Does a Texas landlord owe interest on the security deposit?

It depends on the state and the locality. Some Texas 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 Texas 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. $100 plus 3x wrongfully withheld amount plus attorney fees under Tex. Prop. Code 92.109. Missing the deadline without written explanation creates a bad-faith presumption. If your state requires interest, document it in the lease and the move-out itemized statement.

Source: Tex. Prop. Code 92.103