Which states pay interest on unclaimed property?

As of 2026, the short list of states that pay any form of interest to claimants on returned unclaimed property includes Connecticut, New York, and a small handful of others with narrow provisions. The defining characteristic in each: interest is paid only on property that was itself interest-bearing (typically savings accounts), only for the period during which the property was actually earning interest before being turned over to the state, and at the rate the underlying account earned at that time. No state, as far as we've identified, pays interest on the full pool of returned property at a uniform rate. The pre-2003 California regime came closest, but that policy ended over two decades ago. The current landscape is dominated by no-interest defaults, with the partial-interest states as narrow exceptions. For authoritative state-by-state confirmation, see our 50-state map and the official portals linked from our state directory.

Connecticut is one of the few states that explicitly pays interest on interest-bearing property held by the state. Under Conn. Gen. Stat. § 3-73a, the Office of the State Treasurer pays interest on returned property that was itself interest-bearing — a savings account, a CD, certain types of bonds — at the rate the account earned while it was being held. The interest is paid to the claimant when the property is returned. The practical limitation: only interest-bearing property qualifies. A forgotten utility deposit, an uncashed payroll check, or a returned dividend doesn't earn interest, so the state doesn't pay any when it's returned. For claimants whose unclaimed property is bank account balances or similar, the Connecticut interest provision can add a real bump to the recovered amount — sometimes meaningfully on long-held property. For Connecticut state-specific information, see our state directory entry. The State Treasurer's portal has the claim forms and processing details.

New York pays interest on certain interest-bearing accounts under N.Y. Aband. Prop. Law § 1416, but the structure is narrower than Connecticut's: interest is paid at the rate the account earned, and only for the period during which the property earned interest before being turned over to the state. Once the property is in the state's custody, it stops accruing interest for the claimant — the state earns its own returns on the pool, but those returns flow to the state, not to the claimant. In practice, this means a New York claimant whose bank account was earning 2% interest before being escheated will receive the principal plus the pre-escheat interest at 2%, but no post-escheat interest. For property turned over decades ago, the post-escheat interest gap can be substantial. New York's overall unclaimed-funds pool is large — by some estimates over $19 billion — and the partial-interest provision applies to a meaningful share of that pool. For New York specifically, see the Office of the State Comptroller's Office of Unclaimed Funds. The interest treatment is one of the more favorable in the country, even if it doesn't match what claimants might intuitively expect.

Two reasons. First, fiscal: state unclaimed-property pools earn returns when invested. Those returns are a meaningful piece of state general-fund revenue. Paying interest to claimants would redirect those returns away from the general fund and back to property owners. Most states have decided the general-fund use is the higher priority. Second, political: there's no organized constituency advocating for interest payments. The people most affected — owners of unclaimed property who haven't yet come forward — are by definition unaware of their stake. Once they discover the property and file a claim, they're typically grateful to recover the principal and don't push back on the no-interest policy. The lack of pushback means the policy persists. California's 2003 elimination of interest payments is the canonical example of this dynamic. Other states that started without interest never added it; states like California that had interest but eliminated it have rarely restored it. The default has settled toward no interest, and inertia keeps it there. See our California guide for the full history.

Even in the partial-interest states, the recovered interest is usually modest. For a typical bank-account claim — say, $1,000 in a savings account that earned 1% to 2% interest — the pre-escheat interest accrual might add $20 to $40 per year for the few years before the account was reported. Total interest on a typical claim: maybe $50 to $200 depending on how long the account was active before being turned over. This is meaningful but not transformative. The headline math on most unclaimed-property recoveries is the principal, not the interest. The interest is a nice add-on in Connecticut and New York; it's nothing in California, Texas, and most other states. For large-balance claims — six-figure abandoned trust accounts, accumulated retirement balances, long-dormant brokerage holdings — the interest can be significant. But for the typical few-hundred-dollar utility deposit or uncashed dividend, the no-interest default doesn't materially change the recovery amount.

Mostly no. The advice in any state is the same: file the claim as soon as you know about the property. Delay doesn't help in interest-paying states (the interest accrual is usually capped at the pre-escheat period anyway) and actively hurts in no-interest states (where inflation eats into the principal's real value). The one situation where the no-interest policy could marginally affect strategy: if you're weighing whether to claim now or wait for some external event (a tax-year change, a settlement window for related litigation), the no-interest math argues for claiming now rather than later. There's no benefit to leaving the principal in the state's hands; there's a real cost in inflation. For most claimants, the answer is just: file now. See our deceased-parent guide if the claim is on behalf of an estate, where the timing analysis intersects with probate planning.

Generally yes. Interest is ordinary income for federal tax purposes, regardless of whether it's paid by a bank, a state unclaimed-property division, or any other source. If the state pays interest along with your principal recovery, the interest portion should be reported as ordinary interest income on your federal return for the year you receive it. The state will typically issue a 1099-INT for the interest portion if it exceeds the IRS reporting threshold (generally $10). The principal itself isn't taxable — it was always your money — but the interest is. For state income tax, treatment varies. Most states tax interest income at the state ordinary-income rate. California requires a Form 540 disclosure of unclaimed-property recoveries. See our taxability guide for the full federal-and-state breakdown of how unclaimed-property recoveries interact with income taxes.

Special case for inherited unclaimed property. If the property includes income that was earned by the decedent but not received before death — uncashed wages, accrued bond interest, unpaid commissions — that income retains its character as taxable income to whoever inherits it. This is called "income in respect of a decedent" or IRD. For unclaimed-property claims, the IRD analysis matters mostly for claims on financial assets that include accrued interest. If you inherit a deceased parent's savings account that the state holds as unclaimed property, and the state pays you interest accrued before your parent's death, that interest is IRD and is taxable to you as ordinary income. The state's 1099 will typically reflect the interest portion regardless of IRD status. Whether the IRD treatment changes your overall tax exposure depends on your individual circumstances and is worth a quick CPA conversation if the inherited property is large. See our deceased-parent guide for the broader heir-claim tax framework.

Whether you live in an interest-paying state or not, the same three steps apply: - **Search promptly** at our multi-state search tool or directly at the state portal where you suspect property — find the right portal in our state directory. The interest math rarely tips the decision either way; what matters is recovering the principal before inflation erodes its real value further. - **For matches in Connecticut or New York**, expect a small interest add-on on bank-account-type property. Don't expect a windfall. - **For matches in any other state**, expect to receive the principal only. File anyway — the state isn't going to start paying interest, and every year of delay costs you in real terms. See our California no-interest deep-dive for the most consequential example of how the no-interest default works at scale. The interest question is a footnote, not a strategy. Filing promptly is the strategy.