Tennessee Post Judgment Interest Rate: How It Works and How to Calculate It

The Current Rate

Tennessee's post-judgment interest rate is set by T.C.A. § 47-14-121 at two percentage points below the formula rate published by the Commissioner of Financial Institutions. As of July 1, 2026, that rate is 8.75% per annum.

The rate adjusts semi-annually — on January 1 and July 1 — but here's the critical detail: the rate in effect on the exact date your judgment is entered locks in for the life of that judgment. If the AOC rate drops next year, your judgment still accrues at whatever rate was current when the judgment was entered.

How Daily Accrual Works

The formula is simple:

Daily interest = (Unpaid principal × Annual rate) ÷ 365

For a $5,000 judgment at 8.75%:

• Daily accrual: ($5,000 × 0.0875) ÷ 365 = $1.20 per day
• Monthly: roughly $36.50
• Over one year: $437.50

Interest begins accruing on the date of judgment entry and continues until the judgment is paid in full. It runs during the 10-day appeal window, during any enforcement proceedings, and even while a slow-pay installment order is in effect.

Applying Partial Payments

When you receive money through wage garnishment, a bank levy, or voluntary payments, Tennessee civil practice allocates funds in this order:

1. Court costs and execution fees — clerk filing fees, sheriff service charges, any garnishment surcharges
2. Accrued interest — all interest that has built up since the last payment
3. Principal — whatever remains reduces the outstanding judgment balance

This means early payments barely touch your principal. On a $10,000 judgment with $225 in accumulated costs and months of accrued interest, a $1,200 garnishment payment might reduce the principal by only $750 or so.

Contract Rate Exception

If the original debt was based on a written contract that specified its own legally permissible interest rate — say 10% or 12% — the judgment can carry that contract rate instead of the statutory default. The judge notes this at the time of entry. If your judgment order states a specific rate, use that rather than the statutory 8.75%.

Keeping an Accurate Ledger

An accurate interest ledger isn't optional — it's what you'll need if the debtor disputes the balance or if the clerk asks for a payoff figure. Track these columns for every payment event:

• Date of payment
• Amount received
• Allocation to costs
• Allocation to interest (calculate days since last payment × daily rate × remaining principal)
• Allocation to principal
• New principal balance

The Tennessee Judgment Collection guide includes a printable interest tracking ledger and walks through the full accounting process, including how to handle the payoff calculation when the debtor finally satisfies the judgment.

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