Illinois 2026 Security Deposit Interest Rate: 0.005%

[Cite: 765 ILCS 715]

A shorter-term lease, or a tenancy that ends before hitting that 6-month mark, doesn't generate an interest obligation under this statute at all, regardless of how large the landlord's overall portfolio is.

5. The two different payment triggers, and why they're not the same

This is a detail worth getting precisely right, since the statute actually sets up two separate payment mechanics rather than one uniform rule. On the standard annual cycle, a landlord has to pay accumulated interest within 30 days after each 12-month rental period, but only if that accumulated amount reaches $5 or more.

[Cite: 765 ILCS 715]

At lease termination, that $5 threshold doesn't apply. Whatever interest has accumulated, even if it's well under $5, has to be paid out in full once the tenancy actually ends.

[Cite: 765 ILCS 715]

That distinction matters operationally. A landlord tracking compliance across a large portfolio needs two different triggers built into their process: an annual check against the $5 floor for ongoing tenancies, and a no-floor final payout whenever a lease actually terminates.

6. How the payment itself has to work

The statute allows the interest to be paid either in cash or as a credit applied toward rent due.

[Cite: 765 ILCS 715]

That flexibility gives a landlord a practical option beyond cutting a separate check for what's often a very small dollar amount; applying it directly as a rent credit is an administratively simpler path for most portfolios.

7. The two carve-outs from this obligation

Two specific situations remove a landlord's obligation to pay this interest. Deposits connected to public housing are excluded from the Act entirely. And a landlord can withhold interest payment when the tenant is in default under the terms of the lease.

[Cite: 765 ILCS 715]

The default exception is narrower than it might sound; it applies to the tenant's default under the lease itself, not to a landlord's general dissatisfaction with a tenant, and it doesn't eliminate the underlying interest obligation for tenants who are current on their lease terms.

8. Why the actual dollar amount is almost beside the point

At 0.005%, the interest owed on a typical security deposit is genuinely tiny. A $2,000 deposit held for a full year generates 10 cents in interest under this rate. It would be easy for a landlord managing a large portfolio to treat this as immaterial and let it slide.

[Cite: IDFPR, 2026 Security Deposit Interest Act rate notice]

That would be a mistake, because the consequence for skipping it isn't scaled to the tiny amount actually owed.

9. The penalty is genuinely severe, and disproportionate to the rate

If a landlord willfully fails or refuses to pay the interest owed under this Act, and a court finds that failure was willful, the landlord becomes liable for the entire security deposit amount, not just the missed interest, plus court costs and reasonable attorney's fees.

[Cite: 765 ILCS 715]

That's a meaningful asymmetry worth internalizing. A landlord who never pays out a 10-cent interest credit on a $2,000 deposit, and does so willfully rather than through a documented oversight, risks losing that entire $2,000 deposit in litigation, on top of covering the tenant's legal costs. The dollar amount at stake in a dispute has almost nothing to do with the interest rate itself and everything to do with whether the failure to pay can be characterized as willful.

10. What property managers should do now

The practical starting point for a portfolio that meets the 25-unit threshold is building the annual interest calculation and payment into the standard lease-renewal and move-out workflows, using the current year's published IDFPR rate rather than assuming last year's figure still applies without checking. Tracking which tenancies have crossed the 6-month mark, and flagging both the annual $5-threshold payment and the no-threshold termination payout, keeps the two separate triggers from being conflated into one incomplete process.

Given how disproportionate the willful-failure penalty is relative to the actual interest owed, treating this as a routine, automated part of deposit administration, rather than a low-priority line item, is the more defensible approach for any landlord large enough for this statute to apply.