Step 1: Know which interest you're calculating
Before you touch a rate table, decide what kind of interest is in play, because two different clocks can run on the same dispute.
- Prejudgment interest compensates a plaintiff for the time between the injury or breach and the date judgment is entered. It's governed by its own statute, and the rate and method often differ from what comes after. If that's your question, start with our prejudgment interest overview.
- Post-judgment interest accrues on the judgment amount from the date of entry until the judgment is paid in full. This is the figure most people mean by "judgment interest," and it's the focus of this guide.
The two are calculated separately and then, typically, added together. Never assume a single rate covers the whole timeline.
Step 2: Identify the governing rate — federal or state
The most important decision is jurisdiction, because it fixes both the rate and, often, the method.
Federal judgments. Post-judgment interest on most federal civil judgments is set by statute at 28 U.S.C. § 1961: a rate equal to the weekly average one-year constant-maturity Treasury yield published by the Federal Reserve for the calendar week preceding the judgment. Because it tracks a moving market benchmark, it changes constantly — so we don't print a number here that will be stale next week. See the current federal post-judgment rate for the live figure.
State judgments. Every state writes its own rule. Some fix a flat statutory rate; others float it against a benchmark and reset monthly, quarterly, or annually. The method varies too — some compound, many are simple. Find your state on the state-by-state index, or let the state judgment interest calculator apply the correct rule for you.
Step 3: Lock the rate to the judgment date
Judgment interest is not calculated at today's rate. For floating rates, the governing figure is the one in effect on — or immediately before — the date the judgment was entered, and it stays fixed for the life of that judgment even as the published benchmark moves on.
The federal rate, for instance, freezes to the Treasury yield for the week before entry. So to reconstruct a judgment from 2019, you need the 2019 rate, not the current one. Historical values matter, which is why every series is stamped with its effective date; you can trace the underlying 1-year Treasury constant-maturity figures and read exactly how each series is sourced on our methodology page.
Step 4: Apply simple or compound — correctly
This is where good calculations go bad. Whether interest compounds is dictated by statute, not by preference or convenience.
Simple interest accrues only on the original principal. The balance grows in a straight line — the same dollar amount is added each period. Most state judgment statutes, and nearly all prejudgment rules, use simple interest.
Compound interest accrues on principal plus previously accrued interest. Federal post-judgment interest compounds annually. Tax interest goes further: IRS underpayment interest under § 6621 compounds daily, which is why balances there grow faster than a flat rate suggests — our IRS interest calculator handles that daily compounding automatically.
Using simple where the statute demands compound — or the reverse — is the most common and most expensive mistake in these calculations.
Step 5: Do the daily-interest math (actual/365)
Interest accrues by the day, so you convert the annual rate into a daily rate and multiply by the number of days the judgment was outstanding. The standard "actual/365" convention works like this:
- Daily interest = Principal × (Annual rate ÷ 365)
- Total simple interest = Principal × Annual rate × (Days ÷ 365)
Count the actual number of days between the judgment date and the payment or calculation date. Two caveats worth verifying: some jurisdictions use a 360-day year, and some divide by 366 in a leap year. When in doubt, the governing statute or local court rule controls.
A fully worked example
Suppose a judgment of $10,000 carries a simple interest rate of 9% (an illustrative round number, not a current rate) and remains unpaid for 200 days. Work it step by step:
- Annual interest: $10,000 × 0.09 = $900.00
- Daily interest: $900.00 ÷ 365 = $2.4658 per day
- 200 days of accrual: $2.4658 × 200 = $493.15
- Payoff total: $10,000 + $493.15 = $10,493.15
Now contrast compounding. If that same $10,000 sat at 9% compounded annually, year one would add $900 — but year two's interest would accrue on $10,900 (adding $981), and the gap widens every year after. That is why Step 4 matters as much as the rate itself.
Common pitfalls — and where to verify
A few errors recur often enough to name:
- Using today's rate for an older judgment instead of the rate that locked at entry.
- Applying compound interest where the statute specifies simple.
- Miscounting days, or mixing a 360-day and a 365-day convention.
- Forgetting that a partial payment reduces the principal on which interest accrues going forward.
Run the numbers yourself, then check them against a purpose-built tool — the full suite of interest calculators covers federal, state, prejudgment, and tax scenarios. One caution: this guide is general information, not legal advice, and the figures a calculator produces are estimates. Always verify the governing rate and method against the official statute or the court's own order before relying on a number in a filing.