State Late Payment Interest Rates for Invoices: What You Can Legally Charge

Q: What is the statutory late payment interest rate for invoices in my state?

It varies by state. Common statutory rates include 9% in New York, 10% in California, 6% in Texas and Pennsylvania, and 15% in South Dakota. These rates apply when the parties have not agreed on a rate in writing, and they change over time, so confirm the current statute.

Guides · Updated October 2026

Here is the question that sends freelancers into a spiral: what are the state late payment interest rates for invoices, and can I actually charge them? The uncomfortable truth is that the United States has no single federal late payment rate for business invoices. Unlike the UK, where one statute hands every supplier a fixed rate automatically, the US gives you a patchwork: your contract first, your state's default rate second, and your state's usury ceiling as the hard stop. Let me show you how the layers stack, what the numbers look like in the states people ask about most, and why the contract matters more than any of it.

The three layers: contract, default, ceiling

Think of it as a waterfall. The contract rate applies if you put one in writing before the invoice was issued. The standard small-business formulation, 1.5% per month (18% APR), lives here, and it is enforceable in most states when both parties agreed to it.

If your contract says nothing, most states supply a default statutory rate that applies to overdue debts and judgments. This is the number you can fall back on, but you cannot invent a higher rate after the fact. And behind everything sits the usury ceiling, the maximum rate any debt can carry, which varies by state and loan type.

State statutory rates for invoices: the states people ask about

The table below lists the default statutory rates used in this site's calculator, verified October 2026. Rates change by statute, so treat this as a starting point and confirm the current law before you invoice:

State / jurisdiction	Default rate (APR)
South Dakota	15%
Rhode Island	12%
Vermont	12%
California	10%
Utah	10%
New York	9%
Illinois	9%
Oregon	9%
South Carolina	8.75%
Texas	6%
Pennsylvania	6%
Virginia	6%
United Kingdom	11.75%*
European Union	10.40%*

*The UK rate is 8% over the Bank of England base rate under the Late Payment of Commercial Debts (Interest) Act 1998, plus a fixed 40-100 pounds per invoice. The EU rate follows Directive 2011/7/EU. Both float with the central bank rate.

Notice the spread: a freelancer in Texas falls back to 6%, while one in South Dakota falls back to 15%. On a slow-paying $10,000 invoice, that is the difference between $600 and $1,500 a year of accrued interest. The state your contract points to matters.

Worked example: $5,000 invoice, 60 days overdue

Simple interest: balance x annual rate x days / 365.

Rate	Interest accrued
New York, 9%	$73.97
California, 10%	$82.19
Contract 1.5%/month	$150.00
South Dakota, 15%	$123.29

Math check for the New York row: $5,000 x 0.09 x 60/365 = $73.97. The agreed contract rate beats every statutory default, which is exactly why getting the clause in writing matters more than memorizing the table.

My honest take: stop memorizing rates, start writing clauses

Freelancers spend too long hunting for the perfect statutory rate and too little time putting one sentence in their agreements. The table above is a fallback. Your own written clause is the primary weapon, and it beats the fallback in every state because the standard 1.5% per month is higher than nearly every default rate. The clause needs four things: the rate, when it starts, whether it compounds, and how it is calculated. One sentence does it:

Contract wording that works: "Invoices unpaid after 30 days accrue interest at 1.5% per month, calculated on the outstanding balance, from the due date until paid."

Two caveats. First, some states regulate late fees separately from interest: California, for example, generally limits late fees to 10% of the invoice amount unless otherwise agreed. Second, if you do business internationally, the UK and EU give suppliers automatic statutory rights without any contract clause, which is why those rates appear in the table. For the comparison of flat fees versus interest, see late fee vs interest on an overdue invoice, and for the enforcement side, how to charge interest without losing the client.

Run the exact numbers for your state and your invoice.

Pick your jurisdiction, enter the balance and the days overdue.

Open the Late Payment Interest Calculator

Frequently asked questions

What is the statutory late payment interest rate for invoices in my state?

It varies by state. Common default rates include 9% in New York, 10% in California, 6% in Texas and Pennsylvania, and 15% in South Dakota. These apply when the parties have not agreed on a rate in writing, and they change over time, so confirm the current statute.

Can I charge more interest than my state's statutory rate?

Usually yes, if the rate is agreed in writing before the invoice is issued. Statutory rates generally act as defaults. Usury caps set the ceiling, and some states limit late fees separately, for example California generally caps late fees at 10% of the invoice without an agreement.

What happens if my contract has no late payment rate?

Most states supply a default statutory rate that applies to judgments and overdue debts. You can usually still charge the statutory rate, but you cannot invent a higher rate after the invoice is already overdue.

Does the UK have a statutory late payment interest rate?

Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998, UK suppliers can claim 8% over the Bank of England base rate on overdue business-to-business invoices, plus a fixed sum of 40 to 100 pounds per invoice, without needing a contract clause.

Which US state has the highest statutory interest rate for late payments?

South Dakota's statutory rate of 15% is among the highest of the commonly cited states, well above the 6% floor seen in Texas, Pennsylvania, and Virginia. Rates are set by state statute and can change.

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