Security Deposit Rules by State: What Landlords Can and Can't Keep

Security deposits are one of the most argued topics in landlord-tenant law. Tenants want their money back. Landlords want protection for damages. And somewhere in between, state law draws the line. The problem is that line looks different depending on where the rental property sits.

How Much Can a Landlord Charge?

Most states cap security deposits at one or two months' rent, but the details matter.

California updated its rules in 2024, capping deposits at one month's rent for most landlords, with an exception for small landlords who own no more than two properties with four or fewer total units combined. Florida also tightened its rules in 2025, limiting the initial deposit collected before move-in to no more than one month's rent.

Alaska allows up to two months' rent for most units, but units renting above $2,000 per month have no cap. Connecticut caps deposits at one month's rent for tenants 62 and older, while allowing up to two months for younger tenants.

On the other end of the spectrum, states like Texas and Wyoming set no statutory maximum. Even in states with no formal cap, deposits must be reasonable and non-discriminatory. Excessive deposits can still be challenged in court.

When Does the Deposit Have to Come Back?

Return deadlines range from 14 days on the short end to 60 days on the long end. Here are some examples worth knowing.

California requires the deposit back within 21 calendar days of move-out, with an itemized statement for any deductions. Florida gives landlords 15 days to return the full deposit if no deductions are made, or up to 30 days if they intend to withhold any portion, in which case written notice with the reasons is required.

Alabama, Arkansas, and West Virginia allow the longest return window at 60 days. Montana has one of the shorter timelines, requiring return within 10 days if no deductions are being made, or 30 days if deductions apply.

Missing the return deadline is not a minor technicality. Landlords who miss these deadlines may forfeit their right to make any deductions at all, and some states tack on double or triple damages as a penalty.

What Can a Landlord Actually Deduct?

Every state allows deductions for unpaid rent and damage beyond normal wear and tear. That phrase is where most disputes start.

HUD defines normal wear and tear as unavoidable aging from everyday use. Faded paint, worn carpet, and small nail holes from hanging pictures all fall into this category. These are the landlord's responsibility, not the tenant's.

Damage is a different story. Large holes in walls, broken windows, torn screens, and pet stains caused by negligence or carelessness go beyond normal wear and tear and can be charged against the deposit.

Here is a quick way to think about it.

Normal wear and tear (cannot deduct): faded paint after several years, light scuffs on walls from furniture, carpet worn down from foot traffic, minor scratches on hardwood floors, small nail holes from standard picture hanging.

Damage (can deduct): holes punched in walls, unapproved paint colors, broken windows, carpet stained by pets or bleach, burns on countertops, broken fixtures from misuse.

Paint is one of the most common disputes. In most cases, repainting is considered routine maintenance rather than tenant damage, especially after a long tenancy. Courts generally treat paint fading and minor scuffs as normal wear.

Interest on Security Deposits

Some states go further than just requiring a refund. Seventeen states require landlords to pay interest on deposits held beyond a certain period, typically six months or more. Maryland requires landlords to pay simple interest calculated at either the daily U.S. Treasury yield curve rate for one year or 1.5% annually, whichever is greater.

Illinois requires interest on deposits for buildings with 25 or more units. Local city rules can add another layer, so landlords in places like Chicago, Los Angeles, and San Francisco may face stricter requirements than state law alone.

The Non-Refundable Deposit Problem

Some landlords try to label a portion of the deposit as non-refundable. Whether that holds up depends entirely on the state. In California, no lease can legally label any part of a security deposit as non-refundable. Other states may permit non-refundable pet fees or cleaning fees, but these typically have to be disclosed clearly and cannot be buried inside the standard security deposit amount.

When in doubt, check your state's specific rules before including any non-refundable language in a lease.

How to Protect Yourself as a Landlord

The simplest thing a landlord can do is document everything. Take photos and complete a signed inspection checklist at both move-in and move-out. If deductions are made, provide an itemized written statement with receipts or invoices for every charge. Many states require this documentation anyway, and without it, keeping any portion of the deposit becomes hard to defend.

California now requires landlords to provide before-and-after photos for any repairs claimed against the deposit, a rule that went into effect in April 2025. Other states are watching these reforms closely.

Why Your Lease Agreement Matters Here

A solid lease agreement is your first line of defense in any security deposit dispute. It should spell out the deposit amount, the conditions under which deductions can be made, how and when the deposit will be returned, and any pet or cleaning fees that apply. Vague lease language leads to vague outcomes. When both parties understand the terms from day one, disputes at move-out happen a lot less often.

If you are renting a property in any US state, a state-specific lease agreement ensures the security deposit terms in your contract match what the law actually requires where you are.