Interest on a court judgment is set by statute, not by the judge, and how much can be charged depends on where the case was decided. In federal court, the rate has recently run around 3.4% to 3.6%. In state courts, judgment interest rates commonly range from about 5% to 12%, and a few states go higher. If the judgment grew out of a written contract that fixed its own interest rate, that contract rate often replaces the statutory default. So the short answer to how much interest can be charged on a judgment is: whatever the governing statute sets for the week or year the judgment was entered, unless a contract rate controls.
The Federal Judgment Interest Rate
Federal courts apply one nationwide rate to money judgments in civil cases. Under 28 USC 1961, the rate equals the weekly average one-year constant maturity Treasury yield published by the Federal Reserve for the calendar week before the judgment is entered.1Office of the Law Revision Counsel. 28 USC 1961 – Interest Once the judgment is entered, the rate locks in at that week’s figure and stays fixed for the life of the debt, even as Treasury yields keep moving.
In early 2026, the federal post-judgment rate has hovered between roughly 3.43% and 3.56%.2District Court for the Northern Mariana Islands. Post Judgment Interest Rates That is low compared with most state rates, so creditors who win in federal court often collect less in interest than they would under state law. The underlying Treasury yield data is published in the Federal Reserve’s H.15 release.3Federal Reserve Board. H.15 – Selected Interest Rates (Daily)
Federal judgment interest is computed daily and compounded annually.1Office of the Law Revision Counsel. 28 USC 1961 – Interest Interest accrues for every day the debt goes unpaid, and at the end of each year the accumulated interest is folded into the principal. From that point on, the debtor pays interest on a larger balance.
State Judgment Interest Rates
State legislatures set their own rates, and they generally run higher than the federal figure. Two approaches dominate.
Fixed-rate states write a specific percentage into the statute that stays the same regardless of market conditions. These rates commonly land between about 5% and 12%. A few states set rates of 15% or more for certain kinds of claims.
Variable-rate states tie the judgment rate to an economic benchmark and add a set number of percentage points on top, then adjust the result on a regular schedule. The rate can shift several times a year as the underlying benchmark moves.
To confirm the current number for a specific state, search the official website of that state’s court system or chief financial officer for “post-judgment interest rate.” States with variable formulas typically publish updated rate tables.
When a Contract Rate Applies Instead
If the judgment arises from a written contract that specifies its own interest rate, that rate often replaces the statutory default. A majority of states explicitly allow this. The parties already agreed on the number, so the court honors their agreement rather than substituting the legislature’s fallback.
This comes up most in cases built on promissory notes, loan agreements, and commercial leases with interest provisions. If the contract calls for 8% and the state’s statutory rate is 6%, the creditor gets the contract rate. Some states cap how high the contract rate can go once it is embedded in a judgment; others apply whichever rate is higher. Anyone dealing with a contract-based judgment should read the underlying agreement for an interest clause before assuming the statutory rate controls.
How Judgment Interest Is Calculated
Interest begins accruing when the judgment is officially entered in the court’s records, not necessarily on the day the judge announced the ruling. In federal court, the entry date is when the clerk records the judgment on the docket.1Office of the Law Revision Counsel. 28 USC 1961 – Interest Some state statutes start the clock on the date the judgment is “rendered,” which can differ by a few days. On a large judgment, even a few days of interest is real money.
Simple Interest
Most states use simple interest, which applies only to the original judgment amount. The formula is straightforward:
Principal × Rate × Time = Interest
On a $50,000 judgment at 8% simple interest, the annual interest is $4,000. Three years unpaid produces $12,000 in interest and a $62,000 payoff. The yearly interest never grows because the principal never grows.
Compound Interest
Federal law and a handful of states use compound interest, adding each year’s accrued interest to the principal before calculating the next year’s.1Office of the Law Revision Counsel. 28 USC 1961 – Interest Take the same $50,000 judgment at 8%, compounded annually. Year one produces $4,000 in interest, taking the balance to $54,000. Year two’s interest is $4,320, for a balance of $58,320. Year three adds $4,665.60. Total interest after three years is $12,985.60, nearly $1,000 more than simple interest over the same span. The gap widens the longer the debt sits.
What the Interest Runs On
In federal court, post-judgment interest applies to “any money judgment,” which covers the full amount the court orders paid. When a judgment includes attorney fees or court costs alongside damages, the interest generally runs on the whole sum. Many state courts follow the same approach, though some treat costs or fees separately. Unless the court’s order says otherwise, use the total judgment amount as the starting figure.
Partial Payments
When the debtor makes partial payments, the usual rule in civil cases is that payments are applied to accrued interest first, and only the remainder reduces the principal. Early payments may not shrink the underlying balance as quickly as the debtor expects. The judgment order or state law can specify a different order, so check before you assume.
How Long Interest Keeps Running
Interest keeps running until the judgment is paid in full, but judgments themselves have a lifespan. Most states give a judgment 10 to 20 years before it expires and becomes unenforceable, and most allow the creditor to renew it for another full term.
Renewal has a costly side effect in states that otherwise use simple interest. When a judgment is renewed, accrued but unpaid interest can be folded into the new principal balance, and interest then runs on that larger figure. This effectively produces compounding in a simple-interest jurisdiction, and creditors often renew specifically to capitalize the accrued interest.
Consider a $30,000 judgment at 10% simple interest. It accumulates $3,000 a year, or $30,000 over ten years. If the creditor renews and rolls the interest into the principal, the new balance is $60,000, and the next decade’s interest runs on that. Ignoring a judgment is one of the most expensive choices a debtor can make.
Pre-Judgment Interest Is Separate
Everything above concerns post-judgment interest, which starts the day the court enters the judgment. Pre-judgment interest is a separate award that covers the period between when the harm occurred (or the debt became due) and when the court issued the judgment. It is not automatic. In federal court, awarding it is generally left to the judge’s discretion, with some statutes requiring it for specific claims. State practice varies: some states award pre-judgment interest as a matter of course on liquidated damages, while others limit it or leave it to the judge. The rate can differ from the post-judgment rate even in the same jurisdiction, and when both are awarded, the court’s order typically spells out the amounts and rates separately.
Judgment Interest and Taxes
Interest received on a court judgment is taxable income. The IRS treats it like any other interest, and the creditor reports it on line 2b of Form 1040.4Internal Revenue Service. Publication 4345 – Settlements, Taxability This is true regardless of the underlying claim. Even when the damages themselves are tax-free, as some personal injury damages are, the interest portion is separately taxable. When interest paid in the course of a trade or business reaches $600 or more, the payer files Form 1099-INT.5Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID Even without a 1099-INT, the creditor is still responsible for reporting the interest. If a judgment has been accruing for years, plan for the tax bill on the interest before spending the payout.