security Deposit Interest?
Not every state requires landlords to pay interest on security deposits, but more than 15 do — and the rules vary significantly by state, building size, and deposit amount.
| State | Rate | Method | Key Rule |
|---|---|---|---|
| New York | ~1% | Simple | Buildings with 6+ units; landlord may keep 1% as admin fee |
| New Jersey | 1.5% | Simple | Must pay or credit interest annually |
| Massachusetts | 5% | Simple | Must be deposited in a separate interest-bearing account |
| Maryland | 3% | Simple | Only applies to deposits held 6+ months |
| Connecticut | ~0.5% | Simple | Rate set annually by Banking Commissioner |
| Illinois | 0.01% | Simple | Buildings with 25+ units; Chicago RLTO has stricter rules |
| Wisconsin | Varies | Simple | Must match bank savings rate; voluntary for landlords |
| Washington D.C. | ~4% | Simple | One of the highest rates in the country |
| Iowa | ~2% | Simple | Required for deposits held more than 12 months |
| Minnesota | 1% | Simple | Required for all deposits; penalties for non-compliance |
Simple Interest vs. Compound Interest
Most states use simple interest, calculated as: Interest = Principal × Rate × Years. This is straightforward but underestimates what an account actually earns over time.
Compound interest (annual) recalculates the balance each year, so interest also earns interest. For long tenancies (5+ years) this can make a meaningful difference. If your state doesn't specify the method, simple interest is the safe legal standard — but you can use this calculator's compound mode to see the maximum you might argue for.
What Happens If Your Landlord Doesn't Pay?
If your landlord fails to return your deposit and its interest within the legally required timeframe (typically 14–30 days after move-out, varying by state), you may be entitled to:
- Double or triple damages in many states (e.g., Massachusetts allows 3× the deposit)
- Attorney fees and court costs if you win a small claims action
- Forfeiture of the right to deduct damages from the deposit in some jurisdictions
The first step is always a formal demand letter — a written, dated request that gives the landlord one final opportunity to comply before you escalate. This tool generates that letter for you.
Documentation That Strengthens Your Case
To successfully claim your deposit and interest, gather:
- A copy of your signed lease agreement showing the deposit amount
- Bank receipt or check confirming payment of the deposit
- Move-in and move-out inspection reports or photos
- Written notice of your forwarding address (required in most states)
- This calculator's exported receipt showing the exact interest calculation
