Retainage calculator
Retainage withheld, payment due on this application, and balance to finish — with optional step-down retainage once the job passes 50% complete.
Retainage withheld
$27,500
Payment due now
$32,500
Balance to finish
$200,000
$300,000 of work completed to date, earning $272,500 net of retainage. Reference calculation only — confirm the retainage rate and step-down rule against your actual contract terms and state prompt-payment statute.
The formula
A worked example
A $500,000 contract is 60% complete, with a 10% retainage rate stepping down to 5% past the halfway point, and $240,000 already paid in prior applications. Work completed to date is $300,000. Retainage withheld is $27,500 (10% on the first $250,000 of work, 5% on the next $50,000), leaving $272,500 earned net of retainage — against $240,000 already paid, this application is due for $32,500.
Reducing (step-down) retainage
Risk to the paying party generally drops as a project nears completion, so many contracts and state statutes lower the withholding rate once the job passes the halfway mark.
The first 50% of work completed is retained at the full rate; only the portion of work completed past 50% is retained at the reduced rate — not the whole job retroactively.
The 50% threshold and the reduced rate itself vary by state and by negotiated contract terms — this models the common pattern, not a universal rule.
When retainage gets released
Most commonly at substantial completion, final completion, or after a defined punch-list and warranty period — the exact trigger is set by the contract, and some agreements release retainage in stages rather than all at once (for example, half at substantial completion and the remainder once final punch-list items are resolved). Public projects in particular often follow statutory release timelines that differ from private contract terms.
Frequently asked questions
A percentage of each progress payment — commonly 5-10% — that the owner or general contractor withholds from a contractor or subcontractor until the work reaches an agreed milestone, typically substantial completion or final acceptance. It exists to give the paying party leverage to ensure the work actually gets finished and any punch-list items get corrected.
Retainage applies to the value of work completed to date, not the whole contract at once: retainage withheld = (contract value × % complete) × retainage rate. The amount actually due on a given payment application is that earned value, minus retainage, minus whatever was already paid out in prior applications.
A common contract or statutory provision that lowers the retainage rate — often from 10% to 5% — once the project passes 50% complete, on the theory that risk to the paying party drops as the job nears completion. Some state prompt-payment statutes require this step-down; others leave it to the contract.
Typically at substantial completion, final completion, or after a defined warranty/punch-list period, depending on the contract. Some contracts release retainage in stages — a portion at substantial completion, the remainder after final punch-list items are resolved.
No. State prompt-payment statutes vary meaningfully — some cap the maximum retainage rate, some mandate step-down provisions, and some set specific deadlines for releasing retainage after completion. Public projects often follow different rules than private ones. Check your state's statute and the specific contract language rather than assuming a standard rate applies.
Usually, yes — most contracts apply the same retainage rate to change-order work as to the base contract, though some negotiated agreements exclude certain change orders from retainage. This calculator folds change orders into the adjusted contract sum before applying the rate; check your specific contract if change orders are meant to be treated differently.
Retainage and holdback are generally the same concept under different names — money withheld from progress payments. A performance bond is a separate instrument entirely: a third-party guarantee (from a surety) that the contractor will complete the work, rather than money withheld from the contractor's own payments.
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