Illinois 2026 Security Deposit Interest Rate: 0.005%

The Security Deposit Interest Act, codified at 765 ILCS 715, doesn't set a fixed interest rate in the statute itself. Instead, it ties the rate to an external benchmark: the interest paid by the largest commercial bank in Illinois, measured by total assets, on minimum-deposit passbook savings accounts as of December 31 of the preceding calendar year.

[Cite: 765 ILCS 715]

For 2026, that benchmark comes from Northern Trust Company's rate as of December 31, 2025, and the Illinois Department of Financial and Professional Regulation publishes the resulting figure annually.

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

The confirmed rate for 2026 is 0.005%, reported alongside an annual percentage yield of 0.01%. That's the same figure that applied in 2025.

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

A rate staying flat year over year isn't unusual under this mechanism; it simply reflects that the benchmark bank's passbook savings rate itself didn't move between the two measurement dates. A landlord shouldn't assume a stable rate means the underlying calculation has stopped happening; IDFPR still issues a new notice confirming the figure each year, even when the number comes out the same.

This law doesn't apply to every Illinois landlord. It's specifically scoped to a lessor of residential real property consisting of 25 or more units, whether that's a single building or a contiguous complex of buildings under common ownership.

[Cite: 765 ILCS 715]

A landlord with a handful of smaller properties scattered across different parts of a city, none individually reaching 25 units and not forming a contiguous complex, generally falls outside this statute's reach. It's the scale and physical clustering of ownership that triggers the obligation, not simply owning rental property in Illinois generally.

Interest doesn't start accruing the moment a deposit is collected. It applies specifically to deposits held for 6 months or longer.

[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.

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.

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.

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.

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.

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.

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.