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Every Tax Lien State Ranked by Maximum Return

How this ranking works — read the criteria before the table

This ranking orders every lien-selling jurisdiction in our state-law library — 17 pure lien states plus the 3 hybrids (Alabama, Florida and Ohio, which sell both liens and deeds) — by one number: the maximum interest or penalty the statute allows on a redeemed certificate, annualized where the law states it in another period. Every figure comes from our law library, where each state's rate was verified against its governing statute on 2026-10-30, and each entry links to the full state law page so you can check the source yourself.

Three warnings before you use the ranking. First, a maximum is not a market rate: in bid-down auctions the winning rate is whatever competition leaves, and the gap can be enormous — Arizona's ceiling is 16%, yet our law library notes winning Maricopa County rates commonly bid down to 0–3%. Second, some states pay a penalty instead of interest (a one-time percentage, sometimes re-applied per period), and one — Indiana — pays no rate at all: its return is a redemption penalty of 110% or 115% of the minimum bid depending on how fast the owner redeems. Third, the rate is only half the trade. The redemption window decides how long your money is locked up, and a 12% rate on a certificate that redeems in four months beats an 18% rate on one that sits for three years at a lower effective return once you count dead capital between sales.

The ranking: every lien state by statutory maximum

From the top of the rate table to the bottom, with the mechanism that produces each number:

• Iowa — 24% per year, fixed by statute (Iowa Code 447.1). The rate is never bid down; bidders compete on the undivided interest percentage instead. The highest ceiling in the country, with no rate compression.
• Maryland — up to 20% per year where counties set it (Montgomery and Prince George's counties at 20%, Baltimore City at 18%), against a 6% statutory default in counties that have not acted (Tax-Property § 14-820). Ranked on its documented county maximum — your rate depends entirely on which county's list you buy.
• Illinois — penalty bid down from 9% per 6-month period, an 18% annualized ceiling (35 ILCS 200/21-215). The winning penalty is charged at the sale and re-applied every 6 months of the redemption period, which is why Illinois math outperforms its headline for patient holders. (Older guides still cite the pre-2022 18%-per-6-months figure — it is superseded.)
• Florida — 18% per year maximum, bid down in 0.25% increments (Fla. Stat. § 197.432(6)); a mandatory 5% minimum applies on redemption of most certificates, so even a 0.25% winning bid pays 5% when the owner redeems.
• New Jersey — up to 18% per year, bid down from 18% (N.J.S.A. 54:5-32); when interest reaches 0%, bidding continues as premium, which earns nothing (see the premium article in this series).
• Ohio — up to 18% per year, bid down at auction (ORC 5721.32(C)), and subsequent taxes the holder pays accrue at 18% regardless of the bid rate. Only counties of 200,000+ population sell certificates.
• District of Columbia — 18% per year (1.5% per month) on the certificate amount (D.C. Code §§ 47-1306, 47-1361).
• Mississippi — 18% per year (1.5% per month) on the taxes and costs, plus 5% damages on the tax amount (Miss. Code Ann. § 27-45-3); no interest is earned on any overbid.
• Arizona — up to 16% per year, bid down from 16% (A.R.S. § 42-18053); simple interest, and a fraction of a month counts as a whole month. See the Maricopa warning above: 16% is the ceiling, not the clearing rate.
• Wyoming — 15% per year plus a one-time 3% penalty on the purchase amount (W.S. 39-13-108).
• Nebraska — 14% per year, fixed by statute (Neb. Rev. Stat. 77-1824), simple interest accruing daily; not bid down.
• Kentucky — 12% per year (1% per month), fixed (KRS Chapter 134); no rate bidding, certificates of delinquency are allocated under the state's process.
• Alabama (lien counties) — up to 12% per year, bid down in 1% increments (§§ 40-10-180 to 40-10-200); Alabama is a hybrid — counties that chose the sale-of-land system instead pay 8% redemption interest.
• Louisiana — from January 1, 2026, bid down from 1% per month (12% per year) to a floor of 0.7% per month (8.4%), plus a 5% penalty on redemption (R.S. 47:2154). Louisiana converted to a lien state by statute — a 2026 change most national lists have not caught yet.
• Montana — 10% per year plus a 2% penalty on the delinquent amount (MCA 15-16-102).
• Missouri — up to 10% per year on the purchase money up to the taxes plus costs (§ 140.340 framework); no interest on amounts bid above the obligation.
• South Dakota — up to 10% per year, bid down (SDCL 10-23-8); no bid above 10% is valid.
• Colorado — variable by law: the Federal Reserve Bank of Kansas City discount rate in effect September 1 plus 9 points, rounded, set each October 1 and fixed for the certificate's life (C.R.S. § 39-12-103). Unrankable as a fixed number — check the current year's set rate on our Colorado page.
• Indiana — penalty-based, not a rate: 110% of the minimum bid if redeemed within 6 months, 115% after (IC 6-1.1-24 / 25-2), plus 5% per annum on any overbid returned at redemption. On a fast redemption that is among the best annualized outcomes in the country; on a slow one it dilutes.
• West Virginia — 0%. Senate Bill 552 (2022) eliminated interest on the Auditor sale purchase price; a redeeming owner repays amounts paid plus fees and costs. The play in West Virginia is the property path, not yield.

Why the ranking inverts in practice

If you sorted these states by what winning bidders actually earned last season, the table would shuffle hard. Bid-down states compress: Florida's 18% ceiling produces plenty of certificates at 5% (the statutory floor outcome on redemption) and lower at competitive county sales, and Arizona's institutional volume pushes Maricopa to the 0–3% range our library records. Fixed-rate states do not compress at all — Iowa's 24% and Nebraska's 14% are the rate — but they ration access differently: Iowa parcels are often assigned rotationally among registered bidders, and high redemption rates mean the yield is real but the deed almost never is.

Penalty states reward speed of redemption rather than patience. Indiana's 110/115 structure annualizes beautifully on a 90-day redemption and poorly on a 364-day one. Illinois is the opposite: because the winning penalty re-applies every six months, a certificate redeemed in month 30 has collected the penalty five times. Neither fact is visible in a headline-rate table, which is why each state's full page in our library carries the mechanism, not just the number.

The professional use of this ranking is as a screen, not a shopping list: pick two or three systems whose mechanics match your capital timeline, learn their lists cold, and let the rate be the last variable you optimize. The investors who lose money in this asset class rarely lose it on rate — they lose it on an expired certificate, a missed notice deadline, or a parcel they never researched.

The numbers that matter more than the rate

Before you commit to any state on this list, pull four numbers from its law page: the redemption window (your lockup), the certificate's lifespan and your deadline to act on it (Florida certificates die at 7 years; Arizona foreclosure must start within 10;Indiana liens terminate if the deed petition is not filed within 6 months after redemption expires), the subsequent-tax rule (who must pay later years' taxes to protect the position, and at what rate they accrue), and the sale's format (bid-down, premium, rotation or drawing). Those four, plus the rate, are the whole trade. Our library tracks all of them per state, from statute, and stamps the verification date on every page.

Questions

Which state has the highest tax lien interest rate?
Iowa, at a fixed 24% per year (Iowa Code 447.1). The rate is set by statute and is not bid down; competition happens on the undivided interest percentage instead. Maryland counties reach 20%, and the 18% tier includes Florida, New Jersey, Ohio, Illinois (annualized), Mississippi and DC.

Do I actually earn the maximum rate at auction?
Usually not in bid-down states: the maximum is where bidding starts. Winning rates are set by competition — Maricopa County, Arizona commonly clears at 0–3% against a 16% ceiling. Fixed-rate states (Iowa, Nebraska, Kentucky) pay the statutory rate but ration access by rotation or drawing instead.

Which is better, a high rate or a penalty state?
They pay on different clocks. Interest states pay for time held; Indiana-style penalties (110%/115% of the minimum bid) pay for redemption happening at all, so they annualize best on fast redemptions. Illinois re-applies its penalty every 6 months, rewarding patience. Match the mechanism to your capital timeline.

Are these rates current?
They are the statutory maximums in our state-law library, verified against governing statutes on 2026-10-30. Two recent changes are already reflected: Illinois's 9%-per-6-months cap (superseding the old 18% figure) and Louisiana's conversion to a lien state effective January 1, 2026.