Prejudgment Interest Rules in Minnesota
At a glance
| 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 | The lower tier is expressly simple interest (§ 549.09, subd. 1(c)(1)(i)). The text states 10% per year for the over-$50,000 tier without separately specifying compounding. |
| 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 |
Requirements one by one
Governing law
Minn. Stat. § 549.09, subd. 1, directs courts to compute “preverdict, preaward, or prereport interest on pecuniary damages.” It applies the same framework to contract and tort claims; subdivision 2 addresses interest after an award or judgment is entered.
Interest rate
For an award of $50,000 or less, any award for or against the state or a political subdivision, and a family-court award, subdivision 1(c)(1)(i) uses a Treasury-yield formula rounded to the nearest percent with a 4% floor. The published 2026 rate is 4%. Subdivision 1(c)(2) instead sets 10% per year for an award over $50,000 outside the government and family-court categories.
When interest starts running
Under subdivision 1(b), the starting date is the earliest of action commencement, arbitration demand, or written claim notice. Notice only supplies that earlier date if the action begins within two years. Special damages incurred later start accruing interest when incurred. Written settlement offers can shorten the period under the statute's comparison of offers with the award.
Simple or compound
The lower tier is expressly “computed as simple interest per annum.” The 10% tier states an annual rate without separately saying whether it compounds; the statute does not expressly resolve that question for this tier.
Claims against the government
Subdivision 1(c)(1)(i) keeps awards for or against the state or a political subdivision in the Treasury-yield tier regardless of size. Thus a government award over $50,000 remains at the published 4% rate in 2026 instead of moving to the 10% tier.
Other exceptions
Subdivision 1(b) excludes future, punitive, and other noncompensatory damages; workers' compensation benefits outside third-party actions; specified fees and costs; and awards not exceeding the conciliation-court limit. Section 491A.01, subd. 3a, sets that limit at $20,000 generally and $4,000 for a consumer-credit transaction. Family courts may lower or omit interest on the grounds stated in § 549.09, subd. 1(c)(1)(ii).
What trips people up
A written claim notice can start interest before suit only if the claimant files within two years. The offer-comparison rule may also stop interest at the losing party's closer offer and restrict the amount on which interest runs.
Common questions
Does a $75,000 judgment against a Minnesota county use 10%? No. Section 549.09, subd. 1(c)(1)(i), keeps government judgments in the lower tier regardless of amount; its published rate is 4% for 2026.
Does an award below the conciliation-court limit earn prejudgment interest? Subdivision 1(b)(4) excludes an award that does not exceed the limit in § 491A.01; the ordinary limit is $20,000.
Statutes and sources
- Minn. Stat. § 549.09, subd. 1 — prejudgment accrual, rate tiers, offers, and exclusions. Accessed 2026-10-06: https://www.revisor.mn.gov/statutes/cite/549.09
- Minn. Stat. § 549.09, subd. 2 — interest on an unpaid judgment or award. Accessed 2026-10-06: https://www.revisor.mn.gov/statutes/cite/549.09
- Minn. Stat. § 491A.01, subd. 3a — $20,000 general and $4,000 consumer-credit conciliation limits. Accessed 2026-10-06: https://www.revisor.mn.gov/statutes/cite/491A.01
- Minnesota State Court Administrator, 2026 Interest Rates on State Court Judgments and Arbitration Awards — “the annual interest rate for calendar year 2026 shall be 4%.” Accessed 2026-10-06: https://www.revisor.mn.gov/court_rules/rule/msinte/
Source links
Every statute quoted above, linked, with the date we checked it.
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