Arizona: Prejudgment Interest Rules
The short answer
Arizona's dividing line is liquidated versus unliquidated damages, not contract versus tort. A liquidated claim -- one whose amount the evidence lets you compute with exactness, without a judge or jury's opinion or discretion -- earns prejudgment interest as a matter of right, running from the date the debt became due, at 10% a year unless a written agreement sets a different rate. An unliquidated claim gets none at all: Arizona's interest statute expressly forbids a court from awarding prejudgment interest on unliquidated damages, and bars any interest, pre- or post-judgment, on future, punitive, or exemplary damages. Once judgment is entered, the general rate (absent a contract rate) is the lesser of 10% a year or 1% plus the prime rate, locked in at whatever it was on the day of entry. Medical debt gets its own, lower capped rate.
| Governing law | A.R.S. § 44-1201 is Arizona's single, comprehensive interest statute -- covering ordinary debts, judgments generally, medical debt, and condemnation proceedings all in one section, and expressly barring prejudgment interest on unliquidated, future, punitive, or exemplary damages. A body of case law (Fleming v. Pima County; Employers Mutual Casualty Co. v. McKeon) establishes that a LIQUIDATED claim draws prejudgment interest as a matter of right, regardless of whether it sounds in contract or in tort |
|---|---|
| Interest rate | For an ordinary debt or obligation other than medical debt: 10% a year, unless a different rate is agreed to in writing. For a judgment on that kind of written agreement: the agreement's own rate. For any other judgment, including prejudgment interest on a liquidated claim with no contract rate: the lesser of 10% a year or 1% plus the prime rate (as published by the Federal Reserve), which is fixed at whatever it is once the judgment is entered and does not change afterward. Medical debt, and any judgment on medical debt, is capped separately at the lesser of a one-year Treasury constant-maturity yield or 3% |
| When interest starts running | For a liquidated claim, interest runs from the date the debt or obligation became due -- typically the date of breach, demand, or when the amount was fixed -- not from the date suit was filed or judgment entered. For an unliquidated claim, there is no prejudgment interest at all: the statute expressly forbids a court from awarding it |
| Contract vs. tort claims | Arizona's real dividing line is liquidated versus unliquidated damages, not contract versus tort. "Prejudgment interest is a matter of right on a liquidated claim regardless of whether the claim sounds in contract or in tort" (Fleming v. Pima County, as stated in Employers Mutual Casualty Co. v. McKeon). A claim is liquidated if the evidence lets its amount be computed with exactness, without reliance on a judge's or jury's opinion or discretion -- true of many contract debts and of some tort claims with an exactly fixed loss, but not of most personal-injury verdicts |
| Mandatory or discretionary | Mandatory once a claim is liquidated -- "prejudgment interest on a liquidated claim is a matter of right and not a matter of discretion" (Employers Mutual Casualty Co. v. McKeon). For an unliquidated claim, the statute goes further than leaving it to discretion: it affirmatively PROHIBITS a court from awarding prejudgment interest on it at all |
| Simple or compound | The statute never uses the word "compound"; it describes an annual rate applied to a principal sum, and Arizona courts and practitioners calculate it as simple interest |
| Claims against the government | Arizona doesn't bar or generally discount interest against the state or its agencies -- the ordinary § 44-1201 rate structure applies, and courts have enforced the FULL, undiscounted rate against a state entity: when the Arizona State Retirement System had to refund an over-collected charge to Arizona State University, the Court of Appeals held the University was entitled to the full 10% rate for an "indebtedness" under subsection (A), not the lower prime-plus-1% "judgment" rate under subsection (B), because the debt existed independently of any judgment (Arizona State University Board of Regents v. Arizona State Retirement System). A condemnation judgment against a city, county, the state transportation department, or certain special districts uses a separate rate statute specific to that body (§ 44-1201(C)) -- outside this survey's scope, which excludes eminent-domain-specific rates |
| Other exceptions | No prejudgment interest is allowed on unliquidated damages, and no interest at all -- pre- or post-judgment -- is allowed on future damages, punitive damages, or exemplary damages found by the trier of fact; this is a categorical statutory bar, not a discretionary call. Medical debt and judgments on medical debt are carved out of the general 10%/prime-plus-1% framework entirely, capped instead at the lesser of a one-year Treasury constant-maturity yield or 3%. A condemnation judgment's rate depends on which government body brought the proceeding, each set by its own separate statute |
Compare this rule across all 50 states + DC →
The short answer
Arizona doesn't ask whether your claim is a contract claim or a tort claim to decide whether you get prejudgment interest -- it asks whether the damages are "liquidated," meaning the amount can be worked out exactly from the evidence, without a judge or jury having to use judgment or discretion. If it's liquidated, you get prejudgment interest as a matter of right, running from the date the debt became due, at 10% a year unless a written agreement sets a different rate. If it's unliquidated -- as most personal injury verdicts are -- Arizona's interest statute doesn't just leave the decision to a judge's discretion; it expressly forbids awarding prejudgment interest on it at all. The statute goes further still: no interest of any kind, before or after judgment, is ever allowed on future damages, punitive damages, or exemplary damages. Once a judgment is entered, the going-forward rate (absent a contract rate) is the lesser of 10% a year or 1% plus the prime rate, fixed at whatever it is that day. Medical debt runs on its own, separately capped rate.
Requirements one by one
Governing law
Everything runs through one statute, A.R.S. § 44-1201, titled "Rate of interest for loan or indebtedness; interest on judgments; definitions." It sets the rate for an ordinary debt, the rate for a judgment generally, a special capped rate for medical debt, cross-references to separate rate statutes for condemnation judgments, and an explicit bar on prejudgment interest for unliquidated, future, punitive, and exemplary damages. Layered on top of the statute is a long line of case law -- most notably Fleming v. Pima County and Employers Mutual Casualty Co. v. McKeon -- establishing that a liquidated claim earns prejudgment interest as a matter of right, whether it's a contract claim or a tort claim.
Interest rate
For an ordinary debt or obligation other than medical debt, the rate is 10% a year unless the parties agreed to a different rate in writing. If a judgment is based on that kind of written agreement, the agreement's own rate carries over into the judgment. For any other judgment -- including a prejudgment interest award on a liquidated claim that has no contract rate of its own -- the rate is the lesser of 10% a year or 1% plus the prime rate as published by the Federal Reserve, and whatever that combined rate happens to be on the date the judgment is entered is locked in for the life of that judgment. Medical debt, and any judgment arising from medical debt, is carved out entirely and capped at the lesser of a one-year Treasury constant-maturity yield or 3% -- a much lower ceiling than the general framework.
When interest starts running
For a liquidated claim, the interest clock starts on the date the debt or obligation became due -- often the date of a breach, a demand for payment, or whenever the amount became fixed and certain -- not the date the lawsuit was filed or the judgment was entered. For an unliquidated claim, there's no accrual date to speak of, because there's no prejudgment interest available on it in the first place; the statute forbids the award outright.
Contract vs. tort claims
The label on the claim doesn't control -- whether the damages are liquidated does. Arizona's courts have said plainly that "prejudgment interest is a matter of right on a liquidated claim regardless of whether the claim sounds in contract or in tort." The test for "liquidated" comes from a classic damages treatise Arizona courts have long relied on: a claim is liquidated if the evidence lets its amount be computed with exactness, without resorting to anyone's opinion or discretion. That standard is met by plenty of contract debts (an unpaid invoice, a note) and by some tort claims too (a fixed, itemized repair bill for property damage), but it's rarely met by a personal-injury verdict for pain and suffering, which depends on a jury's judgment to value.
Mandatory or discretionary
Once a claim qualifies as liquidated, awarding prejudgment interest isn't discretionary at all -- it's a matter of right, and a trial court that declines to award it can be reversed for legal error. For an unliquidated claim, Arizona goes a step further than most states: rather than simply leaving the question to a judge's discretion, the statute affirmatively bars the court from awarding prejudgment interest on it under any circumstances.
Simple or compound
The statute nowhere uses the word "compound." It describes a straight annual rate applied to a principal sum, and Arizona practice treats it as simple, non-compounding interest.
Claims against the government
Arizona doesn't bar or generally reduce interest against the state or its agencies -- the ordinary § 44-1201 framework applies across the board. That was borne out in a real dispute where the state's own retirement system had to refund money it had wrongly collected from Arizona State University: the University argued it was owed the full 10% rate that applies to an ordinary "indebtedness" under subsection (A), rather than the lower prime-plus-1% rate that applies to a "judgment" under subsection (B), and the Court of Appeals agreed, holding the debt existed independently of any judgment and so the higher, undiscounted rate applied. The one place government entities get their own separate treatment is condemnation: a judgment in an eminent-domain proceeding brought by a city, county, the state transportation department, or certain special districts uses a rate set by a different statute specific to that body, rather than the general § 44-1201 rate -- a narrower topic outside this survey's scope.
Other exceptions
Beyond the liquidated/unliquidated line, the statute draws a second, absolute line around certain damage types: no interest at all, prejudgment or postjudgment, is available on future damages (damages that will be incurred after the judgment, including the future cost of any injunctive or equitable relief), punitive damages, or exemplary damages, no matter how the underlying claim is otherwise treated. Medical debt sits in its own separate track entirely, both for the base rate on the debt itself and for any judgment on it, capped well below the general 10%/prime-plus-1% ceiling.
What trips people up
The most common misconception is assuming Arizona sorts prejudgment interest by contract versus tort. It doesn't -- the liquidated/unliquidated line cuts across both, so a tort claim for an exactly quantifiable loss can qualify for interest as a matter of right, while a contract claim requiring expert testimony or judicial discretion to value its damages might not.
People also sometimes assume the unliquidated-damages bar just means a court has discretion whether to award interest. It's stronger than that: the statute affirmatively prohibits the award. There's no case-by-case judgment call to make once a claim is found unliquidated.
The future-damages, punitive-damages, and exemplary-damages bar is easy to overlook in a large personal-injury verdict: even where a portion of a judgment is otherwise eligible for interest, the future-damages component (say, an amount awarded for a lifetime of future medical care) and any punitive award simply never draw interest, before or after judgment.
Common questions
Do I get prejudgment interest automatically if I win my lawsuit in Arizona?
Only if your damages are liquidated -- exactly computable from the evidence without a judge or jury's discretion. If they are, interest is a matter of right. If they're unliquidated, the statute bars prejudgment interest entirely.
What's Arizona's prejudgment interest rate?
10% a year for an ordinary debt or liquidated obligation, unless a written agreement sets a different rate. Once judgment is entered, the going-forward rate is the lesser of 10% or 1% plus the prime rate, fixed as of the date of entry.
Can I get prejudgment interest on my personal injury verdict?
Generally no, if the damages (like pain and suffering) required the jury's judgment to value -- those are unliquidated, and the statute forbids prejudgment interest on them. A separately quantifiable item, like a specific, itemized medical bill, could be treated differently if it's genuinely liquidated.
Does Arizona give the government a discount on interest?
No. The same rate structure applies to the state and its agencies as to anyone else -- a state entity has actually litigated (and won) an argument for the full, undiscounted 10% rate against another state agency.
Statutes and sources
- A.R.S. § 44-1201(A), (B) (rate on debts and judgments) — quoted in full above. Accessed 2026-07-05: https://www.azleg.gov/ars/44/01201.htm
- A.R.S. § 44-1201(D), (E), (F) (unliquidated/future/punitive damages bar) — quoted in full above. Accessed 2026-07-05: https://www.azleg.gov/ars/44/01201.htm
- A.R.S. § 44-1201(A)(1) (medical debt cap) — quoted in full above. Accessed 2026-07-05: https://www.azleg.gov/ars/44/01201.htm
- Employers Mutual Casualty Co. v. McKeon, 170 Ariz. 75, 78 (App. 1991) — "prejudgment interest on a liquidated claim is a matter of right and not a matter of discretion ... regardless of whether the claim sounds in contract or in tort." Accessed 2026-07-05: https://www.courtlistener.com/opinion/1238060/employers-mutual-casualty-co-v-mckeon/
- Arizona State University Board of Regents v. Arizona State Retirement System, 242 Ariz. 387 (App. 2017) — held the University was entitled to the full 10% "indebtedness" rate against the state retirement system, not the lower "judgment" rate. Accessed 2026-07-05: https://www.omlaw.com/wp-content/uploads/ASU-ASRS-Opinion-Reversed-and-Remanded-1.pdf
Source links
Every statute quoted above, linked, with the date we checked it.