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Construction retainage
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Work out what a progress payment actually pays you after retainage — and whether the amount being withheld is even legal in your state. Built for US trade subcontractors.
All 50 states and DC, public and private caps, with the step-down rules. Download the draw summary as a PDF — nothing leaves your browser. Working in Canada? Use the holdback calculator instead.
Retainage caps in the US are set separately for publicly funded and privately funded work, and they are often not the same number.
This progress claim
California caps private retainage at 5% under Pub. Cont. Code §7201 / Civ. Code §8811. Release normally runs about 45 days after completion or acceptance.
The 5% private cap is new. SB 61 applies it to contracts entered into on or after January 1, 2026.
There is no tax line here on purpose. In most states sales tax on a construction contract attaches to materials when you buy them, not to the progress draw you bill — so a retainage calculation has no tax to defer.
Take it to the draw meeting
One page, ready to attach to your progress claim. Generated in your browser — nothing is uploaded and nothing is stored.
This calculator is a planning tool, not legal or tax advice. Retainage law is moving quickly — California, New York, Mississippi, Washington, Ohio, Iowa and Kentucky have all changed inside the last three years, and several caps turn on contract size, project type or the date you signed. Confirm the figures for your project with your attorney before you invoice.
The part nobody explains
Retainage is not a discount
Retainage is the oldest financing trick in construction. A percentage of every payment gets held back until the job is done, which means the subcontractor — the party with the least cash and the most payroll — funds the closeout risk of everybody above them. On a $500,000 contract at 10% you are carrying $50,000 of somebody else’s comfort for the length of the job plus however long the release takes. That is usually more than your net margin, and it is the reason a profitable sub can still run out of money.
Two things make it worse than it needs to be. The first is billing late — every week you delay a pay application is a week further out on money you already spent on labor and material. The second is unapproved change orders, because work you performed but never got approved is not in the value of work in place at all, so it is not even earning its retainage yet.
The cap is not five percent everywhere
Most people in the trades carry around a rule of thumb that retainage is 10%, or that it is 5%, and neither is reliably true. The statutory ceiling depends on the state, on whether the money is public or private, and increasingly on when the contract was signed. New Jersey caps public work at 2%. Iowa cut its cap from 5% to 3% in July 2025. Ohio replaced an 8%-until-halfway regime with a flat 4% at the end of September 2025, so two different rules are live right now depending on your contract date. California only got a private cap for contracts signed from January 2026, and New York only started voiding private clauses above 5% in December 2025.
The states where nothing protects you
Alaska, New Hampshire, South Dakota, Vermont and West Virginia set no statutory ceiling on either public or private retainage. West Virginia has no retainage statute at all. In roughly eighteen more states — Arizona, Texas, Pennsylvania, Michigan, Louisiana, Oklahoma, Wisconsin, Virginia, Delaware, DC and others — public work is capped but private work is left entirely to the contract. This calculator says no statutory cap in those cases rather than showing a number, because a number would be a lie and the honest answer is that your payment clause is the only thing standing between you and whatever the GC feels like withholding.
Texas is the one to be careful with, because the secondary sources get it wrong. Property Code §53.101 requires an owner to reserve 10% as a lien fund for claimants. That is a duty the owner owes to people who might file a lien; it is not a ceiling on what can be withheld from your pay application. Plenty of articles publish it as a 10% private cap. It is not one.
Ask for the step-down
A dozen states reduce or stop retainage at the halfway mark, and it is rarely applied unless somebody asks. Arizona and Pennsylvania both release half the retainage and drop the rate to 5% at 50% complete. Oklahoma steps down to 2.5%. Illinois, Kentucky and Nebraska drop to 5%. Arkansas, Hawaii, North Carolina, North Dakota and Wisconsin simply stop withholding more. Michigan freezes at 10% rather than stepping down. If your job crossed 50% two draws ago and the withholding never changed, that is a phone call worth making.
Caps by state
Public and private ceilings, with the usual release clock. Where the two release windows differ, the public figure is shown first. Several of these have moved recently, so treat the statute cite as the thing to check rather than the number.
| State | Public | Private | Release | Statute |
|---|---|---|---|---|
| Alabama | 5% | 10% | 35 / 60 days | Ala. Code §39-2-12 / §8-29-3 |
| Alaska | No cap | No cap | No statutory deadline | AS §36.90.210 |
| Arizona | 10% | No cap | 60 / — days | A.R.S. §34-221(C) |
| Arkansas | 5% | No cap | 30 / — days | Ark. Code §22-9-604 |
| California | 5% | 5% | 60 / 45 days | Pub. Cont. Code §7201 / Civ. Code §8811 |
| Colorado | 5% | 5% | 60 / — days | C.R.S. §24-91-103 / §38-46-103 |
| Connecticut | 7.5% | 5% | — / 30 days | Conn. Gen. Stat. §49-41b / §42-158k |
| Delaware | 5% | No cap | 60 / — days | 29 Del. C. §6962(d)(5) |
| District of Columbia | 10% | No cap | No statutory deadline | D.C. Code §2-203.01 |
| Florida | 5% | No cap | 28 / — days | Fla. Stat. §255.078 / §218.735 |
| Georgia | 5% | No cap | 30 / — days | O.C.G.A. §13-10-80 |
| Hawaii | 5% | No cap | No statutory deadline | HRS §103-32.1 |
| Idaho | 5% | 5% | 30 / 35 days | Idaho Code §54-1926(3) / §29-115 |
| Illinois | 10% | 10% | No statutory deadline | 815 ILCS 603/20; 30 ILCS 550/1 |
| Indiana | 6% | No cap | 61 / — days | Ind. Code §36-1-12-14 |
| Iowa | 3% | No cap | 30 / — days | Iowa Code ch. 573 |
| Kansas | 5% | 5% | 30 days | K.S.A. §16-1904 / §16-1804 |
| Kentucky | 10% | 10% | 30 days | KRS §371.410 |
| Louisiana | 10% | No cap | 45 / — days | La. R.S. §38:2248 |
| Maine | 5% | No cap | — / 30 days | 5 M.R.S. §1746 |
| Maryland | 5% | 5% | 120 / 90 days | Md. SFP §17-110 / Real Prop. §9-304 |
| Massachusetts | 5% | 5% | 65 / 90 days | M.G.L. c.30 §39K/§39G; c.149 §29F |
| Michigan | 10% | No cap | 30 / — days | MCL 125.1563 |
| Minnesota | 5% | 5% | 60 days | Minn. Stat. §337.10 subd. 4 / §15.72 |
| Mississippi | 5% | 5% | 45 / 60 days | Miss. Code §31-5-33 / §87-9-3 |
| Missouri | 5% | 10% | 30 days | Mo. Rev. Stat. §8.960 / §436.303 |
| Montana | 5% | 5% | 30 / — days | Mont. Code §18-2-316 / §28-2-2110 |
| Nebraska | 10% | 10% | 45 days | Neb. Rev. Stat. §45-1204 |
| Nevada | 5% | 5% | 30 days | NRS 338.515 / 624.609 |
| New Hampshire | No cap | No cap | No statutory deadline | No retainage statute |
| New Jersey | 2% | No cap | 45 / — days | N.J.S.A. 40A:11-16.3 |
| New Mexico | Prohibited | Prohibited | 21 days | N.M. Stat. §57-28-5 |
| New York | 5% | 5% | 30 days | State Fin. §139-f; GBL §756-c, §757 |
| North Carolina | 5% | No cap | 60 / — days | N.C.G.S. §143-134.1 |
| North Dakota | 10% | 10% | No statutory deadline | N.D.C.C. §48-01.2-13 / §43-07-23 |
| Ohio | 4% | No cap | 30 / — days | ORC §153.12 |
| Oklahoma | 5% | No cap | 21 / — days | 61 Okla. Stat. §113.1, §226 |
| Oregon | 5% | 5% | 30 days | ORS 279C.570 / 701.420 |
| Pennsylvania | 10% | No cap | 45 / — days | 62 Pa. C.S. §3921 |
| Rhode Island | 5% | 5% | 90 days | R.I. Gen. Laws §37-12-10.1 |
| South Carolina | 3.5% | No cap | 10 / — days | S.C. Code §11-35-3030(4) |
| South Dakota | No cap | No cap | 30 / — days | S.D.C.L. §5-18B-11, §9-42-12 |
| Tennessee | 5% | 5% | 90 days | Tenn. Code §66-34-103 |
| Texas | 10% | No cap | 30 / — days | Gov’t Code §2252.032 / Prop. Code §53.101 |
| Utah | 5% | 5% | 45 days | Utah Code §13-8-5 |
| Vermont | No cap | No cap | 30 days | 9 V.S.A. §4005 |
| Virginia | 5% | No cap | No statutory deadline | Va. Code §2.2-4333 |
| Washington | 5% | 5% | 60 / — days | RCW 60.28.011 / ch. 60.30 |
| West Virginia | No cap | No cap | No statutory deadline | No retainage statute |
| Wisconsin | 5% | No cap | No statutory deadline | Wis. Stat. §66.0901(9)(b) |
| Wyoming | 5% | No cap | 41 / — days | Wyo. Stat. §16-6-702(b) |
Caps frequently turn on contract size or project type: Georgia and Indiana have dollar thresholds, Massachusetts requires a $3 million contract before the private cap applies, North Carolina prohibits retainage under $100,000, Louisiana and Texas tier down on larger jobs, and several state DOTs are carved out of their own state’s rules. New Mexico prohibits retainage except on state road work. None of this is legal advice; confirm your project with your attorney.
Questions subs actually ask
Retainage, answered
What is retainage in construction?
Retainage is a percentage of every progress payment that the owner or general contractor holds back rather than paying out, released only after the work is complete and accepted. It exists to give the payer leverage over punch list and closeout. Unlike the Canadian statutory holdback, US retainage is not a lien fund held for your benefit — it is your money sitting in somebody else’s account, and in a number of states there is no legal ceiling on how much of it they can keep.
How much retainage can be withheld?
Five percent is the most common statutory cap and the closest thing to a national norm, but it is not universal. New Jersey caps public retainage at 2%, Iowa at 3%, South Carolina at 3.5%, Ohio at 4%. Texas, Pennsylvania, Illinois, Kentucky, Michigan, Louisiana, Nebraska, North Dakota and DC still allow 10% on at least some work. New Mexico prohibits retainage outright. Alaska, New Hampshire, South Dakota, Vermont and West Virginia set no cap at all — West Virginia has no retainage statute whatsoever.
Is retainage different on public and private jobs?
Yes, and this is the single most expensive thing to get wrong. Most states wrote their public retainage rules decades before they touched private work, so the two numbers are frequently different and in about eighteen states private work is not capped at all. Arizona caps public work at 10% but leaves private work entirely to the contract. Missouri runs the other way, 5% public and 10% private. Alabama is 5% public and 10% private. Always check which side of the line your job falls on before you price it.
When does retainage have to be released?
It depends on the state and, again, on whether the job is public or private. Thirty days after completion or acceptance is the most common statutory clock. Maryland runs 120 days on public work, Tennessee and Rhode Island around 90, Massachusetts 65, Alaska just 8 working days from the prime being paid. Several states — North Dakota, Illinois, Hawaii, Virginia, Wisconsin, West Virginia — set no deadline at all, which means the contract is the only thing standing between you and an indefinite wait.
Do I charge sales tax on retainage?
Usually there is nothing to charge. In most states sales or use tax on construction work attaches to materials at the time you purchase them, with the contractor treated as the final consumer, rather than to the progress payment you bill the owner. That is why this calculator has no tax line — unlike the Canadian version, where GST timing on the holdback is worth real money. A handful of states do tax construction services or specific project types, so confirm your own state before you invoice.
Does retainage drop once the job is half done?
In a number of states, yes, and a surprising number of subs never ask for it. Arizona releases half the retainage and drops to 5% at the 50% mark. Pennsylvania does the same. Oklahoma steps down to 2.5%. Illinois and Kentucky drop to 5%. Arkansas, Hawaii, North Carolina, North Dakota and Wisconsin simply stop withholding further retainage once you pass 50%. Michigan freezes at that point rather than stepping down. If your state has a step-down and nobody applies it, that is cash you are entitled to and are not asking for.
What is the difference between retainage and holdback?
They solve different problems. Canadian holdback is set by provincial lien legislation, is the same percentage on every job in the province, and exists as a fund that unpaid subs and suppliers can claim against — the payer is legally required to withhold it and cannot contract out of it. US retainage is a contract term that the states have layered caps on top of, it varies by state and by project type, and it is security for the payer rather than a fund for you. If you work both sides of the border, use the Canadian holdback calculator for Canadian jobs — the math and the language are genuinely different.
Can I download the calculation as a PDF?
Yes, and it is free with no signup. Enter the project name and the pay application number, then use the download button to get a one-page draw summary you can attach to your pay app or take into a progress meeting. It shows the contract inputs, the retainage withheld, the governing state statute and the net payable. The PDF is generated in your browser, so nothing is uploaded and nothing is stored.
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