What is the Minnesota security deposit interest rate right now?

1% per year, simple and noncompounded, fixed by Minn. Stat. § 504B.178, subd. 2, and unchanged since August 1, 2003. Subdivision 2 sets one rate for every covered deposit: the money "shall bear simple noncompounded interest at the rate of one percent per annum." Minnesota writes the compounding rule into the statute — the phrase "simple noncompounded" is the section's own language.

When must a landlord pay or credit deposit interest in Minnesota?

Interest is "computed from the first day of the next month following the full payment of the deposit" — not from the start of the tenancy, and not from a partial payment. A deposit paid in the middle of a month starts earning on the first day of the following month, and a deposit paid in installments starts only once it has been paid in full.

Does the deposit have to be in an interest-bearing account in Minnesota?

No statute addresses whether the account must bear interest. Section 504B.178 imposes no escrow, trust or separate-account duty, and no subdivision addresses whether the account holding the money earns anything. Subdivision 2 provides that the deposit "shall not be considered received in a fiduciary capacity within the meaning of section 82.55, subdivision 26, but shall be held by the landlord for the tenant who is party to the agreement" — a statement about the character of the holding rather than a direction about where the money must sit.

What happens if a landlord does not pay deposit interest in Minnesota?

Two provisions stack, and both reach interest. Subdivision 4 makes a landlord who fails to provide the written statement within three weeks of termination (or five days in the condemnation case), to transfer or return a deposit as subdivision 5 requires, or to give notice of and complete the initial and move-out inspections required by section 504B.182, liable for "the portion of the deposit withheld by the landlord and interest thereon as provided in subdivision 2, as a penalty, in addition to the portion of the deposit wrongfully withheld by the landlord and interest thereon" — the withheld amount and its interest, twice over.

Do any cities or counties in Minnesota have their own deposit-interest rules?

Minneapolis and St. Paul add no deposit-interest rule of their own; both cities leave the duty to section 504B.178, so the state rate and the state timing govern there as everywhere else in Minnesota.

Does a landlord have to pay interest on a security deposit in Minnesota?

Verified August 28, 2026 All Minnesota topics →

Check your municipality. Minnesota does not preempt local rent regulation — city or county ordinances may impose rent caps, notice periods, and fee limits that are stricter than the state law on this page. Verify your municipality's ordinances before relying on any figure below. Verified local pages: St. Paul.

What the state record says

Local rent control is not flatly barred. Minn. Stat. 471.9996 subd. 1 stops any city, county, or town from adopting or renewing rent control on private residential property, but subd. 2 expressly permits it where the ordinance, charter amendment, or law is approved in a GENERAL ELECTION. The exception is live, not theoretical: St. Paul voters approved a 3% annual rent-stabilization cap in November 2021 (effective May 2022), which the city council has since narrowed — most recently on 2025-05-07 (4-3 vote, changes effective 2025-06-13) to permanently exempt units first receiving a certificate of occupancy after 2004-12-31. Minneapolis voters in 2021 authorized their council to draft a rent-stabilization ordinance, but none has been enacted.

Minnesota requires interest on every residential security deposit at one percent a year, simple and noncompounded, and it is paid with the deposit when the tenancy ends.

Cited to Minn. Stat. § 504B.178 (interest on security deposits) subd. 2 and 3 more cited sources · Verified August 28, 2026

The rate is written into section 504B.178, subdivision 2, so it does not depend on what the landlord's account earns, and it has been one percent since August 1, 2003. Interest is computed from the first day of the month after the deposit is paid in full to the last day of the month in which the landlord returns it or accounts for it in good faith, so it is measured in whole months at both ends. Any interest amount under $1 is excluded and not owed. Minnesota has no annual payment duty, no annual statement and no right to deduct interest from rent — the money comes back with the deposit, within three weeks of termination in the ordinary case.

Minnesota deposit interest at a glance

Interest owed to the tenant	Yes — required by statute
How the rate is set	A percentage written in the statute
Current figure	1% per year, simple and noncompounded, fixed by Minn. Stat. § 504B.178, subd. 2, and unchanged since August 1, 2003.
Rate rules	Subdivision 2 sets one rate for every covered deposit: the money "shall bear simple noncompounded interest at the rate of one percent per annum." Minnesota writes the compounding rule into the statute — the phrase "simple noncompounded" is the section's own language. There are no unit counts, deposit-size thresholds or lease-length conditions, and any interest amount less than $1 is excluded from the provisions of the section, so sub-dollar interest is simply not owed. The rate has been one percent since August 1, 2003, when Laws 2003, chapter 52, section 2 replaced the three percent that applied before that date. A 2024 technical-corrections act, Laws 2024, chapter 85, section 105, struck the spent words "three percent per annum until August 1, 2003, and" along with the orphaned "thereafter," leaving the flat one percent that had already governed every accrual period for two decades. The rate did not change in 2024.
Accrual and payment	Interest is "computed from the first day of the next month following the full payment of the deposit" — not from the start of the tenancy, and not from a partial payment. A deposit paid in the middle of a month starts earning on the first day of the following month, and a deposit paid in installments starts only once it has been paid in full. It runs to the last day of the month in which the landlord, in good faith, complies with the return duty of subdivision 3, or to the date judgment is entered in a civil action involving the landlord's liability for the deposit, whichever date is earlier. Both ends of the period fall on month boundaries. Payment comes at the end of the tenancy, not each year. Subdivision 3 requires the landlord to return the deposit "with interest thereon as provided in subdivision 2" within three weeks after termination of the tenancy — or within five days where the tenant leaves because the building was legally condemned for reasons not due to the tenant's own conduct — after receiving the tenant's mailing address or delivery instructions. Interest also travels with the deposit when the landlord's interest in the property ends: within sixty days the deposit and its interest must go to the successor or back to the tenant (subd. 5). There is no annual payment duty, no annual statement duty and no right to deduct interest from rent anywhere in the section. Any attempted waiver of the section, by contract or otherwise, is void and unenforceable (subd. 10).
Who and what is covered	Subdivision 1 reaches any deposit of money whose function is to secure the performance of a residential rental agreement or any part of one, other than a deposit which is exclusively an advance payment of rent. No unit count, deposit size or lease length narrows it. Subdivision 11 limits the section to tenancies commencing or renewed on or after July 1, 1973, and treats an estate at will as renewed at the commencement of each rental period.
Statute controls where or how the deposit is held	No statute addresses how the deposit is held
Interest-bearing account required	No statute addresses whether the account must bear interest
Custody rules	Section 504B.178 imposes no escrow, trust or separate-account duty, and no subdivision addresses whether the account holding the money earns anything. Subdivision 2 provides that the deposit "shall not be considered received in a fiduciary capacity within the meaning of section 82.55, subdivision 26, but shall be held by the landlord for the tenant who is party to the agreement" — a statement about the character of the holding rather than a direction about where the money must sit. Because the rate is fixed by statute, the one percent is owed whatever the landlord's account actually earns.
Penalty for violation	Two provisions stack, and both reach interest. Subdivision 4 makes a landlord who fails to provide the written statement within three weeks of termination (or five days in the condemnation case), to transfer or return a deposit as subdivision 5 requires, or to give notice of and complete the initial and move-out inspections required by section 504B.182, liable for "the portion of the deposit withheld by the landlord and interest thereon as provided in subdivision 2, as a penalty, in addition to the portion of the deposit wrongfully withheld by the landlord and interest thereon" — the withheld amount and its interest, twice over. Subdivision 7 adds punitive damages not to exceed $500 for each deposit for "the bad faith retention by a landlord of a deposit, the interest thereon, or any portion thereof, in violation of this section," so retaining the interest alone is squarely within the trigger. The $500 is a per-deposit cap rather than a multiplier. Where the landlord has failed to comply with subdivision 3 or 5, retention is presumed to be in bad faith unless the landlord returns the deposit within two weeks after the commencement of any action for its recovery — a presumption with a statutory cure window that summaries of Minnesota law regularly leave out.
Local rules	Minneapolis and St. Paul add no deposit-interest rule of their own; both cities leave the duty to section 504B.178, so the state rate and the state timing govern there as everywhere else in Minnesota.

Cite this page: "Landlord Atlas, Minnesota Security Deposit Interest Laws (verified August 28, 2026), landlordatlas.com/laws/deposit-interest/minnesota/" — free to cite and quote with a link (how these records are verified). Everything above is cited in the citations section below.

Calculate Minnesota security deposit interest — free, no signup, built on the same verified Minnesota law as this page.

City and county deposit-interest pages in Minnesota

Minneapolis — a local code that defers to the state rule
St. Paul — a local code that defers to the state rule

Notes and caveats

Paid at the end, not each year — Fifty-state summaries frequently say Minnesota interest is paid annually. Nothing in section 504B.178 says so. Subdivision 2 defines a single unbroken accrual period that ends when the landlord complies with the return duty, subdivision 3 is the only place in the section that orders the landlord to hand interest to the tenant, and there is no anniversary date, no annual statement and no deduct-from-rent right in any of the eleven subdivisions.
The 2024 amendment did not move the rate — Laws 2024, chapter 85 was a technical-corrections act. Its section 105 removed the spent phrase "three percent per annum until August 1, 2003, and" and the word "thereafter" from subdivision 2, leaving the one percent that had already applied since 2003. A claim that Minnesota changed its deposit-interest rate in 2024 mistakes the tidying for a change in the law.
When the clock starts — Interest does not start on the day the tenancy begins or the day the deposit is handed over. It starts on the first day of the month following full payment of the deposit, so a deposit paid on the 3rd earns nothing for the rest of that month, and a deposit paid in installments earns nothing until the last installment is in. Calculations built on a day-one-of-the-tenancy start overstate what is owed, usually by up to a month.
Interest under a dollar — Subdivision 2 provides that any interest amount less than $1 is excluded from the provisions of the section. It is an exclusion rather than a rounding rule, and it looks at the interest, not at the size of the deposit: at one percent a year, a $500 deposit passes the dollar mark after about two and a half months.
The old three percent — Deposits accruing before August 1, 2003 bore three percent a year, and that figure still circulates in older charts. The current rate is one percent; the three percent survives only in the obsolete words the 2024 amendment struck out.
One interest rule that runs toward the landlord — Subdivision 8 makes a tenant who withholds the last month's rent in violation of that subdivision liable to the landlord for, among other things, interest on the whole deposit as provided in subdivision 2. It is the same one percent, pointed the other way, and it is not a landlord duty.

Common questions: Minnesota deposit interest

Each answer is the verified value from the table above, restated as a direct answer. Free to quote with a link to this page.

What is the Minnesota security deposit interest rate right now?: 1% per year, simple and noncompounded, fixed by Minn. Stat. § 504B.178, subd. 2, and unchanged since August 1, 2003. Subdivision 2 sets one rate for every covered deposit: the money "shall bear simple noncompounded interest at the rate of one percent per annum." Minnesota writes the compounding rule into the statute — the phrase "simple noncompounded" is the section's own language.
When must a landlord pay or credit deposit interest in Minnesota?: Interest is "computed from the first day of the next month following the full payment of the deposit" — not from the start of the tenancy, and not from a partial payment. A deposit paid in the middle of a month starts earning on the first day of the following month, and a deposit paid in installments starts only once it has been paid in full.
Does the deposit have to be in an interest-bearing account in Minnesota?: No statute addresses whether the account must bear interest. Section 504B.178 imposes no escrow, trust or separate-account duty, and no subdivision addresses whether the account holding the money earns anything. Subdivision 2 provides that the deposit "shall not be considered received in a fiduciary capacity within the meaning of section 82.55, subdivision 26, but shall be held by the landlord for the tenant who is party to the agreement" — a statement about the character of the holding rather than a direction about where the money must sit.
What happens if a landlord does not pay deposit interest in Minnesota?: Two provisions stack, and both reach interest. Subdivision 4 makes a landlord who fails to provide the written statement within three weeks of termination (or five days in the condemnation case), to transfer or return a deposit as subdivision 5 requires, or to give notice of and complete the initial and move-out inspections required by section 504B.182, liable for "the portion of the deposit withheld by the landlord and interest thereon as provided in subdivision 2, as a penalty, in addition to the portion of the deposit wrongfully withheld by the landlord and interest thereon" — the withheld amount and its interest, twice over.
Do any cities or counties in Minnesota have their own deposit-interest rules?: Minneapolis and St. Paul add no deposit-interest rule of their own; both cities leave the duty to section 504B.178, so the state rate and the state timing govern there as everywhere else in Minnesota.

Citations

Minn. Stat. § 504B.178 (interest on security deposits) · subd. 2 (verified 2026) Official source
Minn. Stat. § 504B.178 (return of the deposit with interest) · subd. 3 (verified 2026) Official source
Minn. Stat. § 504B.178 (damages; bad-faith retention) · subds. 4, 7 (verified 2026) Official source
Laws 2024, ch. 85, § 105 (technical correction to subd. 2) · § 105 (verified 2026) Official source

How this record was verified: Direct read of Minnesota Statutes section 504B.178 in the current published edition on the Office of the Revisor of Statutes site, all eleven subdivisions read in full together with the section's history line; the interest subdivision compared against the same section in the 2023 edition and against Laws 2024, chapter 85, section 105 in the Revisor's own struck-and-inserted text, which establishes both what the 2024 amendment changed and the pre-2003 rate; and the Revisor's Statutes Affected table queried across all legislative sessions, including the 2025 regular and first special sessions and the 2026 regular session, returning eight records of which the most recent is the 2024 amendment.