Late Fee Rules on Invoices by State
What can you legally charge when a client pays late? Select your state to see maximum interest rates, prompt payment act details, small claims limits, mechanics lien deadlines, and sample late fee clause language.
TX
Texas
Max: 1.5% per month
FL
Florida
Max: 1% per month
CA
California
Max: 10% per annum
GA
Georgia
Max: 1% per month on construction; 5% above Federal Reserve discount rate otherwise
NC
North Carolina
Max: 1% per month
AZ
Arizona
Max: 1.5% per month
TN
Tennessee
Max: 10% per annum
OH
Ohio
Max: 8% per annum
MI
Michigan
Max: 5% above the federal funds rate; contracts may specify higher
PA
Pennsylvania
Max: 1% per month
IL
Illinois
Max: 2% per month on construction
NY
New York
Max: 16% per annum
NJ
New Jersey
Max: 6% per annum
VA
Virginia
Max: 12% per annum
CO
Colorado
Max: 8% per annum
AL
Alabama
Max: 1% per month
AK
Alaska
Max: 10.5% per annum
AR
Arkansas
Max: 5% above the Federal Reserve discount rate; 17% maximum
CT
Connecticut
Max: 12% per annum
DE
Delaware
Max: 5% over the Federal Reserve discount rate; no specific statutory cap for commercial contracts
HI
Hawaii
Max: 1% per month
ID
Idaho
Max: 12% per annum
IN
Indiana
Max: 8% per annum
IA
Iowa
Max: 5% per annum
KS
Kansas
Max: 10% per annum
KY
Kentucky
Max: 12% per annum on construction; 8% default otherwise
LA
Louisiana
Max: 12% per annum
ME
Maine
Max: 6% per annum
MD
Maryland
Max: 6% per annum
MA
Massachusetts
Max: 12% per annum on construction; 6% default otherwise
MN
Minnesota
Max: 10% per annum
MS
Mississippi
Max: 8% per annum
MO
Missouri
Max: 9% per annum
MT
Montana
Max: 10% per annum
NE
Nebraska
Max: 16% per annum
NV
Nevada
Max: Prime rate + 2%
NH
New Hampshire
Max: 10% per annum
NM
New Mexico
Max: 15% per annum
ND
North Dakota
Max: 6% per annum
OK
Oklahoma
Max: 6% per annum
OR
Oregon
Max: 9% per annum
RI
Rhode Island
Max: 12% per annum
SC
South Carolina
Max: 1% per month
SD
South Dakota
Max: 12% per annum
UT
Utah
Max: 2% per month
VT
Vermont
Max: 12% per annum
WA
Washington
Max: 12% per annum
WV
West Virginia
Max: 6% per annum
WI
Wisconsin
Max: 5% per annum
WY
Wyoming
Max: 7% per annum
Understanding late fee rules for contractors
Every state has different rules about how much interest or late fees you can charge on unpaid invoices. These rules come from a mix of state statutes, prompt payment acts (most apply to construction), and general contract law.
The most important thing to know: you can only enforce late fees that were disclosed before work began. If your contract or invoice doesn't mention a late fee rate, you may only be entitled to the state's default judgment interest rate — which is often much lower than 1.5% per month.
Each state page on this site covers: maximum interest rates, prompt payment act details, small claims court limits, mechanics lien deadlines, demand letter requirements, and a sample late fee clause you can use in your invoices. Use our Late Fee Calculator to calculate the exact amount for a specific invoice, or our Demand Letter Generator to create a state-aware demand letter.
Related free resources
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Start Free TrialFrequently asked questions
Can I charge late fees on invoices in every state?▾
Yes — every state allows some form of interest or late fee on overdue invoices. However, maximum rates vary significantly. Some states like Texas allow up to 18% per year, while others like California cap the default rate at 10%. The key: your late fee terms must be disclosed before work begins.
What is the most common late fee rate?▾
The industry standard is 1.5% per month (18% annually). This rate is enforceable in most states. However, some states cap rates lower, so always check your state's rules. Our Late Fee Calculator can show you exactly what you're allowed to charge.
What is a prompt payment act?▾
A prompt payment act is a state law that requires timely payment for construction work (and sometimes other services). Most apply primarily to government contracts, but many states extend protections to private construction too. They typically set payment deadlines and interest rates for late payments.
Do I need a lawyer to charge late fees?▾
No — you don't need a lawyer to include late fee terms in your invoices. However, your terms must be disclosed to the client before work begins (ideally in a signed contract). For disputes over large amounts, consulting a licensed attorney is recommended.
What should I do if a client refuses to pay the late fee?▾
Start with a formal demand letter that references your terms and the applicable state law. If that doesn't work, you can file in small claims court (limits vary by state) or consult a collections attorney. Our Demand Letter Generator can help you create a state-aware letter.