Tax Lien Interest Rates by State: Up to 24%
Compare maximum interest rates and penalties across all 50 states and D.C. Find the highest-yield states for tax lien investing.
Updated for 2026 · Covers tax lien certificates, redeemable deeds, and tax deed penalties
Top 5 Highest Rate States
How Much Does a Tax Lien Certificate Cost?
A tax lien certificate is priced off the unpaid tax bill, not off the property. Across the tax-lien and certificate states in LienSuite's delinquent-tax database, the median county's average delinquent bill is $1,618, and the middle half of counties fall between $786 and $4,477. Roughly four counties in five average under $5,000 — which is why a certificate is a small-ticket purchase even when the house behind it is not.
Two things get added on top of the tax bill at auction:
- County charges. Interest already accrued, statutory penalties, advertising and certificate fees ride along with the taxes. You pay them, and the owner has to repay them to redeem.
- Premium, in premium-bid states. Once bidding in a state like New Jersey reaches 0% interest, investors bid cash above face value. Premium is not returned when the owner redeems, so it lowers your effective yield.
Ticket size varies a lot by state. In the two states where we hold the most lien-state records, the average delinquent bill is $4,323 in Florida (18%, bid down) and $5,341 in Ohio (18%, bid down). Browse the underlying bills yourself: Florida county tax delinquent property lists and Ohio county tax delinquent property lists.
Methodology: county-level averages of tax owed on unpaid, unsettled delinquent records across the tax-lien and certificate states listed in the table below, aggregated from county sources and refreshed nightly. Figures last updated 2026-10-02. Averages describe the tax bill, not a winning bid — a bid-down or premium-bid auction can land above or below them.
Understanding Rate Types
Fixed Rate
The interest rate is set by state law and does not change at auction. You earn the full statutory rate regardless of competition. Examples: Iowa (24%), Connecticut (18%), Nebraska (14%).
Bid Down
Auction starts at the maximum rate and investors bid the rate down. The investor accepting the lowest rate wins. Popular in competitive markets. Examples: Florida (18% max), Ohio (18% max), Arizona (16% max), Illinois (9% per 6 months max).
Penalty
Instead of interest, the owner pays a flat penalty to redeem. Can be one-time or monthly. Often produces higher effective returns. Examples: Texas (25-50%), Georgia (20%), Delaware (15%).
Premium Bid
The rate is fixed and bidders compete by paying above the lien amount; the premium usually earns no interest, reducing effective yield. Examples: Colorado, Maryland, D.C. New Jersey bids the rate down first, then takes premiums.
Complete State-by-State Comparison
| State | Sale Type | Max Rate | Rate Type | How It Works |
|---|---|---|---|---|
| AlabamaAL | Tax Lien | 12% | Bid Down | Maximum 12% annual, bid down at auction (lien-auction counties)Ala. Code § 40-10-184 |
| AlaskaAK | Tax Deed | 15% + 20% | Penalty | Set by each municipality: interest up to 15% a year plus a penalty up to 20% of the tax; the owner can redeem for 1 year after the foreclosure judgmentAS 29.45.250 |
| ArizonaAZ | Tax Lien | 16% | Bid Down | Maximum 16% annual, bid down at auctionA.R.S. §§ 42-18053, 42-18114 |
| ArkansasAR | Tax Deed | 10% | Penalty | 10% penalty on delinquent taxes; no redemption after the State Lands sale (since July 1, 2023)Ark. Code § 26-36-201 |
| CaliforniaCA | Tax Deed | 1.5%/mo | Penalty | 1.5% monthly redemption penalty on defaulted taxes (18% annual), owed before the sale; no redemption after itCal. Rev. & Tax. Code § 4103 |
| ColoradoCO | Tax Lien | 9 pts + discount rate | Premium Bid | Federal discount rate plus 9 points, rounded, set each September 1 (14% for 2025 sales); the premium earns no interestC.R.S. § 39-12-103(3) |
| ConnecticutCT | Tax Lien | 18% | Fixed | 18% a year: 1.5% a month on municipal tax liens, and 18% on the purchase price at a tax sale (6-month redemption)C.G.S. §§ 12-146, 12-157 |
| DelawareDE | Redeemable Deed | 15% | Penalty | Flat 15% of the purchase price plus costs if redeemed within 60 days of court approval; 20% within 1 year under the Kent/Sussex alternative procedure9 Del. C. §§ 8729, 8776 |
| District of ColumbiaDC | Tax Lien | 18% | Premium Bid | 1.5% a month simple interest on the amount paid, excluding any surplus bidD.C. Code §§ 47-1346, 47-1361 |
| FloridaFL | Tax Lien (Certificate) | 18% | Bid Down | Maximum 18% annual, bid down at online auction; 5% minimum on redemption except 0% bidsFla. Stat. §§ 197.172, 197.472 |
| GeorgiaGA | Redeemable Deed | 20% | Penalty | 20% premium for the first year (or part of it), plus 10% for each year after, on the full amount paidO.C.G.A. § 48-4-42 |
| HawaiiHI | Tax Deed | 12% | Penalty | The owner may redeem within 1 year by paying the buyer's price and costs plus 12% a yearHRS § 246-60 |
| IdahoID | Tax Deed | 1%/mo | Penalty | 1% a month interest (12% annual) plus a one-time 2% late charge on delinquent taxesIdaho Code §§ 63-1001, 63-201 |
| IllinoisIL | Tax Lien | 9%/6mo | Bid Down | Penalty bid of at most 9% per 6-month period (up to 18% a year) on certificates from 2024; the lowest bid wins35 ILCS 200/21-215 (P.A. 103-555) |
| IndianaIN | Tax Lien | 10-15% | Penalty | 10% of the minimum bid if redeemed within 6 months, 15% within 6-12 months; any overbid earns 5% a yearIC 6-1.1-25-2 |
| IowaIA | Tax Lien | 2%/mo | Fixed | 2% a month interest (24% annual) from the month of sale; the rate is not bidIowa Code §§ 447.1, 446.16 |
| KansasKS | Tax Deed | 13% | Penalty | Interest on delinquent real estate tax: the K.S.A. 79-2968 rate plus 5 points (13% for 2026, 14% for 2025); no redemption after the saleK.S.A. 79-2004 |
| KentuckyKY | Tax Lien | 12% | Fixed | Fixed 12% annual simple interestKRS 134.125 |
| LouisianaLA | Tax Lien | 1%/mo | Bid Down | For tax periods from 2026: monthly interest bid down from 1% (12% a year) to a 0.7% floor in 0.1% steps; a 5% penalty is added at the auctionLa. R.S. 47:2154 |
| MaineME | Municipal Lien | 7% | Penalty | Interest on delinquent taxes, capped each year by the State Treasurer (7% for 2026); the town forecloses automatically after 18 months36 M.R.S. §§ 505, 942, 943 |
| MarylandMD | Tax Lien | 6-20% | Premium Bid | County-set redemption interest: 6% by default, up to 20% (Montgomery, Prince George's); owner-occupied homes capped at 10% on certificates from 2026Md. Code, Tax-Prop. §§ 14-817, 14-820 |
| MassachusettsMA | Tax Lien | 8% | Fixed | 8% a year for tax titles taken on or after November 1, 2024 (16% for older titles)M.G.L. c. 60, § 62 |
| MichiganMI | Tax Deed | 1.5%/mo | Penalty | 1% a month interest plus a 4% administration fee on delinquent taxes, and 0.5% a month more after forfeiture; no lien certificatesMCL 211.78a, 211.78g |
| MinnesotaMN | Tax Deed | 14% | Penalty | Prime-based interest capped at 14% (7% for 2026), plus a late penalty of up to 8% (homestead) or 12% (other property)Minn. Stat. §§ 279.01, 279.03 |
| MississippiMS | Tax Lien | 1.5%/mo | Premium Bid | 1.5% a month interest (18% annual) on the taxes and costs; the overbid earns nothingMiss. Code § 27-45-3 |
| MissouriMO | Tax Lien | 10% | Premium Bid | Up to 10% a year on the purchase price (not on any surplus bid); later taxes paid earn 8%RSMo §§ 140.250, 140.340 |
| MontanaMT | Tax Lien | 10% + 2% | Fixed | 5/6 of 1% a month interest (10% a year) plus a one-time 2% penaltyMCA § 15-16-102 |
| NebraskaNE | Tax Lien | 14% | Fixed | Fixed 14% annual interest rateNeb. Rev. Stat. §§ 77-1807, 77-1824 |
| NevadaNV | Tax Deed | 10% | Penalty | 10% a year interest on the taxes (plus 4-7% penalties) to redeem during the 2-year trustee periodNRS 361.483, 361.570 |
| New HampshireNH | Tax Lien | 14% | Fixed | 14% a year on the whole lien amount from the date of executionRSA 80:69 |
| New JerseyNJ | Tax Lien | 18% | Premium Bid | Maximum 18% annual, bid down toward 0%, then bidders offer a premium; 2-6% redemption penalty by certificate sizeN.J.S.A. 54:5-32, 54:5-61 |
| New MexicoNM | Tax Deed | 1%/mo | Penalty | 1% a month interest (12% annual) plus a penalty of 1% a month capped at 5%, owed before the state deed auction; no redemption after the saleNMSA §§ 7-38-49, 7-38-50 |
| New YorkNY | Tax Deed | 12% | Penalty | 1% a month (12% annual) on delinquent taxes outside New York City (15% by local option); NYC liens accrue 6%, 9% or 16% compounded daily, plus 5%RPTL § 924-a; NYC Admin. Code § 11-224.1 |
| North CarolinaNC | Tax Deed | 2% + 0.75%/mo | Penalty | 2% interest for the first month, then 0.75% a month (about 9% a year) on delinquent taxes; no redemption after the saleN.C.G.S. § 105-360 |
| North DakotaND | Tax Deed | 12% | Penalty | 12% a year interest plus penalties up to 12% on delinquent taxes; no investor certificates, the county takes the tax deedNDCC §§ 57-20-01, 57-20-26 |
| OhioOH | Tax Lien | 18% | Bid Down | Bid down from 18% in 0.25% steps; on redemption the holder gets the bid rate or 6% of the purchase price, whichever is greaterORC §§ 5721.30, 5721.32 |
| OklahomaOK | Tax Deed | 1.5%/mo | Penalty | 1.5% a month on delinquent taxes, capped at 100% of the tax; the investor certificate sale was repealed in 200868 O.S. § 2913 |
| OregonOR | Tax Deed | 1.33%/mo | Penalty | Monthly interest on delinquent taxes (16% annual)ORS 311.505 |
| PennsylvaniaPA | Tax Deed | 10% + 9%/yr | Penalty | 10% late penalty at the collector stage, then 9% a year once returned to the Tax Claim Bureau; Philadelphia and Allegheny owner-occupants may redeem for the bid plus 10%72 P.S. § 5860.306 |
| Rhode IslandRI | Redeemable Deed | 10% + 1%/mo | Penalty | Flat 10% of the price if redeemed within 6 months, then 1% more for each month after (16% at 12 months); 1% a month on later taxesR.I. Gen. Laws §§ 44-9-8, 44-9-19 |
| South CarolinaSC | Redeemable Deed | 3-12% | Premium Bid | 3%, 6%, 9% or 12% of the bid by quarter of the 12-month redemption, capped at the opening bidS.C. Code § 12-51-90 |
| South DakotaSD | Tax Lien | 10% | Bid Down | Maximum 10% a year; bidders bid the rate down and the lowest rate winsSDCL § 10-23-8 |
| TennesseeTN | Redeemable Deed | 12% | Fixed | 12% a year on the entire purchase price, from payment until the motion to redeemTenn. Code § 67-5-2701(b) |
| TexasTX | Tax Deed | 25-50% | Penalty | 25% redemption premium in year 1; 50% in year 2 for homestead, agricultural and mineral property only (other property has 180 days)Tex. Tax Code § 34.21 |
| UtahUT | Tax Deed | 7-10% | Penalty | Interest of 6 points over the federal funds target (7% floor, 10% cap) plus a delinquency penalty, owed before the deed auction; no redemption after the saleUtah Code § 59-2-1331 |
| VermontVT | Tax Deed | 12% | Penalty | 1% a month (a part month counts as a full month) on the sale price if the owner redeems within 1 year32 V.S.A. § 5260 |
| VirginiaVA | Tax Deed | 10% | Penalty | Penalty up to 10% of the tax plus interest up to 10% a year in the first year, set by local ordinanceVa. Code § 58.1-3916 |
| WashingtonWA | Tax Deed | 9-12% | Penalty | 9% a year on homes of 1-4 units with no penalties; 12% a year plus 3% and 8% penalties on other propertyRCW 84.56.020 |
| West VirginiaWV | Tax Lien | 12% | Premium Bid | 1% a month on the taxes, interest and charges due at the sale; the amount bid above that earns no interestW. Va. Code § 11A-3-56 |
| WisconsinWI | Tax Deed | 12-18% | Penalty | 1% a month interest statewide, plus up to 0.5% a month penalty where the county adopts itWis. Stat. § 74.47 |
| WyomingWY | Tax Lien | 3% + 15% | Penalty | One-time 3% penalty plus 15% a year simple interest on redemptionWyo. Stat. § 39-13-108 |
How Tax Lien Returns Work
You Buy the Lien
At a county tax sale, you pay the delinquent taxes owed on a property. In return, you receive a tax lien certificate. The property owner still owns the property, but you now hold the lien.
Interest Accrues
The property owner has a redemption period (typically 1-3 years) to pay you back. When they do, they must pay the original amount plus the statutory interest rate or penalty set by the state.
You Get Paid or Foreclose
Most liens are redeemed (95-98% nationally), meaning you earn your interest. If the owner does not redeem, you can foreclose and potentially acquire the property for the amount of back taxes.
Important Disclaimers
- Rates shown are maximums. In bid-down states, actual returns are often significantly lower due to competition among investors.
- Rates change. State legislatures can modify interest rates and penalty structures. Always verify current rates with the county or state before investing.
- Do your due diligence. High interest rates do not guarantee a good investment. Research the property value, condition, title, and environmental status before buying any tax lien.
- This is not financial advice. Consult with a qualified attorney and financial advisor before making any tax lien investment decisions.
Frequently Asked Questions
Which state has the highest tax lien interest rate?
Iowa pays the highest yearly rate: 2% a month, or 24% a year, fixed by statute. Texas charges a 25-50% flat redemption premium on tax deed sales, which is a one-time amount rather than a yearly rate. Georgia charges a 20% first-year premium, and Connecticut and D.C. pay a fixed 18% a year. Note that these are maximum or statutory rates — actual returns depend on the specific auction and property.
How much does a tax lien certificate cost?
The certificate is priced off the unpaid tax bill, not the property. Across the tax-lien and certificate states in our delinquent-tax database the median county's average delinquent bill is $1,618, with the middle half of counties between $786 and $4,477 — roughly four counties in five average under $5,000. County charges (accrued interest, penalties, advertising and certificate fees) are added on top, and in premium-bid states so is a cash premium that you do not get back when the owner redeems. Figures last updated 2026-10-02. See the full tax lien certificate cost breakdown.
Can you really earn 18% on tax liens?
Connecticut and D.C. pay a fixed 18% a year, so you earn the full rate. Florida, New Jersey and Ohio cap the rate at 18% but bid it down at auction, and competitive bidding often drives actual returns to 1-5% in popular counties. Less competitive rural counties may still yield close to the maximum.
What is a bid-down auction?
In a bid-down auction, the interest rate starts at the maximum (e.g., 18% in Florida) and investors compete by bidding the rate down. The investor willing to accept the lowest rate wins the lien certificate. In highly competitive markets, rates can be bid down to 0%, at which point some states switch to a premium bid system. View upcoming tax sale dates.
What is the difference between tax lien interest and tax deed penalties?
Tax lien interest accrues over time on a certificate you hold — you earn interest until the owner redeems. Tax deed penalties (like Texas's 25-50%) are flat amounts the former owner must pay to redeem the property after a deed sale. Penalties can result in higher effective returns but involve different risks since you take ownership of the property. See the tax deed vs. tax lien state map.
What is the interest rate on a California tax deed?
California is a tax deed state, so a deed buyer does not earn a redemption interest rate the way a lien buyer does in Florida or Illinois. The 1.5% per month (18% annual) penalty in the table above applies to the delinquent owner before the sale — it is not a yield paid to the winning bidder. Under California Revenue & Taxation Code §3707 the right of redemption ends at the close of business on the last business day before the auction, so once the deed sells there is no redemption period and no interest to collect. Your return in California comes from the spread between your winning bid and the property's value, not from a statutory rate. Browse California county tax sale lists.
Do tax deed states pay interest to the buyer?
It depends on whether the state allows redemption after the sale. In redeemable deed states like Texas (25-50% penalty) and Georgia (20% year-one penalty), the former owner can redeem and you collect that penalty. In strict deed states like California, Nevada, Washington and Arkansas there is no post-sale redemption — so the interest and penalty figures listed for those states describe what the delinquent owner owed before the auction, not a return paid to you. Check redemption periods by state.
Are tax lien interest rates guaranteed?
The interest rate is set by law, but receiving that return depends on the property owner redeeming the lien. If the owner never redeems, you may end up foreclosing on the property instead of earning interest. Approximately 95-98% of tax liens are redeemed, so most investors do earn their interest. However, you should always research the property before investing. Look up redemption periods by state.
What is a premium bid in tax lien investing?
A premium bid means the investor pays more than the face value of the tax lien. In states like Colorado, Maryland and D.C. the rate is set by law and bidders compete by paying above the lien amount; in New Jersey bidders first bid the rate down and only then bid a premium. The premium usually earns no interest, which reduces the effective return on your total investment. This makes it critical to understand property values before bidding.
Which states are best for beginner tax lien investors?
States with fixed rates and straightforward processes tend to be best for beginners. Kentucky (12%) and Nebraska (14%) offer fixed rates without competitive bidding. Arizona (16% max, bid down), Alabama (12% max, bid down) and South Carolina (3-12% tiered) are also popular starter states with well-organized online auctions. Start small, learn the process, and scale up once you are comfortable.
How do I find tax delinquent properties to research before a lien sale?
Counties publish delinquent property lists before tax sales. LienSuite aggregates these lists across multiple states with owner information, property details, tax amounts owed, and deal scoring to help you research properties efficiently before auction day. Browse available property lists.
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