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

No statute addresses whether the account must bear interest.

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

No statutory penalty reaches an interest violation specifically.

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

Vermont hands the interest question to its towns and expressly withholds the custody question from them, in two consecutive sentences. 9 V.S.A. § 4461(g) provides that "[a] town or municipality may adopt an ordinance governing security deposits on dwellings" that is "supplemental to and not inconsistent with the minimum protections" of the section, and then draws the line: "The ordinance may not limit how a security deposit is held. The ordinance may authorize the payment of interest on a security deposit."

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

Verified August 28, 2026 All Vermont topics →

Vermont law does not require a landlord to pay interest on a security deposit — but it expressly lets a town require it, and Burlington does.

Cited to 9 V.S.A. § 4461 (Security deposits) (c), (g) and 2 more cited sources · Verified August 28, 2026

At the state level 9 V.S.A. § 4461 imposes no interest duty and no account duty: it sets out what a landlord may retain the deposit for, requires the deposit back with an itemized written statement within fourteen days (sixty for a seasonal rental that is not a primary residence), forfeits the landlord's right to withhold anything on a late return, and doubles the exposure where the failure is willful. The words "account," "escrow," "trust" and "commingle" appear nowhere in the whole residential rental chapter. What makes Vermont unusual is the last subsection: § 4461(g) tells municipalities in one breath that a local deposit ordinance "may not limit how a security deposit is held" and in the next that it "may authorize the payment of interest on a security deposit." The Legislature handed down the interest question and kept the custody question, and the answer for any given Vermont tenant therefore depends on the town.

Vermont deposit interest at a glance

Interest owed to the tenant	No — the statute addresses the interest and does not give it to the tenant
How the rate is set	No rate exists — there is no interest duty
Current figure	No published figure exists
Rate rules	No rate rules — no duty exists
Accrual and payment	No payment duty exists
Who and what is covered	No statutory conditions stated — see the summary and notes
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	No statute addresses custody of the deposit
Penalty for violation	No statutory penalty reaches an interest violation specifically
Local rules	Vermont hands the interest question to its towns and expressly withholds the custody question from them, in two consecutive sentences. 9 V.S.A. § 4461(g) provides that "[a] town or municipality may adopt an ordinance governing security deposits on dwellings" that is "supplemental to and not inconsistent with the minimum protections" of the section, and then draws the line: "The ordinance may not limit how a security deposit is held. The ordinance may authorize the payment of interest on a security deposit." Burlington uses the authorization — § 18-120(a)(1) of its code requires a deposit to be "held by the owner in an interest-bearing account, with an interest rate at least equivalent to a current Vermont bank passbook savings account," and § 18-120(c) returns the deposit "plus interest" net of the deductions the ordinance allows. Barre City's duty is gone: it lived in the city charter rather than in an ordinance, and 24 App. V.S.A. ch. 1, §§ 526 through 528 were repealed by 2019, No. M-12 (Adj. Sess.), § 5(b), effective November 1, 2020, with no replacement in the city's current minimum housing ordinance — though at least one legal-research site still serves the repealed text as if it were live.

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

Check the verified Vermont answer — and every state and city that differs — in the deposit interest calculator — free, no signup, built on the same verified Vermont law as this page.

City and county deposit-interest pages in Vermont

Barre — a repealed or voided former rule, still widely misquoted
Burlington — its own local interest rule

Notes and caveats

The asymmetry in the delegation is deliberate — Read the two sentences of § 4461(g) together and the split is plain: a Vermont municipality may make a landlord pay interest on a deposit, but may not tell the landlord where to keep the money. State law regulates neither, and it forbids towns from regulating one of them. That is why Vermont is not a state whose deposit statute simply never thought about interest: the statute names interest, and then declines to require it.
The state return duty is principal only — § 4461(c) requires the landlord to return "the security deposit along with a written statement itemizing any deductions" — the deposit, and nothing added to it. Every state-level remedy in the section runs on that same figure: forfeiture of the right to withhold under (e), and double "the amount wrongfully withheld" where the failure is willful.
Vermont's other two 'interest' words are about ownership — Apart from § 4461(g), the chapter uses the word twice: in § 4452, for an occupant who succeeds to a purchaser's interest, and in § 4461(f), which transfers the deposit to the new landlord "[u]pon termination of the landlord's interest in the dwelling unit." Neither is money.
Ask which town, and check whether the rule is still alive — Because the duty is local, a Vermont answer is only as good as the municipality it is given for, and repealed local rules linger in circulation. Barre City is the cautionary case: its deposit-interest duty sat in the city charter, the Legislature repealed it effective November 1, 2020, and text of the dead provision is still published online as though it governed.

Common questions: Vermont 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 Vermont security deposit interest rate right now?: No published figure exists.
When must a landlord pay or credit deposit interest in Vermont?: No payment duty exists.
Does the deposit have to be in an interest-bearing account in Vermont?: No statute addresses whether the account must bear interest.
What happens if a landlord does not pay deposit interest in Vermont?: No statutory penalty reaches an interest violation specifically.
Do any cities or counties in Vermont have their own deposit-interest rules?: Vermont hands the interest question to its towns and expressly withholds the custody question from them, in two consecutive sentences. 9 V.S.A. § 4461(g) provides that "[a] town or municipality may adopt an ordinance governing security deposits on dwellings" that is "supplemental to and not inconsistent with the minimum protections" of the section, and then draws the line: "The ordinance may not limit how a security deposit is held. The ordinance may authorize the payment of interest on a security deposit."

Citations

9 V.S.A. § 4461 (Security deposits) · (c), (g) (verified 2026) Official source
24 App. V.S.A. ch. 1 (City of Barre charter), §§ 526-528 repealed by 2019, No. M-12 (Adj. Sess.), § 5(b), eff. Nov. 1, 2020 · subch. 005 (verified 2026) Official source
Burlington Code of Ordinances § 18-120 (Deposits) · § 18-120(a)(1), (c) (verified 2026) Official source

How this record was verified: Complete read of 9 V.S.A. § 4461 (security deposits), subsections (a) through (g) with its amendment history line, and of every published section of 9 V.S.A. ch. 137 (residential rental agreements) on the Legislature's statute site; every occurrence of 'interest', 'escrow', 'commingle', 'account' and 'trust' in the chapter examined in context, the chapter producing no occurrence at all of the last four and exactly three of 'interest'; and the 2025-26 biennium closed against the Legislature's own table of acts affecting statute sections, all 2,705 rows, in which § 4461 does not appear and only §§ 4452, 4456a and 4468b of ch. 137 do. Burlington Code of Ordinances § 18-120 read in full on the city's official code site (code current through Ord. 7-15-26), and the repeal of the Barre City charter provisions read in the Legislature's own text of 24 App. V.S.A. ch. 1.