What rates of return can an investor expect from tax certificates?

Interest rates vary by the jurisdiction or state where offered. For example, Florida offers a maximum interest rate of 18%, while Alabama offers a fixed rate of 12%. Arizona has an interest ceiling of 16%, while Iowa offers 2% per month on the unpaid balance. Note: It is important to point out that the interest applied to tax certificates is simple interest. Further, in those states where "bid down" auctions are the rule, it is rare to secure tax liens at the maximum rate allowed by statute. This is due to the highly competitive nature of the tax sale process.