Illinois Security Deposit Laws: No Cap, the 30/45-Day Return, and Penalties

Illinois security deposit law is unusual: there is no single statute that governs every rental. Instead, two narrow Acts pick up where the lease leaves off — the Security Deposit Return Act, 765 ILCS 710, which controls itemization and returns and which since January 1, 2024 binds every residential lessor in the state, and the Security Deposit Interest Act, 765 ILCS 715, which requires interest only for buildings with twenty-five or more units. A landlord renting out a single house or a small two-flat used to sit outside the Return Act; Public Act 103-224 deleted that threshold, and almost every Illinois guide still has this wrong. And in Chicago, none of that is the whole story, because the city’s own Residential Landlord and Tenant Ordinance is far stricter and overrides the statewide baseline for most units. This guide walks the entire framework: the unit-count thresholds, what you may deduct, the thirty-day statement and forty-five-day return, when interest is owed, the twice-the-deposit penalty, and where the Chicago rules diverge.

The single most important habit in Illinois is to know which rule applies to which building before you do anything else. The wrong assumption — treating a small building as if the Return Act governs, or applying the statewide Acts to a Chicago unit — is exactly how landlords and tenants end up in a dispute. Everything here is general information, not legal advice; confirm the current figures and consult a licensed Illinois attorney before acting on a specific dispute, because these Acts and the Chicago ordinance are amended over time.

Below, a short overview video summarizes the Illinois deposit rules; the sections that follow break down each piece in detail — the no-cap starting point, the deletion of the Return Act’s unit threshold and the twenty-five-unit threshold that still governs deposit interest, deductions versus normal wear and tear, the return timeline, interest, penalties, the Chicago RLTO, and the small-claims path if a dispute cannot be resolved.

The first thing to understand about Illinois is what it does not have: a statewide dollar limit on security deposits. Unlike states that cap the deposit at one or two months’ rent, Illinois leaves the amount to the lease. A landlord and tenant may agree on whatever figure the market supports, and one month’s rent, or one month plus a partial second, is common. There is no statute a tenant can point to and say the deposit is “too high” as a matter of state law.

That does not mean the amount is completely unregulated everywhere. Local ordinances can add rules, and Chicago in particular regulates how a deposit is held, receipted, and returned even though it too sets no hard cap. So the correct way to think about the cap question in Illinois is this: statewide, the number is a matter of contract; locally, a city ordinance may add handling rules on top. Always read the lease and check for a local ordinance before assuming a deposit amount is or is not allowed.

Illinois law layers protection by building size. Two separate Acts do the work, and each has its own threshold. Getting the threshold right is the whole ballgame, because a rule that binds a large building does not touch a small one.

The Security Deposit Return Act — Every Illinois Lessor Since 2024

The Security Deposit Return Act, 765 ILCS 710, applies to every lessor of residential real property in Illinois who has received a security deposit. Until January 1, 2024 it reached only a lessor of residential real property containing five or more units; Public Act 103-224 deleted that threshold, and the codified section now opens simply “a lessor of residential real property who has received a security deposit from a lessee”, with no unit count anywhere in it. A single-condo owner and a single-family landlord are now squarely inside the Act. Under the Act, a landlord who intends to withhold any part of the deposit for damage may not do so unless, within thirty days after the tenant vacates, the landlord furnishes the tenant an itemized statement of the damage and the actual or estimated cost of repairing or replacing each item, with paid receipts or copies attached. If the landlord gives estimated costs rather than paid receipts, the landlord must furnish the actual receipts within thirty days after the estimate. The deposit or its remaining balance must then be returned — within thirty days when receipts accompany the statement, and within forty-five days when the statement uses estimates and receipts follow.

The Security Deposit Interest Act — Twenty-Five or More Units

The Security Deposit Interest Act, 765 ILCS 715, sets a higher threshold. It requires a landlord of a building — or a complex of buildings on contiguous parcels — with twenty-five or more units to pay interest on a security deposit held longer than six months. The rate is not a fixed percentage; it equals the rate paid on minimum-deposit passbook savings accounts by the largest commercial bank with its main premises in Illinois, measured as of December thirty-first of the year before the lease began. The landlord must pay any interest of five dollars or more within thirty days after the end of each twelve-month rental period, by cash or by a credit against rent.

Whatever the building size, the categories of a legitimate deduction are the same. A landlord may keep part of the deposit only to make itself whole for money the tenant actually owes or for damage the tenant actually caused — not to upgrade the unit at the tenant’s expense.

Permitted Deductions

• Unpaid rent. Rent that remains owed for the final month or any earlier period.
• Unpaid utilities. Utility charges the tenant was contractually responsible for and left unpaid at move-out.
• Repair of damage beyond ordinary wear and tear. Broken fixtures, large holes, pet-stained flooring, and similar damage the tenant or their guests caused.
• Other lease-specified charges. Where the lease clearly allows it and the charge is genuine, such as the cost to replace keys or restore lease-listed personal property.

Not Deductible — Ordinary Wear and Tear

Ordinary wear and tear is the natural deterioration that happens from living in a unit normally, and the landlord must absorb it. Illinois treats these as non-deductible:

• Faded or lightly scuffed paint, and small nail holes from hanging pictures.
• Carpet worn thin along walkways from ordinary foot traffic, with no stains or pet damage.
• Minor marks, loose grout, or caulk that has aged around tubs and sinks.
• Worn but still-functioning appliances and fixtures that simply reached the end of their useful life.

For a building the Return Act covers — since 2024, every one of them — the deadline structure is the part landlords miss most, and it is two separate rules rather than one sliding scale. Under 765 ILCS 710, a landlord who deducts for damage may not keep any part of the deposit unless, within thirty days after the tenant vacates, the landlord delivers or mails an itemized statement of the damage and the actual or estimated cost to repair or replace each item, with paid receipts attached. The clock runs from the day the tenant actually surrenders the unit.

What the Itemized Statement Must Include

The statement must describe each item of damage and its actual or estimated cost. When the landlord already has the work done, it attaches the paid receipts. When the landlord provides an estimate instead, it must furnish the actual paid receipts within thirty days after sending the estimate. That two-step path is why the return deadline can extend from thirty days to forty-five: a statement built on receipts closes quickly, while one built on estimates gives the landlord additional time to substantiate before the balance is due.

No Forwarding Address? Mail to the Last Known Address

An Illinois tenant is not required to give a forwarding address, though providing one in writing at move-out is the surest way to receive the statement and refund promptly. If the tenant leaves no address, the landlord should mail the itemized statement and any refund to the last known address — commonly the rental unit itself — and keep proof of mailing. A landlord should not sit on the funds waiting for an address; the obligation to send the statement on time still applies.

Statewide, interest is a big-building question. Under the Security Deposit Interest Act, 765 ILCS 715, a landlord of a building or contiguous complex with twenty-five or more units must pay interest on a deposit held longer than six months. A landlord below that threshold owes no interest under state law, no matter how long the deposit is held.

The rate is set by a formula rather than a fixed number. It equals the interest paid on minimum-deposit passbook savings accounts by the largest commercial bank — measured by total assets — with its main premises in Illinois, as of December thirty-first of the year before the lease started. Because that passbook rate has been extremely low in recent years, the annual interest a covered tenant is owed is often small, but the landlord still must calculate it and pay any accrued interest of five dollars or more within thirty days after the end of each twelve-month rental period. The Illinois Department of Financial and Professional Regulation publishes the applicable rate each year, so verify the current figure before a calculation.

Illinois backs the Return Act with a real penalty. Under 765 ILCS 710, if a court finds that a landlord refused to supply the required itemized statement, or supplied it in bad faith, and failed to return the deposit due, the landlord is liable for damages equal to twice the amount of the security deposit, together with court costs and reasonable attorney’s fees. That multiplier is on top of returning whatever was wrongfully withheld.

Bad faith is more than being wrong about a single deduction. It generally means the landlord ignored the statement requirement, invented charges, refused to itemize, or kept the deposit with no legitimate basis. A landlord who sends a clear itemized statement with receipts on time is well protected even if one deduction is later disputed. The penalty exists to punish the landlord who treats the deposit as free money, not the one who makes a documented, good-faith judgment call. The attorney’s-fees provision matters especially, because it can make even a modest deposit worth a lawyer’s time to pursue.

If the rental is in Chicago, set the statewide Acts aside and start with the city. The Chicago Residential Landlord and Tenant Ordinance (the RLTO) is far stricter than Illinois law and covers most rental units in the city. The main exemption is narrow: an owner-occupied building with six or fewer units is generally outside the ordinance. Nearly everything else in Chicago is covered, regardless of the twenty-five-unit threshold that still shapes the statewide Interest Act – and regardless of the Return Act’s old five-or-more-unit threshold, which Public Act 103-224 deleted on January 1, 2024.

For a covered Chicago unit, the RLTO layers several obligations that state law does not impose on smaller buildings. The landlord must hold the deposit in a separate, federally insured Illinois account and cannot commingle it with the landlord’s assets; give the tenant a written receipt identifying the bank; pay annual interest at a rate the City Comptroller sets each year; deliver an itemized statement of any damages within thirty days after the tenant moves out; and return the deposit within forty-five days after the tenant vacates (or within seven days in the event of fire or casualty). The RLTO’s penalty is severe: a landlord who violates the security-deposit provisions can owe the tenant two times the deposit plus the interest due, and attorney’s fees and costs.

Put the rules together and the Illinois move-out becomes a repeatable checklist rather than a judgment call. Follow this sequence and penalty exposure all but disappears.