Illinois Security Deposit Interest Rules
Illinois requires deposit interest for 25+ unit buildings held over 6 months (765 ILCS 715). Chicago RLTO is broader. Free calculator.
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Book a DemoDoes Illinois require interest on security deposits?
Yes, for buildings with 25 or more residential units when the deposit is held longer than 6 months. The rule is in the Illinois Security Deposit Interest Act, 765 ILCS 715. Smaller buildings (under 25 units) are not subject to the state interest rule. The Chicago Residential Landlord and Tenant Ordinance (RLTO) imposes its own broader interest requirement on most Chicago rentals.
The Illinois state interest rule
Under 765 ILCS 715, landlords of 25+ unit buildings must pay interest on security deposits held longer than 6 months. The rate is set annually by the Illinois Department of Financial and Professional Regulation (IDFPR) based on prevailing savings account rates. Interest must be paid to the tenant either annually or at lease termination, the landlord's choice. The deposit may be commingled with operating funds (no separate account requirement at the state level).
Chicago RLTO interest requirement
The Chicago RLTO requires interest on security deposits held longer than 6 months for most Chicago rentals (except owner-occupied 6-or-fewer unit buildings). The Chicago rate is set annually by the City Comptroller and is generally lower than commercial savings rates. Interest must be paid annually within 30 days of the lease anniversary or at lease termination.
What happens if an Illinois landlord doesn't pay required interest
Under state law, the tenant can recover the unpaid interest plus 1 percent of the deposit per month of non-payment, plus attorney fees. Under Chicago RLTO, the penalty is the unpaid interest plus an amount equal to the deposit (effectively 2x the deposit) plus attorney fees. The Chicago penalty is much stronger.
How to use this calculator
Enter deposit amount and months held. The calculator estimates Illinois interest assuming the 25+ unit threshold and current IDFPR rate. For Chicago rentals, refer to the Chicago RLTO rate.
Frequently asked questions about Illinois deposit interest
Does Illinois require landlords to pay interest on security deposits?
Yes, for buildings with 25 or more residential units when the deposit is held longer than 6 months (765 ILCS 715). Smaller buildings (under 25 units) are not subject to the state interest rule at the state level. Chicago RLTO imposes its own broader requirement.
What is the Illinois deposit interest rate?
The rate is set annually by the Illinois Department of Financial and Professional Regulation (IDFPR) based on prevailing savings account rates. The current rate is published on the IDFPR website each January.
Does Chicago require deposit interest on all rentals?
Most. The Chicago RLTO applies to most Chicago rentals except owner-occupied 6-or-fewer unit buildings. The interest rule kicks in when the deposit is held longer than 6 months. The Chicago rate is set annually by the City Comptroller.
What happens if an Illinois landlord doesn't pay required interest?
State law: unpaid interest plus 1 percent of the deposit per month of non-payment, plus attorney fees. Chicago RLTO: unpaid interest plus an amount equal to the deposit (effectively 2x penalty) plus attorney fees. The Chicago penalty is much stronger.
How often must Illinois deposit interest be paid?
Either annually or at lease termination, the landlord's choice. Under Chicago RLTO, interest must be paid annually within 30 days of the lease anniversary or at lease termination.
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