Security deposit interest calculator by state

Key Takeaways

• 14 states currently require landlords to pay interest on residential security deposits: Connecticut, Illinois (Chicago specifically, not statewide), Iowa, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Pennsylvania, and Virginia.

• Connecticut's rate is not fixed. It is set annually by the state Banking Commissioner and published every December for the following calendar year. The confirmed 2026 rate is 0.49%, down from 0.52% in 2025 and 0.5% in 2024. This year-to-year movement is why online sources often appear to disagree: they are frequently citing different years, not different facts.

• Massachusetts requires 5% annual interest or the actual bank rate, whichever is lower, under M.G.L. c. 186 §15B. New Jersey has no fixed statutory percentage at all; the landlord owes whatever the deposit account actually earned.

• New York requires landlords of buildings with six or more units to pay the actual interest earned on the deposit account, minus a 1% administrative fee the landlord is permitted to retain. Buildings under six units are not required to hold deposits in an interest-bearing account at all.

• A $2,400 deposit held 14 months earns $140.00 in Massachusetts (5% rate) and $28.00 in Minnesota (1% rate), using identical simple-interest math and only a different statutory rate. The same deposit in Connecticut for 2026 earns $13.72.

A $2,400 security deposit held for 14 months owes the tenant a specific dollar figure, and that figure depends entirely on which state the property sits in and which calendar year the interest accrued. Most calculators ask for a state and a rate and leave the reader to go find the rate themselves, which is exactly the point where most PM companies either guess or use a number that was correct two years ago and has since changed.

Numetix takes an expert-led, AI-powered, and human-in-the-loop approach to security deposit accounting, and that starts with tracking the correct current-year statutory rate for each property's state, not a number carried over from the prior year's calculation. This guide works through the exact math for the states with the clearest, most current primary-source rates, and gives the confirmed full list of every state that requires this at all.

Quick Answer: How much interest do I owe on a security deposit, and which states require it?

• 14 states require security deposit interest: Connecticut, Illinois (Chicago only), Iowa, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Pennsylvania, and Virginia. Every other state has no interest requirement at all.

• Interest owed = deposit amount × annual rate × (months held ÷ 12), using simple interest everywhere it applies. The rate itself varies by state and, in several states including Connecticut and Maryland, changes every calendar year based on a published government index rather than staying fixed.

• Confirm the specific rate for the current calendar year before calculating, not a rate remembered from a prior year or copied from an article published in an earlier year. Connecticut's 2026 rate (0.49%) is meaningfully different from its 2025 rate (0.52%) and its 2024 rate (0.5%).

The 14 states that require security deposit interest

Only a specific, confirmed set of states require any interest on residential security deposits at all: Connecticut, Illinois (as a Chicago municipal ordinance, not a statewide Illinois requirement), Iowa, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Pennsylvania, and Virginia. If a managed property sits outside these 14 states, no interest calculation applies regardless of deposit size or how long it is held. This list itself is worth confirming directly, since PM companies operating across several states sometimes assume interest applies more broadly than it does, or miss that it applies at all in a state they don't associate with tenant-protective rules.

Why Connecticut's rate changes every year, and why that explains most of the "conflicting" figures online

Connecticut General Statutes §36a-26 requires the state Banking Commissioner to publish a new deposit index every December, based on the average rate paid on savings and money market deposits as reported in the FDIC's National Rates and Rate Caps for that year. This is not a fixed number; it moves annually with actual market conditions. The confirmed rates in recent years: 0.5% for 2024, 0.52% for 2025, and 0.49% for 2026. An article written in early 2025 correctly citing 0.52% is not wrong, it is simply describing a prior year, and using that figure for a 2026 calculation would produce an incorrect result. Anyone doing this calculation should confirm the rate for the specific calendar year the interest is accruing in, sourced from the Connecticut Department of Banking directly, not from an aggregator that may not have been updated since the prior year's announcement.

Worked example: Connecticut, $2,400 deposit, 14 months, 2026 rate

Using the confirmed 2026 rate of 0.49%: $2,400 × 0.0049 × (14/12) = $13.72 owed to the tenant. Connecticut requires this interest to be paid annually on the lease anniversary, or credited toward rent, with a written annual statement showing the deposit amount and interest earned. Missing this annual statement is itself a separate compliance issue independent of the interest calculation.

Worked example: Massachusetts, $2,400 deposit, 14 months

Massachusetts requires 5% annual interest or the actual bank rate, whichever is lower, under M.G.L. c. 186 §15B. Using the 5% statutory ceiling: $2,400 × 0.05 × (14/12) = $140.00. If the actual account earned less than 5% for that period, the lower actual rate applies instead, which means the PM company needs the account's real yield on file, not just the statutory ceiling, to know which figure actually governs.

Worked example: New York, $2,400 deposit, 14 months, building with 6+ units

New York does not set a fixed percentage. For buildings with six or more units, the landlord must place the deposit in an interest-bearing account and pay the tenant whatever interest the account actually earned, minus a 1% administrative fee the landlord is permitted to keep. If that account earned 2.5% over the period: tenant receives 1.5%, landlord retains 1%. Using a $2,400 deposit at an account yield of 2.5% over 14 months: gross interest = $2,400 × 0.025 × (14/12) = $70.00. Landlord's 1% fee portion = $2,400 × 0.01 × (14/12) = $28.00. Tenant receives $70.00 − $28.00 = $42.00. Buildings with fewer than six units in New York are not required to hold deposits in an interest-bearing account at all, and owe no interest unless the landlord voluntarily chose to hold it in one.

The other eight states with interest requirements

Iowa, New Hampshire, New Mexico, North Dakota, Ohio, Pennsylvania, and Virginia each have their own rate structure, several tied to state-specific indices similar to Connecticut's rather than a single fixed percentage. Given how frequently these figures move year to year and how often secondary sources lag the current published rate, confirm the specific current-year figure for any of these states directly against the state's official banking or consumer affairs department before using it in a client calculation, rather than relying on a single secondary source.

Frequently asked questions

Why do different websites show different interest rates for the same state?

In most cases this is not a factual disagreement, it's a timing difference. States like Connecticut and Maryland tie their rate to an index that changes every calendar year, and many articles are simply describing whatever year they were published in without a clear update cycle. A rate that was accurate when an article was written in 2024 or 2025 may no longer be the current figure. Always check the specific calendar year a cited rate applies to, not just the state.

Does security deposit interest apply if the tenant moves out mid-year?

In states requiring annual interest payment, the interest is generally prorated for the partial period the deposit was actually held, using the same simple interest formula applied to the fractional year. Some states specify the interest must be paid or credited at move-out even if it falls between the tenancy's normal annual payment dates; confirm the specific state's timing requirement rather than assuming a mid-year move-out forfeits the accrued interest.

What happens if a PM company has been using an outdated interest rate?

Correct the current and future calculations using the confirmed current-year rate immediately, and review recent move-outs to check whether any tenant was paid using an outdated figure. If an underpayment is found, most states treat this the same as any other interest shortfall: it should be corrected and paid promptly, documented, and the process for confirming the annual rate should be fixed going forward so the same error doesn't recur next year.

For property management firms operating in interest-bearing deposit states, our accounting services confirm the current calendar-year rate for each property's state and track accrued interest continuously, expert-led, AI-powered, and human-in-the-loop.

See the security deposit accounting guide for the full trust liability framework this calculation sits inside.