Put it in your terms
A line like “Late payments accrue interest at 1.5% per month (18% per year)” on your contract or invoice is what makes interest and late fees clearly owed.
Your terms first, then state law
US late payment interest calculator: rates by state (2026)
The US has no national late-payment interest for business invoices. You can charge the interest or late fee your client agreed to in your contract or invoice terms. If nothing was agreed, the state’s legal rate applies to an overdue contract debt: 9% a year in New York, 10% in California, 7.87% in Florida for late 2026, and 6% in Texas from the 30th day.
A yearly rate your client agreed to. 1.5% a month is 18% a year.
%
Only if your client agreed to it.
No agreed rate, so California’s legal rate applies: 10% a year (Cal. Civil Code § 3289(b)). 10% a year after a breach of contract.
You can add
$20.55Days late
30
Interest
$20.55
10% a year · $0.68 a day
Fixed fee
$0.00
How it adds up
3 Oct 2026 – 1 Nov 202630 days at 10% a year
$20.55
Fixed compensationYour own fee
$0.00
Total you can add
$20.55
A line for your final reminder
Invoice #1042 is now 30 days overdue. Under California law (Cal. Civil Code § 3289(b)), interest of $20.55 (10% a year) can now be added. I’m happy to waive this if the invoice is paid this week.Business-to-business invoices only. A rate agreed in your contract replaces these. General information, not legal advice.
Rather not chase at all?
Babara sends polite, escalating reminders for you, can mention this interest for you, and stops the moment they pay.
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How it works in the US
No terms? State law
Each state sets a legal rate for money owed under a contract. You can ask for it in a demand letter, and courts add it if you sue.
Mind the caps
States limit how much interest can be charged. Most exempt business deals or allow higher agreed rates, but very high rates can be challenged.
Federal contracts
If you invoice a federal agency, the Prompt Payment Act sets the rate: 4.75% a year from July to December 2026.
Checked 12 October 2026
Legal interest rates by state
The rate state law adds to an overdue contract debt when the contract sets none. A rate in your own terms replaces it.
| State | Legal rate | Law | Good to know |
|---|---|---|---|
| Arizona | 10% | A.R.S. § 44-1201 | Simple interest from the day after the due date. |
| California | 10% | Cal. Civil Code § 3289(b) | 10% a year after a breach of contract. |
| Colorado | 8% | C.R.S. § 5-12-102 | Compounded once a year. |
| Florida | 7.87% | Fla. Stat. § 687.01 and § 55.03 | Set every quarter by Florida’s CFO. 7.87% from 1 October to 31 December 2026. |
| Georgia | 7% | O.C.G.A. § 7-4-2 | On commercial accounts, up to 1.5% a month can be charged on amounts 30+ days past due (§ 7-4-16). |
| Illinois | 5% | 815 ILCS 205/2 | Simple interest from the day after the due date. |
| Massachusetts | 6% | M.G.L. c. 107 § 3 | If you win in court, 12% a year is added from the breach or demand (c. 231 § 6C). |
| Michigan | 5% | MCL 438.31 | Court judgments use a different, variable rate. |
| New York | 9% | N.Y. CPLR 5004 | Simple interest from the day after the due date. |
| North Carolina | 8% | N.C.G.S. § 24-1 | Simple interest from the day after the due date. |
| Ohio | 7% | Ohio R.C. 1343.03(A) | Set each year. 7% for 2026. |
| Pennsylvania | 6% | 41 P.S. § 202 | Simple interest from the day after the due date. |
| Texas | 6% | Tex. Fin. Code § 302.002 | Starts on the 30th day after the amount is due. |
| Virginia | 6% | Va. Code § 6.2-301 | On an open account with no written terms, it can be charged once the bill is 60 days old. |
| Washington | 12% | RCW 19.52.010 | Simple interest from the day after the due date. |
Other countries
Before you start
Good questions
Is there a federal late payment interest rate for businesses?
No. The federal Prompt Payment Act only covers federal agencies paying their contractors (4.75% a year for July to December 2026). Between private businesses, the rate comes from your terms or from state law.
Can I charge a late fee on an invoice?
Yes, if your client agreed to it in your contract or invoice terms before the work. State that it applies to late payments and how much it is. Many businesses use 1% to 1.5% a month.
What interest can I charge if my invoice says nothing?
Your state’s legal rate for overdue contract debts, for example 9% in New York, 10% in California and 12% in Washington. It is usually claimed in a demand letter or added by a court.
Which state’s law applies?
Usually the state named in your contract. With no choice of law, it is often where the work was done or where the client is. When in doubt, ask a local attorney.
How is it calculated?
Simple interest: invoice amount × yearly rate ÷ 365 × days late. Texas counts from the 30th day after the due date, and Colorado compounds once a year.
Consider the awkward part handled
Let Babara chase it for you
Babara follows up late invoices politely and on schedule, and can mention your late fee in the final reminder.
Start freeYour clients won’t know what hit them. (A very polite email.) Free for your first 3 invoices.