Chicago security deposit interest follows the year the rental agreement was entered into, with the applicable announced rate governing new agreements and renewals. The payment year does not determine the rate. Before checking a lease, confirm that Chicago’s Residential Landlord and Tenant Ordinance (RLTO) covers the property, then separate the agreement date, rental term and payment deadline. Sections 5-12-080(c) and 5-12-081 establish these distinctions.

Check whether Chicago’s interest provisions cover the rental

The RLTO generally applies to rental agreements for dwelling units within Chicago, subject to specific exclusions. One consequential exclusion is owner-occupied premises containing six units or fewer. Small size alone does not establish that exemption: owner occupancy also matters. Some other RLTO protections still apply to those premises, so an exemption from deposit interest does not mean exemption from every tenant protection. Sections 5-12-010 and 5-12-020 establish the scope and exclusions.

Other exclusions cover specified institutional and student housing, certain occupancy connected to employment or a purchase contract, and cooperative units occupied under proprietary leases. Hotels and similar accommodations have a conditional exclusion involving the duration of occupancy and monthly rent. Check the category’s conditions before treating a rental as excluded.

Subsidized housing is not categorically outside the RLTO. The ordinance applies to those agreements to the extent it does not directly conflict with the laws or regulations governing the subsidy program. Section 5-12-010 states that qualification.

Illinois also has a separate deposit-interest statute covering residential property with at least 25 units in one building or a complex on contiguous parcels. Its coverage test is different; do not use that threshold to decide whether Chicago’s provisions apply. See the Illinois Security Deposit Interest Act, section 1.

Match the agreement or renewal to its rate

Once coverage is established, identify when the agreement was entered into. Section 5-12-080(c) connects the rate to that year. Section 5-12-081 says the Comptroller’s announced rate applies to covered agreements made or renewed after the most recent announcement. Read those provisions together when matching an agreement to its rate notice. See Chicago’s ordinance, pages 9–11.

Keep three dates separate:

For an unchanged fixed-term agreement spanning January 1, the calendar turning does not itself create a renewal. Do not automatically split that term into different calendar-year rates.

A renewal requires a fresh rate check, even if the landlord continues holding the original deposit. Keep the renewal’s agreement date and term dates with the original lease. If signatures straddle December and January, or the tenancy continues through an automatic extension or a month-to-month arrangement, establish when and how the operative agreement arose before choosing a rate.

For a 2026 renewal, obtain the applicable 2026 city notice. An older notice belongs in the record for the agreement it governs; it should not be substituted merely because it is already in the file.

Separate the six-month threshold from the payment deadline

For covered security deposits and prepaid rent, section 5-12-080(c) requires interest when the landlord holds the money for more than six months. Once that requirement applies, interest accrues from the beginning of the rental term specified in the agreement. The first six months are not an interest-free period. See section 5-12-080(c).

Under the same provision, the landlord must pay annual interest within 30 days after each 12-month rental period ends, either in cash or as a credit against rent due. Check that a claimed credit appears in the rent ledger. A calculation saved in a management system does not establish that the tenant received it.

Move-out introduces a separate accounting deadline. Section 5-12-080(d) generally requires return of the deposit balance and required interest within 45 days after the tenant vacates, subject to permitted deductions. It provides a shorter seven-day deadline after notice terminating the agreement under the fire-or-casualty provision in section 5-12-110(g). Check Chicago’s deposit-return provisions alongside the annual-payment record.

A 2026 payment can use an earlier agreement’s rate

Hypothetical example: A covered rental agreement is entered into on December 15, 2024, for an 18-month term beginning January 1, 2025. The landlord receives a $2,500 deposit before the term begins and holds that unchanged balance throughout 2025. There is no intervening renewal.

The City Comptroller’s notice dated December 29, 2023 sets the 2024 rate at 0.01%. Applying the agreement-year rule, the first annual calculation is:

$2,500 × 0.0001 = $0.25

The percentage conversion matters: 0.01% becomes 0.0001 when multiplying, producing 25 cents in interest.

The first 12-month rental period runs from January 1 through December 31, 2025. Its annual interest payment is due within 30 days afterward—January 30, 2026. The agreement year is therefore 2024, the accrual period is in 2025, and the payment falls in 2026. The timing follows section 5-12-080(c).

This example covers only the first annual period. Any remaining partial period needs a separate calculation.

Assemble a file that explains the payment

Keep enough information for either party to reproduce the calculation:

• Coverage facts: property address, number of units, owner-occupancy information and any relevant institutional or subsidy status.
• Agreements: the original lease, renewals, amendments and evidence of when each agreement was accepted, alongside its term dates.
• Deposit receipt: amount, receipt date, dwelling-unit description and the recipient’s signed identification. The ordinary receipt rule also requires the landlord’s name when an agent receives the money. Electronic transfers have a specified electronic-receipt alternative.
• Bank disclosure: the financial institution’s name and address, plus any notice that the deposit moved to another institution.
• Rate evidence: the city notice applicable to each agreement or renewal being reconciled.
• Payment ledger: deposit and prepaid-rent balances, calculation periods, interest amounts, cash payments or rent credits, and their dates.

The receipt and bank-disclosure requirements appear in sections 5-12-080(a) and (b). The fuller reconciliation file is a practical recordkeeping recommendation.

If the figures disagree, send a written request identifying the balance, agreement, period, rate and payment being questioned. Ask for the calculation and evidence of the payment or credit.

A timely but insufficient interest payment has a specific notice-and-response procedure under section 5-12-080(f)(2). After receiving written notice of the deficiency, the landlord has 14 days to pay the correct interest due plus $50 or provide a written calculation explanation. A disputed explanation can still be challenged. Do not assume this procedure resolves every deposit violation. See section 5-12-080(f).

If coverage, agreement dates or remedies remain disputed, take the records to a Chicago landlord-tenant attorney.

For related reading, see our rental management guidance, guides for renters and local housing coverage.