Tennessee Code Annotated § 47-14-121 sets forth how courts shall compute interest. The year is broken in half and potentially two different rates may apply, one rate from January 1 through June 30, and another possibly from July 1 to December 31. The legislature requires the AOC to publish the rates, so check http://www.tncourts.gov/node/1232344.
How to calculate interest
- Compute the number of days that passed between the anniversary date of order and the date they pay. Do not count the first day of the judgment.
- Divide the number of days by 365 to get the rate amount for formula.
- Multiply by the official Tennessee Judgment Interest Rate.
As of July 1, 2016, the rate was 5.50 percent.
(Note: simple Interest calculations may vary slightly depending on the number of decimal places used in the calculation. Also, interest rates may change, so always refer to the AOC website URL above. Interest is not compounded for purposes of post-judgment interest.)
Example: Judgment for $120 entered on January 1, 2008. Using January 1, 2015 as date interest is computed through, use the following formula: $120 (Judgment amount) x .0525 (5.25% interest) x (2557 (# of days) ÷ 365) = $44.13 interest. $120 (Judgment Amount) + $44.13 (interest) = $164.13 (the total amount owed by defendant as of January 1, 2013).
Work sheet is available upon request.
MTAS has opined that this statute is self-executing and does not need an ordinance to effectuate collection of interest, in the same way that municipal courts are required to collect state litigation tax at the statutory rate of $13.75.