Texas Security Deposit Interest Rules

Does Texas require interest on security deposits?

No. Texas does not require landlords to pay interest on residential security deposits. The state's security deposit rules live in Texas Property Code Chapter 92 and cover the return deadline (30 days), itemized deductions, and bad-faith penalties (3x the wrongfully withheld portion plus $100 plus attorney fees under § 92.109), but the chapter does not impose an interest obligation.

Local Texas ordinances

Major Texas cities including Houston, Dallas, Austin, San Antonio, and Fort Worth also do not require deposit interest. A few municipalities have additional tenant-protection ordinances, but interest on deposits is not among them. The state's deposit framework is uniform statewide on this point.

Texas deposit caps and best practices

Texas does not cap residential security deposits at a specific multiple of rent, so landlords have flexibility on amount. Most Texas landlords charge one month's rent as deposit. Best practice is to: deposit funds in a separate account to make accounting cleanly trackable; document the deposit in the lease with the exact amount and purpose; and follow the 30-day return rule with itemized deductions to avoid the § 92.109 3x penalty trap.

How to use this calculator

Enter deposit amount and months held. The calculator returns $0 in required interest for Texas (the state does not require it) and confirms the deposit balance for return. Use the related Texas Security Deposit Return Deadline calculator to track the 30-day return clock.

Frequently asked questions about Texas deposit interest

Does Texas require landlords to pay interest on security deposits?

No. Texas Property Code Chapter 92 governs residential security deposits and does not impose an interest requirement. Texas is one of about 36 states that do not require deposit interest at the state level.

Do any Texas cities require deposit interest?

None of the major Texas cities (Houston, Dallas, Austin, San Antonio, Fort Worth) require deposit interest under local ordinances. The state framework is uniform on this point.

Is there a maximum security deposit in Texas?

Texas does not cap residential security deposits at a specific multiple of rent. Landlords have flexibility on the amount. Most Texas landlords charge one month's rent as deposit, which is also the most common amount nationally.

Does the deposit have to be in a separate Texas bank account?

Not required by statute. Texas allows commingling of security deposits with operating funds. Best practice is still to track deposits cleanly in accounting (a separate sub-ledger if not a separate account) to make 30-day refund processing easier and to defend any deduction documentation.

What is the deposit return rule in Texas?

Texas Property Code § 92.103 requires return of the deposit within 30 days after the tenant surrenders possession and provides a forwarding address in writing. Missing the deadline in bad faith exposes the landlord to 3x the wrongfully withheld portion plus $100 plus attorney fees under § 92.109.