Retainage Calculator

Retainage, also called retention, is the slice of every pay application the owner or general contractor holds back until the job is substantially complete. The typical rate is 5% to 10%, set by the contract and capped by state law. On a $500,000 contract with a 10% retainage rate, $50,000 stays in the owner's pocket until the punch list is closed and final lien waivers are signed.

The reason it exists: pressure. Retainage gives the paying party cash to finish the job if a contractor walks off, refuses warranty work, or leaves defective work behind. The cost: every link in the contract chain runs on tighter cash than the schedule of values suggests. A sub billing $100,000 on a 10% retainage job is actually getting $90,000 in the bank that month.

Rules vary by state. California caps retainage on public works at 5%. Texas allows up to 10% on private commercial work. Florida steps it down once a project crosses 50% completion. Read your contract first, then check the statute.

Counting retainage as “received.” The single most common bookkeeping error. Retainage is income you have the right to bill, but it's not cash in the bank. Track it as a separate receivable line. If you mix it into your regular A/R, you'll think you're flush when you aren't.

Forgetting the partial-release trigger. Many contracts allow retainage to step down from 10% to 5% (or from 5% to 0%) after the project crosses a completion threshold. Subs often miss this. The owner won't volunteer to cut the held amount. You have to ask in writing once you cross the line.

Mismatched billing periods. If your accounting system runs on a fiscal month but your pay applications run on a calendar month, the cumulative-billed and cumulative-paid figures can drift. Reconcile them to the same cutoff date before you trust any retainage report.

Releasing retainage before lien waivers are signed. For GCs releasing retainage to subs: do not cut the check without a signed final unconditional lien waiver. Once retainage is gone, the pressure to collect that waiver goes with it.

Retainage is governed by state law on public projects and policed by state prompt-pay statutes on private work. The cap you can withhold, the timing of release, and who has the right to ask for early release all change at the state line. Don't assume what works in California works in Texas.

The five states below cover most of LienDone's pilot footprint. Each link goes to a detailed page with statutory citations and the actual lien waiver forms you need on that state's projects.

• California

  5% on most public works; private contracts set their own rate.

• Texas

  Up to 10% on private commercial work; 5% on public projects.

• Florida

  10% before 50% completion, 5% after, on most public projects.

• New York

  5% on public works under State Finance Law §139-f.

• Arizona

  Capped at 10% until 50% completion, then capped at 5% on the remainder.

A few patterns hold everywhere. Public projects tend to be more tightly regulated than private. Prompt-pay statutes usually give the paying party 30 to 45 days after substantial completion to release the held funds. Lien rights stay alive until retainage is paid in many states, so don't sign a final unconditional waiver while retainage is still outstanding. If you're working across state lines, treat each project under its own state's rule book.