Kentucky Post-Judgment Interest Rate

Judgment interest in Kentucky is not something you negotiate — it accrues automatically under KRS 360.040 from the date the judgment is entered. Getting the rate and the math right matters because clerks, employers processing garnishments, and courts all look at the interest itemization on your enforcement paperwork. An incorrect calculation can get a garnishment order rejected.

Which Rate Applies

The rate depends entirely on when the judgment was entered:

• Judgments entered on or after June 29, 2017: the default statutory rate is 6% per annum, compounded annually. House Bill 223 reduced it from 12% effective that date.
• Judgments entered before June 29, 2017: the historical default rate was 12% per annum.

The rate is set at the time of judgment entry and stays fixed for the life of that judgment. A judgment on a contract, promissory note, or other written obligation bears the rate established in that instrument. A judgment for unliquidated damages may bear less than 6% if the court orders a lower rate after a hearing.

How to Calculate It

Interest accrues on the unsatisfied judgment amount and compounds annually under KRS 360.040; court costs are not part of the interest base. After each annual compounding, previously accrued interest is included in the interest-bearing judgment balance:

Annual interest = Interest-bearing judgment balance × 0.06

For daily accrual, divide by 365.

Worked example: A $2,000 judgment entered August 1, 2025, with $35 in court costs. The debtor pays nothing for one full year.

• Awarded principal: $2,000.00
• Awarded court costs: $35.00
• Annual interest ($2,000 × 6%): $120.00
• Total owed at Day 365: $2,155.00

If the debtor makes a partial payment, the statutory priority applies: the payment satisfies court costs first, then accrued interest, then reduces the remaining principal. Future interest is calculated from the remaining judgment balance, excluding court costs.

Why This Gets Judgment Creditors in Trouble

The most common mistake is using the old 12% rate on a judgment entered on or after June 29, 2017. A garnishment affidavit claiming 12% interest on a judgment entered in 2024 will be flagged. The second-most common mistake is compounding interest on court costs, which the statute does not allow.

The forms differ: wage garnishment uses the affidavit in Form AOC-150; non-wage garnishment uses Form AOC-145 with the AOC-150.1 order; execution uses Form AOC-135. State the correct remaining balance, interest, and costs on the applicable filing and verify the calculation before filing.

Tracking Interest Over Time

For judgments that take months or years to collect through partial garnishment payments, keeping an accurate ledger is essential. Each payment changes the principal, which changes the daily interest accrual going forward.

The Kentucky Small Claims Judgment Collection Guide includes a pre-formatted interest and payment ledger that handles the statutory payment priority (costs → interest → principal) and tracks the running balance across partial payments.

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