Which Tax Sale Bidding Methods Do States Use?

How Does Bid-Down Interest Work?

The auction starts at the state’s maximum rate, and bidders offer to accept less. Florida starts at 18% and accepts bids only in whole percents or quarter-percent steps. An unsold certificate goes to the county at the maximum rate (Fla. Stat. § 197.432(6)). Arizona bids down from 16%, Ohio from 18% in 0.25% steps (Ohio Rev. Code 5721.32), South Dakota from 10%, and Alabama lien-auction counties from 12% (Ala. Code §§ 40-10-180 to -202, as amended by HB335 in 2024). Louisiana’s new lien auctions, which began January 1, 2026, bid down from 1% a month to a 0.7% floor (La. R.S. 47:2154).

New Jersey adds a twist. Once bidding reaches 1%, bidders start offering a cash premium from $0 up, and the town holds that premium for up to 5 years (see the NJ Division of Local Government Services guide, Elements of Tax Sales in New Jersey).

Florida softens the race to the bottom. If the owner redeems early, you get at least 5% of the face amount, unless you bid 0% (Fla. Stat. § 197.472(2)). Bidders who go to 0% are betting on getting the property, not on interest.

How Do Premium Bids Work?

The rate is fixed, and bidders pay extra on top of the taxes. Whether that extra comes back matters more than anything else:

• Colorado: the overbid is “credited to the county general fund and is not recovered by the investor” (El Paso County Treasurer). The 2026 rate is 13%, and 2025 sales earned 14%, according to the Larimer County Treasurer.
• Indiana: redemption pays 110% of the minimum bid within 6 months or 115% within a year, plus 5% a year on the overbid (Ind. Code § 6-1.1-25-2).
• Missouri: up to 10% a year on the purchase, with no interest on the overbid (RSMo 140.340).

How Do Ownership and Rotational Methods Work?

In ownership bidding you compete on how small a share of the parcel you will take, and in rotational sales buyers take turns in a set order instead of bidding on the rate.

Bid-down ownership. Iowa fixes interest at 2% a month, so bidders compete by offering to take the smallest undivided percentage of the parcel, down to 1%. Ties are broken at random (Iowa Code §§ 446.7 and 446.16). Rhode Island uses the same idea, down to 1% of the parcel, with the whole parcel sold if no one bids a fraction (R.I. Gen. Laws § 44-9-8).

Rotational or set order. Nebraska counties may use a round-robin order by drawing numbered tickets, and land bank bids take priority (Neb. Rev. Stat. § 77-1807). Kentucky has no rate bidding at all. Registered buyers pick certificates in an order set by Department of Revenue regulation, and no single buyer may take all of them (KRS 134.128).

Highest bid for property. Deed and redeemable-deed states auction the property itself. Texas sets the minimum at the lesser of the adjudged value or the total owed. Unsold property is struck off to the taxing unit (Tex. Tax Code § 34.01). North Carolina adds 10-day upset-bid periods after the auction (N.C.G.S. 1-339.64). Some places use sealed bids instead of outcry, such as Anchorage, Alaska, and Dodge County, Wisconsin.

What Counties Actually Do

The method is set by state law, but counties choose the details, such as deposit size, registration deadlines, tie-breaks and whether bidding is online. Our state pages list each rule with its statute, so start with Florida tax sales, Colorado tax lien sales, Iowa tax sales and New Jersey tax sales.

Two surprises are common. Competitive counties bid rates far below the statutory maximum, so the advertised 16% or 18% is a ceiling, not a forecast. And in premium states the money you bid above the lien may earn little or nothing.