Does a Washington landlord owe interest on the security deposit?

It depends on the state and the locality. Some Washington 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 Washington 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 wrongfully withheld amount plus attorney fees under RCW 59.18.280(2). If your state requires interest, document it in the lease and the move-out itemized statement.

Source: RCW 59.18.280