Minnesota: Prejudgment Interest Rules
The short answer
Yes, and Minnesota is unusual in NOT splitting the rule by contract vs. tort at all -- one statute, Minn. Stat. § 549.09, covers both. The dividing line instead is the size of the judgment: $50,000 or less (or any judgment against the state or a political subdivision, or in family court) draws simple interest at a rate the courts set each December off the 1-year Treasury yield (4% for 2026); anything over $50,000 draws a flat 10% a year. Interest starts from the earliest of when the lawsuit was filed, an arbitration demand was made, or a written notice of claim was sent, and a formal settlement-offer exchange can cut the accrual period short if the losing side's offer was actually the better one.
| Governing law | Minn. Stat. § 549.09, subd. 1 (rate and mechanics) and subd. 2 (accrual) -- a single statute covers contract and tort pecuniary-damage claims alike |
|---|---|
| Interest rate | Two tiers by judgment SIZE, not claim type: $50,000 or less (and any judgment for or against the state or a political subdivision, or in family court) draws simple interest at a rate the state court administrator sets each December from the 1-year Treasury yield, rounded to the nearest 1%, floored at 4% (4% for calendar year 2026); over $50,000, a flat 10%/yr applies regardless of the T-bill rate, except that a government or family-court judgment stays on the lower tier no matter how large |
| When interest starts running | The earliest of: commencement of the action or a demand for arbitration, a written notice of claim (only if suit is then filed within 2 years of that notice), or -- for special damages -- the date those special damages were incurred if later. A settlement-offer exchange can shorten the period: if the losing party's written offer was closer to the eventual verdict/award than the prevailing party's, the prevailing party's interest is capped at the settlement-offer amount and stops accruing as of the time that offer was made |
| Contract vs. tort claims | Minnesota does not split by claim type -- the same statute, same rate tiers, and same accrual rule apply to "pecuniary damages" whether the claim sounds in contract or tort. The variable that matters here is judgment size ($50,000) and whether the defendant is the state or a political subdivision, not contract vs. tort |
| Mandatory or discretionary | Mandatory once damages are fixed by verdict, award, or report -- the statute says interest "shall be computed," subject only to a contrary contract provision or, in a family-court action, the judge's discretion to order a lower rate or none at all on equitable grounds |
| Simple or compound | Simple interest -- the statute says so expressly for the $50,000-or-less/government/family-court tier ("computed as simple interest per annum"); the over-$50,000 tier isn't separately labeled, but it uses the same annual-accrual-on-the-unpaid-balance mechanism, with no compounding language anywhere in the section |
| Claims against the government | A judgment for or against the state or a political subdivision draws the LOWER, Treasury-yield-based simple-interest rate regardless of the judgment's size -- the flat 10% tier never applies to a government party |
| Other exceptions | No prejudgment interest on: workers' compensation judgments or awards (except third-party actions), future (not-yet-incurred) damages, punitive or other noncompensatory damages, a judgment or award that doesn't exceed the conciliation (small-claims) court's jurisdictional limit ($20,000 generally, $4,000 for a consumer-credit claim, under § 491A.01), or the portion of any award already made up of interest, costs, disbursements, or attorney fees. Child support judgments have drawn no interest at all since August 1, 2022 |
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The short answer
Minnesota is one of the few states that doesn't split prejudgment interest
by contract vs. tort at all -- the same statute, Minn. Stat. § 549.09,
covers both a breach-of-contract claim and a personal-injury or
property-damage claim the same way. What actually changes the rate is the
size of the judgment. A judgment of $50,000 or less (and any judgment
against the state or a local government, or one entered in family court)
draws a lower, simple-interest rate the courts recalculate every December
off the 1-year Treasury yield -- 4% for 2026. A judgment over $50,000 draws
a flat 10% a year instead, unless the defendant is the government, in
which case the lower rate applies no matter how large the judgment gets.
Interest starts running from whichever came first -- filing suit, demanding
arbitration, or sending a written notice of claim -- and a formal
settlement-offer exchange can cut the accrual period short if it turns out
the losing side actually made the better offer.
Requirements one by one
Governing law
A single statute, Minn. Stat. § 549.09, governs prejudgment interest (the
statute calls it "preverdict, preaward, or prereport interest") for both
contract and tort claims. Subdivision 1 sets the rate and the mechanics;
subdivision 2 describes how interest accrues once a judgment or award is
entered.
Interest rate
The rate depends on the judgment's size, not the type of claim. For a
judgment or award of $50,000 or less -- or any judgment for or against the
state or a political subdivision, or one entered in a family-court action,
no matter how large -- the interest is simple interest at a rate the state
court administrator sets each December from the one-year constant-maturity
Treasury yield, rounded to the nearest whole percent, with a 4% floor (the
rate for calendar year 2026 is 4%). For a judgment or award over $50,000,
other than a government or family-court judgment, the rate is a flat 10% a
year.
When interest starts running
Interest starts from whichever of these happens first: the commencement of
the lawsuit, a demand for arbitration, or a written notice of claim (a
notice only counts if the lawsuit is actually filed within two years of it).
If part of the damages are "special damages" incurred later than that date,
interest on that portion starts when those special damages were actually
incurred instead. A separate settlement-offer mechanism can cut the period
short: if either side serves a written settlement offer and the other
side's eventual judgment or award turns out to favor the OTHER party's
offer (i.e., the losing party's offer was closer to the actual result than
the prevailing party's own offer), the prevailing party's interest is
limited to the settlement-offer amount and stops accruing at the time that
offer was made, rather than running all the way to verdict.
Contract vs. tort claims
Minnesota treats them alike. There's no separate tort statute or separate
contract statute the way many other states have -- § 549.09 applies to
"pecuniary damages" broadly, covering both. The dimension that actually
changes the outcome here is the size of the judgment and whether the
defendant is a government entity, not whether the underlying claim sounds
in contract or in tort.
Mandatory or discretionary
Interest is mandatory once damages are fixed by a verdict, award, or
report -- the statute says preverdict interest "shall be computed," subject
only to a contrary provision in the parties' own contract. The one carved-
out exception is family court, where a judge may order a lower rate or no
interest at all, but only if the parties agree or the court makes findings
that a lower rate is needed to avoid an unfair hardship to the debtor.
Simple or compound
Interest is simple, not compound. The statute says so in as many words for
the $50,000-or-less/government/family-court tier ("computed as simple
interest per annum"). The over-$50,000 tier isn't given that same label
directly, but it's governed by the identical accrual mechanism in
subdivision 2 -- interest accrues annually on the unpaid balance of the
judgment, with no language anywhere in the section describing interest
compounding on itself.
Claims against the government
A judgment for or against the state or a political subdivision always
draws the lower, Treasury-yield-based rate, regardless of the judgment's
size -- the flat 10% tier that otherwise applies to judgments over $50,000
never reaches a government party.
Other exceptions
Prejudgment interest is unavailable on: workers' compensation judgments or
awards (except in a third-party action arising from the same injury),
future damages not yet incurred, punitive damages, fines, or other
noncompensatory damages, a judgment or award that doesn't exceed the
jurisdictional limit of Minnesota's conciliation (small-claims) court
($20,000 generally, or $4,000 for a consumer-credit claim, under § 491A.01),
and any portion of an award that is itself made up of interest, costs,
disbursements, or attorney fees. Since August 1, 2022, no interest of any
kind accrues on child-support judgments.
What trips people up
The $50,000 line is a threshold, not a bracket -- a $50,001 judgment draws
10% on the ENTIRE amount from the accrual date, not just on the dollars
above $50,000. Getting the number wrong by even a dollar changes which rate
applies to the whole judgment.
The settlement-offer mechanism cuts both ways and is easy to overlook: a
party who wins the case can still end up with LESS prejudgment interest
than expected if their own settlement offer during the case was actually
farther from the final result than the other side's offer was.
Written notice of claim only starts the interest clock if a lawsuit is
filed within two years of sending it -- sit on a notice past that window
and the interest clock resets to the date the lawsuit is actually filed.
Common questions
Does a Minnesota personal-injury case get a different prejudgment
interest rate than a contract case?
No. Minnesota uses the same statute and the same rate tiers for both --
the amount of the judgment (and whether the defendant is a government
entity) is what determines the rate, not the type of claim.
What's Minnesota's prejudgment interest rate right now?
4% for a judgment of $50,000 or less (or against the government, or in
family court) for calendar year 2026; 10% for a judgment over $50,000 with
a private defendant.
Can I get prejudgment interest on a small claims judgment in Minnesota?
No -- a judgment or award that doesn't exceed the conciliation court's
jurisdictional limit ($20,000, or $4,000 for a consumer-credit claim) draws
no prejudgment interest under § 549.09, regardless of what court actually
heard the case.
Does prejudgment interest compound in Minnesota?
No. The statute describes simple interest for the lower tier in so many
words, and the higher tier uses the same non-compounding annual-accrual
mechanism.
Statutes and sources
- Minn. Stat. § 549.09, subd. 1 -- "Except as otherwise provided by
contract or allowed by law, preverdict, preaward, or prereport interest
on pecuniary damages shall be computed as provided in paragraph (c) from
the time of the commencement of the action or a demand for arbitration,
or the time of a written notice of claim, whichever occurs first... For a
judgment or award of $50,000 or less or a judgment or award for or
against the state or a political subdivision of the state, regardless of
the amount, or a judgment or award in a family court action... the
interest shall be computed as simple interest per annum... For a judgment
or award over $50,000... the interest rate shall be ten percent per year
until paid." Accessed 2026-07-05: https://www.revisor.mn.gov/statutes/cite/549.09 - Minn. Stat. § 549.09, subd. 1 (exceptions) -- "preverdict, preaward, or
prereport interest shall not be awarded on the following: (1) judgments,
awards, or benefits in workers' compensation cases, but not including
third-party actions; (2) judgments or awards for future damages; (3)
punitive damages, fines, or other damages that are noncompensatory in
nature; (4) judgments or awards not in excess of the amount specified in
section 491A.01; and (5) that portion of any verdict, award, or report
which is founded upon interest, or costs, disbursements, attorney fees,
or other similar items added by the court or arbitrator." Accessed
2026-07-05: https://www.revisor.mn.gov/statutes/cite/549.09 - Minn. Stat. § 549.09, subd. 2 -- "During each calendar year, interest
shall accrue on the unpaid balance of the judgment or award from the time
that it is entered or made until it is paid, at the annual rate provided
in subdivision 1." Accessed 2026-07-05:
https://www.revisor.mn.gov/statutes/cite/549.09 - Minn. Stat. § 491A.01, subd. 3a -- "the conciliation court has
jurisdiction to hear, conciliate, try, and determine civil claims if the
amount of money or property that is the subject matter of the claim does
not exceed: (1) $20,000; or (2) $4,000, if the claim involves a consumer
credit transaction." Accessed 2026-07-05:
https://www.revisor.mn.gov/statutes/cite/491A.01
Source links
Every statute quoted above, linked, with the date we checked it.