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Security Deposit Interest Calculator
In many states — New York, Illinois, New Jersey, Massachusetts, Connecticut, Maryland, and DC among others — landlords must pay interest on held security deposits, either annually or at move-out. Rates range from the Fed's 1-year T-bill (NY) to a flat 1.5% (IL for buildings > 25 units). This calculator handles accrual across years and produces the tenant refund owed at move-out.
If your state allows it
Total refund owed at move-out
$2,201
Unpaid interest owed
$201
Gross interest accrued
$201
Admin fee retained
$60
Net rate paid to tenant
3.250%
Effective annualized rate
3.357%
How the math works
States that require deposit interest usually mandate one of: (1) annual payment or rent credit, (2) payment at move-out, or (3) option to keep a small admin fee (typical 1%) and pay the rest. The rate is either tied to a benchmark (1-year T-bill) or fixed (1.5%, 5%, etc). Many landlords default to 'pay nothing' and discover at move-out they owe three years of back interest plus penalties.
Practical compliance: keep deposits in a separate, labeled interest-bearing account (many states require separation), track the accrual on a spreadsheet, and pay annually if your state allows it — that avoids a big balloon at move-out and reduces the surface area for a statutory penalty suit.
How to Use
- Enter the deposit amount and the date it was received.
- Select the annual interest rate set by your state (or check your local statute).
- Enter years held and whether interest was already paid annually.
- The calculator accrues interest and shows the total refund owed, including any unpaid interest.
Frequently Asked Questions
Which states require deposit interest?
Currently: CT, DC, FL, IL (buildings >25 units), IA, MA, MD, MN, NH, NJ, NM (terms >1yr), NY, PA (buildings >2 units held >2 years), and ND. Rates and accrual rules vary — check your state statute, not the number here alone.
Does failing to pay interest create liability?
Yes. Most required-interest states make this a strict-liability statute. In NJ and MA, noncompliant landlords can be hit with 3x damages plus attorney fees. NY gives tenants a direct claim against the landlord and against a bank not holding in a separate account. Get this right or pay an attorney for one hour to confirm.
Can I pay interest annually?
Several states require annual payment (or credit against rent), not accrual to move-out. NY allows annual payout or 1%/year administrative fee retained by the landlord. Defaulting to 'pay at move-out' without a statute check is the usual mistake.
What interest rate should I use?
Use your state's current mandated rate. NY floats with 1-year T-bills (~4-5% recently). IL pays 0.01-0.03% (set annually). DC pays the 6-month T-bill. MA pays 5% or the actual bank rate. Don't guess — the statute controls.
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