Reference · United States · 2026
US late payment interest and maximum late fees by state
In the US, late fees on B2B invoices are governed by your contract — there is no federal statutory fee and no federal maximum late fee. What bounds the figure you charge is your state's ceiling on agreed rates (how high can you go?). When the contract is silent, every state has a legal rate of interest you can charge on an overdue invoice, mostly between 5% and 12% per year. Here is that rate for all 50 states, with the statute and a source per row.
Last verified July 9, 2026. Floating rows reset yearly or quarterly — check the note before relying on one.
Highlighted rows float — the figure shown is the published 2026 (or current-quarter) value.
| State | Rate | Statute | Worth knowing | Source |
|---|---|---|---|---|
| Alabama | 6% | Ala. Code § 8-8-1 | Accrues from the day the money should have been paid (§ 8-8-8). Written contract → 8%; ≥ $2,000 principal → any agreed rate (§ 8-8-5). | Source |
| Alaska | 10.5% | Alaska Stat. § 45.45.010(a) | On money after it is due. In litigation the rate drops to a Fed-discount-based formula (6.75% for 2026, AS 09.30.070). | Source |
| Arizona | 10% | Ariz. Rev. Stat. § 44-1201(A) | Any rate may be agreed in writing. Court-awarded prejudgment interest on liquidated claims uses the lower § 44-1201(B) rate (prime + 1). | Source |
| Arkansas | 6% | Ark. Code § 4-57-101(d) | Contracts may agree up to the 17% constitutional cap (amend. 89 § 3). Courts' prejudgment practice is locally described as unsettled. | Source |
| California | 10% | Cal. Civ. Code § 3289(b) | After a breach of contract not stipulating a rate. Ordinary trade credit is generally outside the usury rules; judgments also 10%. No fixed ceiling on an agreed commercial late fee — Civ. Code § 1671(b) presumes the clause valid unless the party challenging it proves it was unreasonable when the contract was made. | Source |
| Colorado | 8% | Colo. Rev. Stat. § 5-12-101 | Compounded annually; the same 8% applies to money wrongfully withheld (§ 5-12-102). Agreement controls up to the 45% criminal ceiling. | Source |
| Connecticut | 8% | Conn. Gen. Stat. § 37-1 | Accrues from the debt's maturity. In litigation courts may instead award discretionary interest up to 10% (§ 37-3a). | Source |
| Delaware | 8.75% (Fed discount + 5) | 6 Del. C. § 2301(a) | Floats with the Federal Reserve discount rate at the time interest is due. Over $100,000 there is no limit on an agreed rate (§ 2301(c)). | Source |
| Florida | 8.06% (Q3 2026) | Fla. Stat. § 687.01 → § 55.03 | The CFO sets the rate quarterly; the same number serves contract debts and judgments. Q1 2026: 8.44%, Q2: 8.25%. | Source |
| Georgia | 7% (18% on commercial accounts) | O.C.G.A. § 7-4-2; § 7-4-16 | 7% simple is the general legal rate — but § 7-4-16 lets the owner of a commercial account charge 1.5% per month on balances 30+ days past due even with no agreement. | Source |
| Hawaii | 10% | Haw. Rev. Stat. § 478-2 | When no written contract fixes a different rate. | Source |
| Idaho | 12% | Idaho Code § 28-22-104 | "Twelve cents on the hundred by the year" absent an express written contract. Judgments use a treasury-based formula instead. | Source |
| Illinois | 5% | 815 ILCS 205/2 | On instruments of writing, on settlement of account from the day the balance is ascertained, and on money withheld by unreasonable and vexatious delay. | Source |
| Indiana | 8% | Ind. Code § 24-4.6-1-103 | From settlement on unwritten-rate instruments; on accounts, from the date an itemized bill was rendered and payment demanded. | Source |
| Iowa | 5% | Iowa Code § 535.2 | Open accounts start accruing six months after the date of the last item. | Source |
| Kansas | 10% | K.S.A. § 16-201 | From the day of liquidating the account and ascertaining the balance; also covers vexatious delay of settlement. | Source |
| Kentucky | 8% | KRS § 360.010 | Written agreements may exceed it within limits; contracts over $15,000 may set any rate. | Source |
| Louisiana | 7.5% (2026) | La. R.S. 13:4202 | The judicial rate, set each October for the next calendar year (Fed discount + 3.25), doubles as the legal rate for contract debts (C.C. art. 2924). | Source |
| Maine | 1-yr T-bill + 3pp | 14 M.R.S. § 1602-B | Prejudgment interest in civil actions; if the contract or note states a rate, that rate applies. No general out-of-court legal rate. | Source |
| Maryland | 6% | Md. Const. art. III, § 57 | The constitutional legal rate, "unless otherwise provided by the General Assembly". | Source |
| Massachusetts | 12% | Mass. G.L. c. 231, § 6C | In contract actions: the contract rate if established, otherwise 12% from the date of breach or demand. | Source |
| Michigan | 5% | MCL § 438.31 | "$5.00 upon $100.00 for a year"; a written stipulation may go up to 7% (the general usury cap). | Source |
| Minnesota | 6% | Minn. Stat. § 334.01 | "$6 upon $100 for a year" unless a different rate is contracted in writing. | Source |
| Mississippi | 8% | Miss. Code § 75-17-1 | Explicitly the legal rate "on all notes, accounts and contracts", actuarial method. | Source |
| Missouri | 9% | RSMo § 408.020 | On written contracts once due; on accounts once due AND payment has been demanded. | Source |
| Montana | 10% | Mont. Code § 31-1-106 | On instruments of writing, accounts stated, and settlements of account from the date the balance is ascertained. | Source |
| Nebraska | 12% | Neb. Rev. Stat. § 45-104 | On written instruments and settled accounts; unsettled accounts accrue from the billing date if unpaid within 30 days. | Source |
| Nevada | 8.75% (prime + 2) | NRS § 99.040 | Prime rate at Nevada's largest bank plus 2pp, reset each 1 January / 1 July; covers contracts and store accounts. | Source |
| New Hampshire | 5.7% (2026) | N.H. RSA § 336:1 | Set yearly by the state treasurer (26-week T-bill + 2); the same rate serves prejudgment and judgment interest. | Source |
| New Jersey | 6.5% (2026, ≥ $20k) | N.J. Ct. R. 4:42-11 | Court-rule rates (Cash Management Fund based; 4.5% below $20,000). No clean contract-silent statute — prejudgment interest on contract claims is equitable. | Source |
| New Mexico | ≤ 15% | NMSA § 56-8-3 | "Not more than fifteen percent" on money due by contract and on settlement of matured accounts — a ceiling courts apply, not an automatic entitlement. | Source |
| New York | 9% | N.Y. CPLR 5004 | The 2022 amendment (2% + fed funds) applies only to consumer-debt judgments — B2B contract claims remain at 9%. | Source |
| North Carolina | 8% | N.C.G.S. § 24-1 | The legal rate. | Source |
| North Dakota | 6% | N.D.C.C. § 47-14-05 | Unless a different written rate (capped by a T-bill-based formula, minimum 7%) is agreed. | Source |
| Ohio | 7% (2026) | Ohio R.C. § 1343.03(A) | The tax commissioner's § 5703.47 rate (federal short-term rounded + 3, set each October) — applies to book accounts and verbal contracts too. | Source |
| Oklahoma | 6% | 15 O.S. § 266 | In the absence of any contract as to the rate; parties may agree to any lawful rate. | Source |
| Oregon | 9% | ORS § 82.010 | On all moneys after they become due — open accounts bear interest from the date of the last item. | Source |
| Pennsylvania | 6% | 41 P.S. § 202 | The "legal rate" whenever an obligation to pay interest names no rate. | Source |
| Rhode Island | 12% | R.I.G.L. § 6-26-1 | "$12.00 on $100 for one year" in business transactions unless expressly stipulated; civil actions also use 12% (§ 9-21-10). | Source |
| South Carolina | 8.75% | S.C. Code § 34-31-20(A) | On accounts stated and ascertained sums due. Judgments instead use prime + 4, compounded annually (§ 34-31-20(B)). | Source |
| South Dakota | ≤ 12% (Category C) | SDCL § 54-3-4 → § 54-3-16 | Where an obligation to pay interest names no rate, interest runs from the debt's incurrence at up to the Category C rate (12%). | Source |
| Tennessee | ≤ 10% (equitable) | Tenn. Code § 47-14-123 | Prejudgment interest MAY be awarded in equity up to 10% — it is not an automatic entitlement, so treat it as a ceiling, not a right. | Source |
| Texas | 6% | Tex. Fin. Code § 302.002 | On open accounts with no agreed rate — accruing from the 30th day after the amount becomes due. An agreed rate on business-purpose credit is capped at 28% a year (Tex. Fin. Code § 303.009(c)). | Source |
| Utah | 10% | Utah Code § 15-1-1 | Absent a contract specifying a different rate. | Source |
| Vermont | 12% | 9 V.S.A. § 41a | Computed by the actuarial method, except as specifically provided by law. | Source |
| Virginia | 6% | Va. Code § 6.2-301 | Implied whenever there is an obligation to pay interest with no express rate; the judgment rate matches (§ 6.2-302). | Source |
| Washington | 12% | RCW § 19.52.010 | On loans/forbearance where no different written rate is agreed. | Source |
| West Virginia | 6.25% (2026) | W.Va. Code § 56-6-31 | Set yearly by the courts (5th Fed District discount + 2, bounded 4–9%); formally the judgment/decree rate. | Source |
| Wisconsin | 5% | Wis. Stat. § 138.04 | The legal rate. | Source |
| Wyoming | 7% | Wyo. Stat. § 40-14-106 | If there is no agreement or provision of law for a different rate. | Source |
Each figure is the statutory rate for contract debts / liquidated accounts when no rate was agreed — not necessarily the post-judgment rate, which several states set differently (noted per row). Georgia deserves a special mention: even with no agreement, O.C.G.A. § 7-4-16 lets a business charge 1.5% per month on commercial accounts 30+ days past due.
Alabama, Alaska, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Indiana, Maryland, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Pennsylvania, Tennessee, Texas, Wyoming: statute text verified via reputable legal mirrors (the official state site blocks automated access) — confirm against the official code before relying on it in a dispute.
How to read this
Contract first, statute second
The US model is the inverse of the EU's. In the EU, statutory interest and a €40 fee apply automatically to late B2B invoices (see the EU rates by country). In the US, your contract does the heavy lifting: B2B parties can generally agree to a late-fee clause and an interest rate — often well above the table's defaults — and courts enforce reasonable ones. The table matters when the paperwork didn't: no clause, no rate, just an unpaid invoice.
Watch the fine print on when interest starts: Texas starts the clock 30 days after the amount is due, Iowa makes open accounts wait six months from the last item, Oregon runs from the last item on the account, and Missouri requires a demand for payment on accounts. And in a few states the rate you can claim out of court is higher than what a court would later award (Arizona and Alaska both drop to a formula rate in litigation) — one more reason a clear payment-terms clause beats relying on defaults.
Selling into the US from Europe? Put a governing-law state, a late-interest rate, and a late-fee clause in your terms — then the table above becomes your fallback, not your ceiling. For EU customers the late-payment calculator puts a number on statutory interest automatically.
The other half
What rate should you put in your own terms?
The table answers what you can claim when your paperwork says nothing. The more useful question is what the paperwork should say — and there, the honest answer is that the US has no standard rate to copy. No federal statute sets one for private invoices.
What most US B2B terms actually use is 1.5% per month — 18% a year. That is a market convention, not a legal default, and it is worth knowing where it comes from: Georgia is the one state that legislates exactly that figure. O.C.G.A. § 7-4-16 lets the owner of a commercial account charge interest on balances due 30 days or more “at a rate not in excess of 1 1/2 percent per month” — no signed agreement required. Elsewhere it is simply the customary number, which is a large part of why it reads as reasonable rather than punitive.
Whatever figure you pick is bounded — by your state's ceiling on agreed rates, and by the rule that a late fee has to compensate rather than punish. Both are worked through in is there a maximum late fee? below.
In practice a workable clause states the rate per month and per year, says when it starts accruing (on the due date, or a stated number of days after), and names the governing-law state. Then the table above becomes your fallback rather than your entitlement — and the day-to-day job stops being legal and starts being follow-up, which is what invoice collection software is for.
The ceiling
Is there a maximum late fee?
Not a federal one, and in most states not a fixed statutory one either. On a B2B invoice the maximum late fee is what your contract says — but two separate rules decide whether that number survives contact with a court.
The first is your state's ceiling on agreed rates, and the spread is enormous. Texas caps credit extended for a business or commercial purpose at 28% a year (Tex. Fin. Code § 303.009(c)); New Mexico stops at 15% and Arkansas at a 17% constitutional cap; Colorado only runs out at a 45% criminal ceiling. In several states the cap simply stops applying above a dollar threshold — Alabama at $2,000, Kentucky above $15,000, Alaska above $25,000, Delaware above $100,000 — and many states exempt business borrowers from the usury rules altogether. Check the governing-law state in the table above before you write a number down.
The second is the penalty rule, and it bites regardless of the ceiling. A late fee is treated as liquidated damages: it has to be a reasonable pre-estimate of what late payment actually costs you, not a punishment for being late. Courts give commercial parties far more room than consumers — California's Civil Code § 1671(b) presumes a liquidated-damages clause in a non-consumer contract “valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made” — but a rate far above the commercial norm invites exactly that argument.
One trap is worth naming, because most search results for this question fall into it. The tight caps you see quoted — flat dollar limits, 5% ceilings, per-month maximums — almost all come from consumerrules: credit-card late charges, residential tenancy, state consumer-credit acts. None of them govern an unpaid invoice between two businesses. Read any “maximum late fee” figure carefully for which side of that line it sits on.
In practice this is why 1.5% per month (18% a year)is the conventional US B2B figure: it matches the one rate a state legislates for commercial accounts (Georgia's O.C.G.A. § 7-4-16), and it is defensible as compensation rather than punishment. Note that it is not universally safe — 18% is above New Mexico's 15% and Arkansas's 17% caps — which is precisely why the governing-law state decides the answer. State the rate per month and per year, and name that state.
Ceiling figures checked September 12, 2026. This is a reference summary, not legal advice — usury and liquidated-damages law is state-specific and fact-specific.
The cost of late payment
US late payment statistics
What waiting on invoices actually does to a small business — sourced figures you are welcome to cite, with a link to the primary source or to this page.
- 59%
carry invoices 30+ days overdue
Nearly three in five small businesses say at least some of their invoices are overdue by 30 days or more — up from 47% a year earlier.
- $17,700
average owed on unpaid invoices
The average amount a small business waiting on unpaid invoices is owed at any one time.
- 29.3 days
average wait to get paid
Small businesses waited an average of 29.3 days to be paid in the second quarter of 2026, with payments arriving almost nine days late.
- 49%
hit cash-flow problems after payment
Almost half of owners say standard payment-processing times still cause critical or moderate cash-flow problems even once the customer has paid.
Source: Intuit QuickBooks Small Business Late Payments Report (2026). Statistics last checked 28 August 2026. The rates table above follows its own verification schedule.
US late fees and late-payment interest — common questions
How high a late fee can go, what to charge, what the statute gives you when your contract is silent, and which state's law governs your invoice.
Can I charge a late fee on an invoice in the US?
Only if your contract or terms provide for one. Unlike the EU — where Directive 2011/7/EU gives every business an automatic right to statutory interest plus a €40 recovery fee — US law leaves late fees to the contract. Courts enforce reasonable late-fee clauses between businesses; without a clause, what you fall back on is the state's legal interest rate in the table above, not a fee.
What is the maximum late fee I can charge on an invoice?
There is no federal maximum, and in most states no fixed statutory one either — a B2B late fee is whatever your contract says, bounded by two things. First, your governing-law state's ceiling on agreed rates: Texas caps business-purpose credit at 28% a year (Tex. Fin. Code § 303.009(c)), New Mexico at 15% and Arkansas at 17%, while Colorado only stops at a 45% criminal ceiling. Second, the penalty rule — the fee has to look like a reasonable pre-estimate of what late payment actually costs you, not a punishment, or a court can refuse to enforce it. Most US B2B terms land on 1.5% per month (18% a year), which reads as reasonable almost everywhere — but check your state first: 18% is above New Mexico's 15% and Arkansas's 17% ceilings.
What is the maximum late fee in California?
California sets no fixed ceiling on a commercial late fee. Civil Code § 1671(b) presumes a liquidated-damages provision in a non-consumer contract valid unless the party challenging it proves it was unreasonable under the circumstances existing when the contract was made — so a reasonable late fee agreed between two businesses generally stands. If your contract sets no rate at all, the fallback is the statutory 10% under Cal. Civ. Code § 3289(b). The low per-month caps and flat-dollar limits usually quoted for California come from consumer credit and residential tenancy rules, not from B2B invoices.
What interest can I charge if the contract says nothing?
The state's statutory legal rate for contract debts — mostly between 5% and 12% per year, fixed by statute in most states (for example New York 9%, California 10%, Texas 6% from 30 days after due). A handful float: Louisiana, New Hampshire, Ohio and West Virginia publish a new rate each year, Florida each quarter, and Delaware and Nevada track the Fed discount or prime rate.
Is there a US equivalent of the EU €40 recovery fee?
No. There is no federal statutory late-payment fee or automatic recovery-cost compensation for B2B invoices. State prompt-payment acts impose interest and deadlines, but almost all of them cover government contracts, not private ones. If you want a fixed late fee or collection-cost recovery on private invoices, it has to be in your contract or terms of service.
Which state's rate applies to my invoice?
Usually the state chosen in your contract's governing-law clause. Without one, courts apply conflict-of-laws rules — typically the state with the closest connection to the transaction. That uncertainty is exactly why standard B2B terms name a governing state and a late-interest rate explicitly: one sentence in your terms replaces this entire table.
How much interest should I charge on an overdue invoice?
Most US B2B terms use 1.5% per month — 18% a year. That is a market convention rather than a legal default, but it is the figure Georgia writes into statute for commercial accounts (O.C.G.A. § 7-4-16), which is a large part of why it reads as reasonable rather than punitive. Whatever you pick, check it against the usury ceiling in your governing-law state and state it as both a monthly and an annual rate.
What is the standard late payment interest rate in the US?
There isn't one — no federal statute sets a late-payment rate for private B2B invoices. Two different numbers get called 'standard': the 1.5% per month (18% per year) convention that appears in most commercial terms, and the state statutory legal rate in the table above, which is what you fall back on when your contract is silent. The first applies because you wrote it down; the second applies because you didn't.
Knowing the rate is the fallback. Getting paid on time is the plan.
DueTrail turns overdue invoices into managed cases with reviewable reminders and recorded promises to pay — so invoices get settled before anyone reaches for statutes.