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

No statute addresses whether the account must bear interest. Where the Uniform Residential Landlord and Tenant Act has been adopted, "[a]ll landlords of residential property requiring security deposits prior to occupancy shall be required to deposit all tenants' security deposits in an account used only for that purpose, in any bank or other lending institution subject to regulation by the Commonwealth of Kentucky or any agency of the United States government", and "[p]rospective tenants shall be informed of the location of the separate account and the account number" (KRS 383.580(1)). Kentucky is unusual in requiring the account number as well as the location.

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

No penalty reaches deposit interest, because no interest is owed. The account duty is enforced by forfeiting the right to withhold: "No landlord shall be entitled to retain any portion of a security deposit if the security deposit was not deposited in a separate account as required by subsection (1) of this section and if the initial and final damage listings required by subsections (2) and (3) of this section are not provided" (KRS 383.580(4)).

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

Kentucky's landlord-tenant act is local-option, and that decides who the deposit rules reach. KRS 383.500 authorizes cities, counties and urban-county governments to enact the Uniform Residential Landlord and Tenant Act as set out in KRS 383.505 to 383.705, requires that those provisions "be adopted in their entirety and without amendment", and bars any other ordinance by such a government "which relates to the subjects embraced in KRS 383.505 to 383.705".

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

Verified August 28, 2026 All Kentucky topics →

What did not become law. None of the following is law; failed bills are sometimes still described as if enacted:

HB 340 (2026 RS) — 'AN ACT relating to termination of residential leases' — Would have created early-termination rights (new sections of KRS ch. 383) for 'medically fragile' tenants (30 days' notice plus medical documentation), tenants 60+ or disabled on the death of a spouse or cotenant (60 days' notice), and tenants facing unabated lead hazards. Does not touch deposits, entry, late fees, or rent-increase rules, but it was the session's principal landlord-tenant bill and a likely refile. Status: Dead. Referred to House Judiciary 2026-01-21 with no further action; the 2026 Regular Session adjourned sine die 2026-04-15. No 2026 bill amending KRS 383.500-383.715, 383.195, or 65.875 was found; the perennial statewide-URLTA bills (2017 HB 510, 2018 HB 550, 2021 HB 595) were not refiled in 2026 — a future statewide-URLTA enactment would rescope Kentucky landlord-tenant law across the board and is the top KY watch item. (checked July 9, 2026).

Kentucky does not require landlords to pay tenants interest on a security deposit, and the account rule that leads sources to say otherwise is a dedicated-account rule rather than an interest rule.

Cited to KRS 383.580 (security deposits — dedicated account, disclosure, forfeiture) (1), (4), (6), (7) and 3 more cited sources · Verified August 28, 2026

In a city or county that has adopted Kentucky's landlord-tenant act, deposits must go into "an account used only for that purpose" at a bank or lending institution regulated by Kentucky or a federal agency, and prospective tenants must be told both where that account is and its account number (KRS 383.580(1)). That account-number disclosure is stricter than most states impose and is the usual reason Kentucky is reported as an interest-bearing-account state; the statute never says the account must bear interest, and the word "interest" appears nowhere in the section. Coverage matters here too: the act is local-option, so outside an adopting city, county or urban-county government Kentucky has no security-deposit statute at all.

Kentucky deposit interest at a glance

Interest owed to the tenant	No — no statute addresses it
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	Yes
Interest-bearing account required	No statute addresses whether the account must bear interest
Custody rules	Where the Uniform Residential Landlord and Tenant Act has been adopted, "[a]ll landlords of residential property requiring security deposits prior to occupancy shall be required to deposit all tenants' security deposits in an account used only for that purpose, in any bank or other lending institution subject to regulation by the Commonwealth of Kentucky or any agency of the United States government", and "[p]rospective tenants shall be informed of the location of the separate account and the account number" (KRS 383.580(1)). Kentucky is unusual in requiring the account number as well as the location. The subsection names a dedicated-purpose account at a regulated institution; it says nothing about the account bearing interest, and the word "interest" does not appear in KRS 383.580 at all. Two subsections govern what happens to the account at the end. If the tenant leaves without paying the last month's rent and does not demand the deposit back, the landlord may remove the deposit from the account after 30 days and apply the excess to the debt owing (subsection (6)). If the tenant leaves owing nothing and a refund is due, the landlord sends notice of the amount to the last known or reasonably determinable address, and if no response arrives within 60 days the landlord may remove the deposit from the account and retain it free of the tenant's claim (subsection (7)).
Penalty for violation	No penalty reaches deposit interest, because no interest is owed. The account duty is enforced by forfeiting the right to withhold: "No landlord shall be entitled to retain any portion of a security deposit if the security deposit was not deposited in a separate account as required by subsection (1) of this section and if the initial and final damage listings required by subsections (2) and (3) of this section are not provided" (KRS 383.580(4)).
Local rules	Kentucky's landlord-tenant act is local-option, and that decides who the deposit rules reach. KRS 383.500 authorizes cities, counties and urban-county governments to enact the Uniform Residential Landlord and Tenant Act as set out in KRS 383.505 to 383.705, requires that those provisions "be adopted in their entirety and without amendment", and bars any other ordinance by such a government "which relates to the subjects embraced in KRS 383.505 to 383.705". Outside an adopting city, county or urban-county government there is no state security-deposit statute to apply at all — which is a different answer from a statute that declines to require interest.

Cite this page: "Landlord Atlas, Kentucky Security Deposit Interest Laws (verified August 28, 2026), landlordatlas.com/laws/deposit-interest/kentucky/" — 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 Kentucky answer — and every state and city that differs — in the deposit interest calculator — free, no signup, built on the same verified Kentucky law as this page.

Notes and caveats

The account rule, exactly — KRS 383.580(1) requires deposits in "an account used only for that purpose, in any bank or other lending institution subject to regulation by the Commonwealth of Kentucky or any agency of the United States government", and then: "Prospective tenants shall be informed of the location of the separate account and the account number." Both duties are about identifying and separating the money. Neither is about what the money earns.
Why Kentucky gets misreported — Two features of the Kentucky text explain the error. First, the account-number disclosure is stricter than any neighbouring state's — Tennessee's parallel statute requires the location only and says the landlord "shall not be required to provide the account number" — and being told an account number reads to many people as having an economic stake in the account. It is not. Second, the definition of "security deposit" itself uses the word escrow: KRS 383.545(13) defines it as "an escrow payment made to the landlord under the rental agreement for the purpose of securing the landlord against financial loss due to damage to the premises occasioned by the tenant's occupancy other than ordinary wear and tear". That describes the character of the payment, is the only occurrence of "escrow" in the entire act, and mandates neither an escrow account nor interest.
Forfeiting the right to withhold — KRS 383.580(4) denies a landlord any portion of the deposit where the money was not deposited in a separate account as subsection (1) requires and the initial and final damage listings required by subsections (2) and (3) were not provided. The move-in listing must be signed by both parties, with a written statement of dissent available to a tenant who disagrees, and the same procedure repeats at move-out.
Currency — The Legislative Research Commission publishes chapter 383 as including enactments through the 2026 Regular Session. KRS 383.580 has stood in its present form since July 13, 1984, when it was repealed and reenacted by 1984 Ky. Acts ch. 176, sec. 16. No 2025 or 2026 measure affects deposits.

Common questions: Kentucky 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 Kentucky security deposit interest rate right now?: No published figure exists.
When must a landlord pay or credit deposit interest in Kentucky?: No payment duty exists.
Does the deposit have to be in an interest-bearing account in Kentucky?: No statute addresses whether the account must bear interest. Where the Uniform Residential Landlord and Tenant Act has been adopted, "[a]ll landlords of residential property requiring security deposits prior to occupancy shall be required to deposit all tenants' security deposits in an account used only for that purpose, in any bank or other lending institution subject to regulation by the Commonwealth of Kentucky or any agency of the United States government", and "[p]rospective tenants shall be informed of the location of the separate account and the account number" (KRS 383.580(1)). Kentucky is unusual in requiring the account number as well as the location.
What happens if a landlord does not pay deposit interest in Kentucky?: No penalty reaches deposit interest, because no interest is owed. The account duty is enforced by forfeiting the right to withhold: "No landlord shall be entitled to retain any portion of a security deposit if the security deposit was not deposited in a separate account as required by subsection (1) of this section and if the initial and final damage listings required by subsections (2) and (3) of this section are not provided" (KRS 383.580(4)).
Do any cities or counties in Kentucky have their own deposit-interest rules?: Kentucky's landlord-tenant act is local-option, and that decides who the deposit rules reach. KRS 383.500 authorizes cities, counties and urban-county governments to enact the Uniform Residential Landlord and Tenant Act as set out in KRS 383.505 to 383.705, requires that those provisions "be adopted in their entirety and without amendment", and bars any other ordinance by such a government "which relates to the subjects embraced in KRS 383.505 to 383.705".

Citations

KRS 383.580 (security deposits — dedicated account, disclosure, forfeiture) · (1), (4), (6), (7) (verified 2026) Official source
KRS 383.500 (local-option adoption of the Uniform Residential Landlord and Tenant Act) (verified 2026) Official source
KRS 383.545 (definitions — "security deposit") · (13) (verified 2026) Official source
KRS chapter 383 (section index and currency statement) (verified 2026) Official source

How this record was verified: Direct read of KRS 383.580, "Security deposits", in full — all seven subsections plus its effective date and history line — and of all 43 sections of Kentucky's Uniform Residential Landlord and Tenant Act, KRS 383.505 through 383.715, each read in full as published by the Legislative Research Commission, alongside KRS 383.500 on local adoption and the chapter 383 section index carrying the currency banner; every occurrence of "interest", "escrow", "trust", "bearing", "accrue" and "account" across all 43 sections examined in context, sixteen in total, of which the six "account" hits are all inside KRS 383.580's own segregation and disclosure rule and the rest are the property sense of "interest", entity-type "trust" in the definitions, "accrued" rent, and the single definitional "escrow" in KRS 383.545(13); no occurrence anywhere of "interest-bearing", "accrue interest" or "pay interest".