Tax Lien Investing by State: Rates, Redemption Periods and Post-Tyler Surplus Rules in All 51 Jurisdictions, Read From the Statutes

Lien states, deed states and the rest: what the statutes actually say

Most guides sort states into two boxes, “tax lien” and “tax deed”. The statutes do not fit two boxes. We read the delinquent tax sale law of every state and DC and found four systems (our classification; each row of the data file carries the citation and a link to the text we saved):

• Lien (19, including 2 hybrids). The investor pays the delinquent tax and gets a certificate. The owner keeps title and can pay it off with interest. If not, the holder applies for a deed or sues to foreclose. Alabama lets each county choose between a lien auction and a property sale, Missouri sells certificates that turn into a collector's deed, and Ohio counties may sell certificates.
• Redeemable deed (10). The investor buys the property (or a tax title) at auction, but the owner can still buy it back for a set period by paying the price plus a penalty. Texas, Georgia and Connecticut are the best-known examples.
• Government sale, no investor lien (20). The county or state holds the delinquency, forecloses or takes title, and only then auctions the property. California, New York, Michigan, Minnesota, Pennsylvania, Washington and Oklahoma are here. Oklahoma repealed its individual tax sale certificate sections in 2008. For an investor these are tax deed sales: you buy a property, not a yield.
• Not verified (2). We could not load the official statute text for Hawaii and New Hampshire from our location, so we leave them blank rather than repeat a secondary source.

The 50-state + DC table

Tax lien and tax deed rules by jurisdiction (statutes read October 7, 2026)

How to read it: “bid down” means the statutory rate is where bidding starts, and the certificate goes to whoever accepts the lowest rate. “Fixed” means the rate is set by law and buyers compete some other way (a premium, a percentage of the parcel, a rotation or a random draw). The text versions differ: where we could not load the official site we used a dated copy (FindLaw, public.law or the Wayback Machine) and say so in the data file; those copies can lag a session behind.

Lien states: the rate on paper and the rate you win

Interest-rate rules in lien states

Three things follow from the statutes themselves. First, in bid-down states the ceiling is not the return. In Florida the winning bid can be any quarter point down to zero, and the certificate earns the bid rate, not 18%. Second, premiums often earn nothing. Colorado's statute says “The excess amount shall be credited to the county general fund”; Missouri says “no interest shall be owing on the excess amount”. A buyer who pays a premium in those states lowers its own yield. Third, fixed-rate states shift the competition elsewhere. Iowa's 2% a month cannot be bid down, so buyers bid down the share of the property they would take instead, and ties go to a random draw.

What the redemption math looks like on a $2,000 certificate (our arithmetic on the statutory formulas)

These are gross amounts before the costs the buyer pays: registration, deposits, notices, title searches, deed application fees (Florida allows a $75 tax deed application fee) and, in Illinois since July 10, 2026, the surplus equity fee.

Redeemable deed states: a penalty, not an annual rate

In a redeemable deed state you buy the property at auction, often for more than the taxes, and the owner can buy it back. The return is a penalty on what you paid, set by statute:

• Texas: 25% if redeemed in the first year and 50% in the second, for homesteads, agricultural land and mineral interests, which can be redeemed for 2 years after the deed is recorded. Other property: 180 days and at most 25%.
• Georgia: 20% of the amount for the first year or fraction, 10% for each year after; redemption for 12 months and then until the buyer forecloses the right by notice.
• Connecticut: 18% a year on the total purchase price, 6 months (60 days for abandoned property).
• Delaware: 15% on top of the price, within 60 days after the court approves the sheriff's sale (20% under the Kent and Sussex subchapter).
• Rhode Island: 10% if redeemed within 6 months, plus 1% of the price for each later month; foreclosure petition after 1 year.
• South Carolina: 3%, 6%, 9% or 12% of the bid depending on the quarter of the 12-month period, but never more than the opening bid of taxes and costs.
• Mississippi: 1.5% a month on the taxes and costs plus 5% damages on the taxes, for 2 years, “regardless of the amount of the purchaser's bid at the tax sale”.
• Tennessee: 12% a year on the price; the court sets a redemption period of up to 1 year, shorter for long delinquencies.
• Vermont: 1% a month, 1 year.

Because the percentage applies to the price you bid, overbidding raises the dollar penalty in Texas, Georgia or Tennessee, but in Mississippi the payout ignores your bid, and in South Carolina it can never exceed the opening bid of taxes and costs.

Tyler v. Hennepin County (2023): what the Court decided

Geraldine Tyler's condominium in Hennepin County, Minnesota, “accumulated about $15,000 in unpaid real estate taxes along with interest and penalties.” The county “seized the condo and sold it for $40,000, keeping the $25,000 excess over Tyler's tax debt for itself.” On May 25, 2023 the Supreme Court held that she plausibly alleged a taking. Chief Justice Roberts wrote for a unanimous Court; Justice Gorsuch, joined by Justice Jackson, concurred. The opinion's last line: “The taxpayer must render unto Caesar what is Caesar's, but no more.”

Two passages matter for investors. The Court counted the states: “Thirty-six States and the Federal Government require that the excess value be returned to the taxpayer.” And it distinguished an older case in which New York law “simply defined the process through which the owner could claim the surplus”. A state may therefore require owners to file a claim by a deadline; what it cannot do is give the owner no way to recover the excess. Minnesota's own revisor now prints a note under the old apportionment statute, Minn. Stat. §282.08, saying it “was found to be a taking in violation of the Takings Clause”.

Which states changed their laws after Tyler

Surplus and equity changes found in the statutes and session laws we saved

Many other states already paid the surplus before 2023, usually with a claim deadline after which unclaimed money goes to the government: Washington 3 years, Virginia 2 years after confirmation, South Carolina 5 years, Georgia 5 years (then to the state Department of Revenue), Rhode Island 5 years, Indiana 3 years, Oklahoma 1 year, Louisiana 1 year, Alaska 6 months, and Utah treats it as unclaimed property. Each is in the data file with its section.

What this means for a lien buyer. In the states that rewrote their laws, an unredeemed certificate no longer turns into the whole property for the price of the taxes. In South Dakota a private holder that takes a deed must auction the property and “is entitled to compensation in the same manner as redemption of a tax certificate”. In New Jersey the owner can force a sheriff's sale. In Arizona the court can order an excess proceeds sale. The upside a buyer can win is moving toward the redemption amount, while the costs of getting there (notices, title work, lawyers, waiting) stay.

What returns are not guaranteed: one institutional buyer's filings

Tax liens are usually sold as a fixed-rate product. The SEC filings of Fortress Credit Realty Income Trust, a private credit REIT that bought 92,024 liens, show what a professional book looks like:

Fortress Credit Realty Income Trust: tax liens held at June 30, 2026 (Form 10-Q, accession 0001193125-26-347204)

What the filings show:

• Concentration in Florida. Florida liens were 72.8% of the book's fair value (our arithmetic). California liens are numerous but small: 46,928 of them carried $50,595,000, about $1,078 each (our arithmetic). The filing does not say what kind of California liens these are; the state's tax code has no investor certificate sale.
• Fast turnover. Starting the year at $368,943,000, the trust bought $239,447,000 of liens and collected $196,615,000 of repayments in six months, 53.3% of the opening balance (our arithmetic).
• A wide yield range. The 10-Q values the liens with a “yield analysis” at 0% to 19.65% (June 30, 2026), against 5.20% to 17.02% at December 31, 2025.
• Losses from premiums. The 2025 10-K attributes a $1.8 million realized loss “primarily” to “the resolution of tax lien investments in jurisdictions where upfront premiums are not recoverable”. In the first half of 2026 realized losses on tax liens were $1,405,000. The statutes above show where that happens: Colorado credits premiums to the county, Missouri pays no interest on the overbid.
• The trust's own risk factors. “Increased competition may drive interest rates lower than what is viable for our investment strategy.” After buying a certificate, “we will not know when or if it will be redeemed”. And if the owner “files a petition in bankruptcy we could lose our lien and possibly our entire investment.”
• Federal liens. If the property also carries a federal tax lien, the IRS can redeem it after a sale for “120 days from the date of such sale or the period allowable for redemption under local law, whichever is longer” (26 U.S.C. §7425(d)).

What a reader can do with this

• Start from the statute, not the brochure. Check the row for your state and click through to the section in the data file. If a guide quotes a rate the statute no longer has (Illinois is the clearest case), the guide is out of date.
• Price the bid, not the cap. In bid-down states, your return is the rate you win, and in Florida a 0% bid gives up even the 5% minimum. Model the redemption timing: the trust above collected repayments equal to 53.3% of its opening tax lien balance in six months (our arithmetic).
• Do not count on getting the property. After Tyler, states are moving toward auctions that send the surplus to the former owner. Treat a deed as a cost and time path, not the payoff.
• Know the extra costs. Notices, title searches, deed and court fees, Illinois's new surplus equity fee, and premiums that earn nothing in some states all come out of the yield.
• Compare with other fixed-income real estate products. Our real estate debt ranking and hard money loan rates pages show what other short-term real estate credit pays.

FAQ

Sources: state statutes read October 7, 2026 from official legislature sites where reachable (Florida Senate, Arizona Legislature, Iowa Legislature, Connecticut General Assembly, Delaware Code Online, D.C. Law Library, Kansas Revisor, Maine Legislature, Maryland General Assembly, Minnesota Revisor, Missouri Revisor, North Dakota Legislature, South Carolina Statehouse, South Dakota Legislature, Vermont Legislature, Code of Virginia, Washington RCW, West Virginia Code, Official Code of Alabama, Oklahoma Statutes PDF, Louisiana Legislature) and otherwise from dated copies on FindLaw, public.law and the Wayback Machine, each URL and currency date in the data file; session laws: Arizona Laws 2026 ch. 256 (HB 2780), Illinois Public Act 104-0553 (HB 4537 enrolled) and New Jersey P.L.2024, c.39 (A3772 chaptered) via LegiScan, Colorado HB 24-1056 status via LegiScan, Louisiana Act 409 of 2024 (SB 119) and digest; Tyler v. Hennepin County, 598 U.S. 631 (2023), preliminary print, supremecourt.gov; 26 U.S.C. §7425 (Cornell LII); Fortress Credit Realty Income Trust Form 10-Q for June 30, 2026 (accession 0001193125-26-347204) and Form 10-K for 2025 (accession 0001193125-26-122217), SEC EDGAR. The classification of each jurisdiction, counts, shares, averages and the $2,000 examples are our arithmetic. This is analysis of public documents and the law, not tax, legal or investment advice.