Tax Lien Yield Calculator
Tax lien certificates pay statutory interest (8% to 36% APR depending on state) until the owner redeems. Calculate true yield after bid-down auctions, subsequent tax payments, and timing.
| Face amount + premium (initial cost) | — |
| Subsequent tax added | — |
| Total cash invested | — |
| Statutory interest earned | — |
| Total payoff at redemption | — |
| Annualized yield (APR) | — |
Tax lien certificates are debt instruments secured by a first-priority lien on real estate. The county sells delinquent tax debt; you pay the tax, collect statutory interest (8-36% APR by state) until the owner redeems. If they don't redeem, you can foreclose and take title. Returns depend on state statute, auction bidding mechanics (rate bid-down vs premium bid-up), and subsequent tax compounding.
Bid-Down vs Premium-Bid Mechanics
Bid-down states (FL, AZ, IL): the statutory rate is the maximum. Investors bid the rate DOWN. Hot Florida auctions routinely close at 0.25-3% APR — far below the 18% statutory ceiling. Plan accordingly. Premium-bid states (NJ, IA): investors bid premiums ABOVE face. Premium is NOT recovered — it dilutes yield. Both auction types push real returns well below statutory headlines.
Subsequent Tax Compounding
Most states let the original lienholder pay subsequent year tax bills at the full statutory rate. This is often the best part of tax lien investing — you get to deploy more capital at the headline statutory rate without competing at auction. If you hold a Florida lien at 18% and the owner doesn't pay next year's tax, you pay it and earn 18% APR on that money too. Sophisticated tax lien investors target jurisdictions with high subsequent-tax accrual specifically.
Last updated May 2026. Sources: National Tax Lien Association.