Does a Illinois landlord owe interest on the security deposit?

It depends on the state and the locality. Some Illinois jurisdictions require landlords to pay interest on security deposits at a rate set by statute (typically 0.5 percent to 4 percent annually), with the interest paid annually, at lease renewal, or at move-out. Other Illinois jurisdictions require interest only if the deposit is held longer than a defined period (often one year) or only on multi-unit buildings (5+ units in some statutes). The interest must be tracked in a separate accounting. Failure to pay required interest can compound the deposit-return penalty: the unpaid interest itself is owed, plus any state-specific damages. Up to 2x the deposit amount if the landlord acts in bad faith under 765 ILCS 710. If your state requires interest, document it in the lease and the move-out itemized statement.

Source: 765 ILCS 710