A Payment on a Minnesota Judgment Does Not Reduce the Judgment. Not Until Two Other Things Are Paid First.

A client with a $250,000 judgment gets a $25,000 payment and asks the obvious question: are we down to $225,000?

No. Under Minn. Stat. § 549.09, subd. 3, that payment goes first to taxable disbursements incurred after entry of judgment (if the creditor has filed the affidavit subdivision 4 calls for), then to accrued interest, and only what’s left touches principal. At ten percent, a $250,000 judgment throws off $25,000 a year in interest. A judgment debtor paying $25,000 a year on that judgment will owe $250,000 forever. That’s not a trick. It’s the order the statute sets, and it’s one paragraph long.

Section 549.09 usually gets read as a rate provision. That’s how we read it in the settlement-offer machinery of subdivision 1(b) and the four-percent-versus-ten-percent spread at the $50,000 hinge. This piece is the arithmetic underneath: how many interest periods there are, who computes each one, what the rate is pegged to and when it moves, and how a payment gets applied when the money finally shows up.

How many periods of interest does one judgment carry?

Three. Each one runs under its own provision, and each one has its own official doing the math. Most discussions collapse them into two.

The middle one is the period practitioners forget. Here’s subdivision 1(a):

When a judgment or award is for the recovery of money, including a judgment for the recovery of taxes, interest from the time of the verdict, award, or report until judgment is finally entered shall be computed by the court administrator or arbitrator as provided in paragraph (c) and added to the judgment or award.

Look at what that sentence does.

There are no conditions. Subdivision 1(b) is loaded with them: offers, counteroffers, the thirty-day window, five excluded categories. Subdivision 1(a) has none. A party that loses the subdivision 1(b) comparison outright still gets subdivision 1(a) interest.

It runs while nobody’s in control. Post-trial motions, a slow order on costs, a fight over the form of judgment. Every week of that accrues at the paragraph (c) rate. A four-month post-trial schedule at ten percent is more than three percent of the verdict.

It gets added to the judgment, and that matters for the third period. Subdivision 1(a) interest is folded into the amount entered. Subdivision 2 then accrues on “the unpaid balance of the judgment or award”, and that balance already contains it. Subdivision 1(b)(5) does bar interest-on-interest as a base for preverdict interest: it excludes “that portion of any verdict, award, or report which is founded upon interest, or costs, disbursements, attorney fees, or other similar items added by the court or arbitrator.” Nothing in the section says the same thing about post-judgment interest.

What is the rate actually pegged to, and where do I find this year’s number?

Paragraph (c) sets up two tracks. The one that floats gets described twice, and the two descriptions don’t name the same Treasury series.

First paragraph of (c)(1)(i), closing sentence:

The rate of interest shall be based on the secondary market yield of one year United States Treasury bills, calculated on a bank discount basis as provided in this section.

Second paragraph, same item:

On or before the 20th day of December of each year the state court administrator shall determine the rate from the one-year constant maturity treasury yield for the most recent calendar month, reported on a monthly basis in the latest statistical release of the board of governors of the Federal Reserve System. This yield, rounded to the nearest one percent, or four percent, whichever is greater, shall be the annual interest rate during the succeeding calendar year.

A one-year bill’s secondary market discount yield and the one-year constant maturity Treasury yield are two different published series. The sentence that actually tells the State Court Administrator what to do is the one in the second paragraph, and it names the constant maturity yield. Don’t rebuild the rate from the general peg in the first paragraph. Better yet, don’t rebuild it at all. The statute hands publication to a specific office and tells it who gets the numbers:

The state court administrator shall communicate the interest rates to the court administrators and sheriffs for use in computing the interest on verdicts and shall make the interest rates available to arbitrators.

The State Court Administrator’s Office publishes them. Its Interest Rates page at mncourts.gov/state-court-administrators-office/interest-rates carries the rates under the heading “Interest Rates on State Court Judgments and Arbitration Awards,” in consolidated PDFs grouped by span of years, not as a single notice for the current year. At the time of writing there’s one covering 2016 through 2026, then 2009–2015, 1990–2008, and pre-1980 through 1991. The same page has a frequently-asked-questions document on interest under § 549.09. Use that published figure.

You won’t find a rate for any year in this article, and that’s on purpose. A number printed here would be right for one year and quietly wrong after that, which is exactly the problem the publication scheme exists to solve.

The other track isn’t published because it doesn’t move. Paragraph (c)(2): “For a judgment or award over $50,000, other than a judgment or award for or against the state or a political subdivision of the state or a judgment or award in a family court action, the interest rate shall be ten percent per year until paid.” Nobody sets it in December. It’s in the statute.

One drafting quirk is worth carrying into any fight over a computation. Paragraph (c)(1)(i) says of the floating track: “the interest shall be computed as simple interest per annum.” Paragraph (c)(2) says only “ten percent per year until paid”. The words “simple interest” aren’t in it. We don’t read that gap as a license to compound, and subdivisions 2 and 3 supply the practical answer by accruing on a balance and applying payments to accrued interest first. But if someone hands you a compounded computation, the difference in the text is where the argument starts, and it’s resolved by authority not cited here.

Does the low rate ever apply to a case that has nothing to do with the state?

Yes, and this is the least-quoted paragraph in the section. It’s the third and last paragraph of (c)(1)(i):

This item applies to any section that references section 549.09 by citation for the purposes of computing an interest rate on any amount owed to or by the state or a political subdivision of the state, regardless of the amount.

All over the Minnesota Statutes, § 549.09 gets cross-referenced as shorthand for “the judgment rate.” This paragraph says that wherever another section borrows § 549.09 by citation and the money runs to or from the state or a political subdivision, the floating item governs, regardless of amount. A statute somewhere else in the code that says “interest at the rate provided in section 549.09” doesn’t get you ten percent against a county.

Subdivision 1(e) supplies both definitions, and both are broad: “state” includes “a department, board, agency, commission, court, or other entity in the executive, legislative, or judicial branch of the state,” and “political subdivision” includes “a town, statutory or home rule charter city, county, school district, or any other political subdivision of the state.” If your defendant is a municipality, the rate question is settled before anyone counts the verdict. That point belongs right next to the notice and immunity analysis in suing a Minnesota city.

Three categories sit outside the ordinary rate entirely. Paragraph (c)(4): “Beginning August 1, 2022, interest shall not accrue on past, current, or future child support judgments”. That’s no accrual at all, and it reaches judgments from before the change. Paragraph (c)(1)(ii) lets a court in a family court action “order a lower interest rate or no interest rate if the parties agree or if the court makes findings explaining why application of a lower interest rate or no interest rate is necessary to avoid causing an unfair hardship to the debtor,” except as to “child support or spousal maintenance judgments subject to section 548.091.” And paragraph (d): “This section does not apply to arbitrations between employers and employees under chapter 179 or 179A. An arbitrator is neither required to nor prohibited from awarding interest under chapter 179 or under section 179A.16 for essential employees.”

Is the post-judgment rate fixed on the day the judgment is entered?

It depends on the track, and it’s the calendar-year language in subdivision 2 that decides it. Read it slowly.

During each calendar year, interest shall accrue on the unpaid balance of the judgment or award from the time that it is entered or made until it is paid, at the annual rate provided in subdivision 1.

On the ten-percent track this changes nothing. (c)(2) says ten percent “until paid,” and there’s no annual determination to import.

On the floating track (under $50,000, or any judgment for or against a public body) that sentence does real work. (c)(1)(i) says the floating rate “shall be the annual interest rate during the succeeding calendar year,” it gets redetermined every December 20, and subdivision 2 accrues “[d]uring each calendar year” at that rate. A floating-track judgment that’s gone unpaid for six years isn’t carrying one rate. It’s carrying a string of annual rates, and a computation that runs the entry-year rate across the whole stretch isn’t what the text describes. A multi-year judgment-interest calculation should show the rate used for each year separately. If it shows one number, ask which year it came from.

Subdivision 2 also splits up the mechanical work, which is unusual:

The court administrator shall compute and add the accrued interest to the total amount to be collected when the execution is issued and compute the amount of daily interest accruing during the calendar year. The person authorized by statute to make the levy shall compute and add interest from the date that the writ of execution was issued to the date of service of the writ of execution and shall direct the daily interest to be computed and added from the date of service until any money is collected as a result of the levy.

The court administrator carries the number to the date of issuance and produces a daily rate. The levying officer carries it from issuance to service. Daily interest runs from service until collection. That’s three sets of hands on one figure. The interest number on a writ is a snapshot with a per-diem attached, and the per-diem is where the mistakes live. Check it. The collection tools this feeds are covered in Minnesota’s garnishment exemptions.

How is a payment applied?

In a fixed order, and only after a filing.

Subdivision 3:

If an affidavit is filed pursuant to subdivision 4, a judgment creditor, or the judgment creditor’s attorney or agent, is entitled to deduct from any payment made upon a judgment, whether the payment is made voluntarily by or on behalf of the judgment debtor, or is collected by legal process, all disbursements that are made taxable by statute or by rule of court, that have been paid or incurred by the judgment creditor or the judgment creditor’s attorney, after the entry of judgment. Any remaining portion of the payment must be applied to the interest that has accrued upon the unpaid principal balance of the judgment before any remaining part is applied to reduce the unpaid principal balance of the judgment.

One part of that is conditional. One part isn’t.

The disbursement deduction is conditional. It exists only “[i]f an affidavit is filed pursuant to subdivision 4”, and that’s an affidavit “specifying the nature and amount of taxable disbursements paid or incurred by the judgment creditor, or the judgment creditor’s attorney, after the entry of judgment.” Subdivision 4 adds that “[a]n execution issued by the court administrator must include increased disbursements as are included in the affidavit filed with the court administrator.” No affidavit, no deduction. Post-judgment service fees and recording costs come out of the creditor’s pocket.

Interest-before-principal isn’t conditional. The second sentence is mandatory and stands on its own.

That’s where the arithmetic at the top of this article comes from. On a $250,000 judgment at ten percent, one year accrues $25,000. A $25,000 payment wipes out exactly that and leaves principal at $250,000. A $40,000 payment wipes out the $25,000 plus $15,000 of principal, and next year’s accrual drops to $23,500. A $10,000 payment covers part of the interest and no principal at all. A debtor paying below the annual accrual isn’t paying the judgment down. He’s renting it. Figure the accrual before you agree to any payment plan, and treat it as the floor. Below it, the plan doesn’t amortize.

And there’s a filing you need before you can execute at all. Where a creditor has received a post-judgment payment, paragraph (c)(3) requires that “before applying to the court administrator for an execution” the creditor “shall file with the court administrator an affidavit of partial satisfaction,” stating:

the dates and amounts of payments made upon the judgment after the most recent affidavit of partial satisfaction filed, if any; the part of each payment that is applied to taxable disbursements and to accrued interest and to the unpaid principal balance of the judgment; and the accrued, but the unpaid interest owing, if any, after application of each payment.

That’s a running ledger, not a one-time form. It has to be rebuilt payment by payment, each one split three ways, with unpaid accrued interest carried forward. A creditor who takes partial payments for three years without keeping that allocation can’t produce the affidavit, and without the affidavit can’t apply for an execution.

What the statute doesn’t tell you

Which number gets measured against $50,000. Paragraph (c) sorts on “a judgment or award of $50,000 or less” and “a judgment or award over $50,000.” A verdict gets reduced for comparative fault, reduced again for collateral sources, then increased by subdivision 1(a) and 1(b) interest and by costs and disbursements before judgment is entered. The section doesn’t say which of those figures does the sorting, and a case can plausibly land on either side of the line depending on the answer. So the order in which Minnesota reduces a verdict carries a rate consequence nobody prices in. Which figure controls is governed by authority not cited here. So is whether “until paid” in (c)(2) survives assignment, renewal, or appeal. The paragraph addresses none of them.

What to do

1. Compute the three periods separately: subdivision 1(b), subdivision 1(a), and subdivision 2. Never let one “prejudgment interest” figure stand in for the first two. Subdivision 1(a) has no conditions, and it’s the one most often left out.
2. Pull the published rate from the State Court Administrator’s Office for each calendar year at issue on a floating-track judgment. Don’t carry the entry-year rate forward, and don’t derive a rate from the Treasury series named in the first paragraph of (c)(1)(i).
3. Check whether any party is the state or a political subdivision, including where another statute borrows § 549.09 by citation.
4. Open a three-column payment ledger the day judgment is entered: taxable disbursements, accrued interest, unpaid principal. Paragraph (c)(3) demands exactly this before you can get an execution.
5. File the subdivision 4 affidavit of taxable disbursements. The right to deduct them from a payment exists only if it’s filed.
6. Tell a client the annual accrual before agreeing to a monthly payment number. A plan below the accrual doesn’t amortize.
7. Check the per-diem on any writ of execution. Three officials have a hand in that figure under subdivision 2.

Where the money goes missing

The parts of § 549.09 people write about are the parts that reward strategy: the offer comparison, the rate cliff, the political-subdivision carve-out. They deserve the attention. But all of that gets decided before judgment is entered. After that, the statute stops being strategic and turns clerical, and the clerical half is where money goes missing.

Subdivisions 3 and 4 are the only place in Minnesota law that tells a judgment creditor how a dollar received gets applied, and the order runs backward from what you’d guess: costs first, interest second, the debt itself last, and costs only if a form got filed. A creditor who doesn’t know that order will report a shrinking balance to a client whose balance isn’t shrinking. A debtor who doesn’t know it will pay for years thinking he’s getting somewhere. Neither one is wrong about the merits. Both are wrong about arithmetic the statute settled and nobody read.

Madgett Law, LLC litigates civil claims in Minnesota state and federal court and handles post-judgment collection, including interest computation under Minn. Stat. § 549.09, affidavits of partial satisfaction, executions, and garnishment. If you’re holding a Minnesota judgment that isn’t being paid, or you’re making payments on one, send us a message or call 612-470-6529.

Sources: Minn. Stat. § 549.09 (2025), “Interest on verdicts, awards, and judgments” — subd. 1(a) (interest from the time of the verdict, award, or report until judgment is finally entered, computed by the court administrator or arbitrator as provided in paragraph (c) and added to the judgment or award); subd. 1(b) (preverdict, preaward, or prereport interest; calculation by the judge or arbitrator; exclusion (5) for “that portion of any verdict, award, or report which is founded upon interest, or costs, disbursements, attorney fees, or other similar items added by the court or arbitrator”); subd. 1(c)(1)(i) (floating track; “the interest shall be computed as simple interest per annum”; the “secondary market yield of one year United States Treasury bills, calculated on a bank discount basis” sentence; the December 20 determination “from the one-year constant maturity treasury yield for the most recent calendar month, reported on a monthly basis in the latest statistical release of the board of governors of the Federal Reserve System,” “rounded to the nearest one percent, or four percent, whichever is greater,” effective “during the succeeding calendar year”; the communication paragraph directing the state court administrator to communicate the rates to court administrators and sheriffs and make them available to arbitrators; and the paragraph providing that the item “applies to any section that references section 549.09 by citation for the purposes of computing an interest rate on any amount owed to or by the state or a political subdivision of the state, regardless of the amount”); subd. 1(c)(1)(ii) (family court discretion to order a lower or no interest rate; inapplicability to child support or spousal maintenance judgments subject to section 548.091); subd. 1(c)(2) (ten percent per year until paid for a judgment or award over $50,000, other than for or against the state or a political subdivision or in a family court action); subd. 1(c)(3) (affidavit of partial satisfaction required before applying to the court administrator for an execution, and its required contents); subd. 1(c)(4) (“Beginning August 1, 2022, interest shall not accrue on past, current, or future child support judgments.”); subd. 1(d) (inapplicability to arbitrations between employers and employees under chapter 179 or 179A, and the second sentence preserving an arbitrator’s latitude to award interest under chapter 179 or section 179A.16); subd. 1(e)(1)–(2) (definitions of “state” and “political subdivision”); subd. 2 (accrual “During each calendar year … on the unpaid balance of the judgment or award … at the annual rate provided in subdivision 1,” and the division of computing responsibility between the court administrator and the levying officer); subd. 3 (order of application of payments — taxable disbursements if a subdivision 4 affidavit is filed, then accrued interest, then unpaid principal); subd. 4 (affidavit specifying the nature and amount of post-judgment taxable disbursements; execution must include increased disbursements included in the affidavit). Minn. Stat. § 548.091 (2025) (heading, “Support, maintenance, or county reimbursement judgments”; cited only because § 549.09, subd. 1(c)(1)(ii) references it). All statutory text from the Minnesota Office of the Revisor of Statutes, 2025 Minnesota Statutes. Currency check: the § 549.09 page was retrieved as raw HTML and displayed no pending-2026-amendment banner; the Revisor’s history line for the section ends at Laws 2021, ch. 30, art. 10, § 78. The Minnesota State Court Administrator’s Office “Interest Rates” page (mncourts.gov/state-court-administrators-office/interest-rates) was retrieved and its contents confirmed: the page is titled “Interest Rates — State Court Administrator’s Office,” carries the heading “Interest Rates on State Court Judgments and Arbitration Awards,” and links rate schedules as consolidated PDFs by span of years (“2016 - 2026,” “2009 - 2015,” “1990 - 2008,” “Pre-1980 - 1991”) together with a frequently-asked-questions document on interest under Minn. Stat. § 549.09. No rate figure for any calendar year is reproduced in this article, by design, so that nothing here goes stale against the published schedule. This article cites no case law. Three propositions are expressly left to authority not cited here: whether “ten percent per year until paid” in paragraph (c)(2) is simple interest as a matter of construction, which figure is measured against the $50,000 threshold, and the effect of post-entry events on the (c)(2) rate. Illustrative dollar figures are hypothetical and are not drawn from any matter. This article is general legal information about Minnesota law, not legal advice, and reading it does not create an attorney–client relationship. Do not use this article to compute interest in your own matter. No outcome is promised or implied.