Cash Flow

Your State Decides How Much of Your Money They Can Hold: A 50-State Retainage Survey

Charles Inokon

June 16, 2026

9 Min Read

Cash Flow

By Charles Inokon, Co-Founder & CEO, Breva® · Subcontractor Financial Readiness

The short version: Retainage rules are set state by state, and they are not close to uniform. On public projects most states cap retainage at 5%, though several still allow 10% — at least until the job is half done. On private projects, more than 30 states now regulate retainage, but many still leave the percentage entirely to your contract. A subcontractor running the same job in Georgia, Florida, and New York is operating under three different cash-flow regimes. Knowing which one applies to your project is the difference between planning your working capital and guessing at it.

Retainage is the slice of every progress payment your customer holds back until the job is closed out. It is also, for most subcontractors, the single largest pool of earned-but-unpaid cash on the books at any given time. A 5% versus 10% withholding rate doesn't sound dramatic until you run it against a year of revenue: on $4M in annual volume, the gap between the two is $200,000 sitting in someone else's account.

What trips up most subs isn't the concept. It's that the rules change the moment you cross a state line — and they've been changing fast. California capped private-project retainage at 5% starting January 2026. New York closed a loophole in December 2025 that let owners contract around its 5% cap. Georgia cut its public-works cap from 10% to 5% back in 2022. If your understanding of your state's rule is more than a couple of years old, it may already be wrong.

This survey lays out, for all 50 states plus D.C., what can be withheld on public and private projects, when it has to come back to you, and where interest or escrow protections apply. Use the map to find your state. Use the table to compare across the states you actually work in.

Find your state

Tap any state to see its retainage rules. States are colored by how favorable the regime is to the party getting paid.

Select a state

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Public projects — cap Tap a state on the map or search above.

Private projects — cap —

Release timing —

Interest / escrow —

Bre's read

The "cap" is only half the story. A 5% cap measured against the total contract sum (New York's approach) behaves very differently from 5% withheld on each progress payment with no aggregate limit. Under a contract-sum cap, a 10% hold early in the job is legal as long as withholding drops to zero by the time you're halfway done. Always check whether your state measures the cap per-payment or per-contract — it changes how much cash is actually tied up at any moment.

The full 50-state table

Sorted alphabetically. "No statutory cap" means the percentage is whatever your contract says — so the number in your subcontract is the rule. Search filters both the map and the table at once.

State	Public cap	Private cap	Release timing	Interest / escrow

Strategy tip

If you work across multiple states, build your retainage assumptions into your bid template, not your closeout process. A sub bidding a $1.5M private job in a no-cap state should price the cost of carrying 10% retainage for the life of the job — and may want to negotiate a reduced or line-item-release clause up front, while there's still leverage. Once the contract is signed, the percentage is locked.

How to actually use this

Two things every sub should do this week:

1. Audit your three biggest open jobs. Pull the retainage line on each, confirm the percentage being held matches what your state allows, and flag anything above the statutory cap. In states like New York and California, a cap above the statutory limit is unenforceable regardless of what the contract says — meaning you may be owed money back right now.

2. Know your release trigger. "Substantial completion," "final acceptance," and "punch list complete" are not the same date, and your state's statute usually ties the release clock to a specific one. If you don't know which event starts the countdown on your project, you can't tell when a late payment becomes a late payment with interest attached.

See where your pay-app cycle really stands

Retainage is one input into your work-to-cash cycle. The Breva® Pay-App Benchmark shows you how your billing and collection timelines compare against other subcontractors — in minutes, free.

Run the free benchmark

Frequently asked questions

What is the maximum retainage that can be withheld?

It depends on the state and whether the project is public or private. On public projects, most states cap retainage at 5%, though a number still allow up to 10% — often dropping to 5% or zero once the project is 50% complete. On private projects, more than 30 states now impose limits (commonly 5%), but many states leave the percentage entirely to the contract, where 10% remains a common figure. There is no single national number.

Do states cap retainage on private projects too?

A growing number do. States including California (effective 2026), New York, Connecticut, Colorado, Idaho, Massachusetts, Nevada, and others regulate retainage on private work. But many large construction states — Georgia, Florida, and Texas among them — leave private-project retainage to be set by the contract between the parties, with no statutory percentage cap.

When does retainage have to be released?

Most statutes tie release to a defined milestone — substantial completion, final acceptance, or completion of the punch list — and then give the owner a set window (often 30 to 60 days) to pay. Prime contractors are usually required to pass retainage down to subcontractors within a short period (commonly 7 to 10 days) after they receive it. The exact trigger and deadline are state-specific; check your state in the table above.

Does withheld retainage earn interest?

Sometimes. Several states — including Connecticut, Louisiana, Michigan, Ohio, and Tennessee — require retainage on certain public projects to be held in interest-bearing escrow accounts, with the interest going to the contractor. In many other states, interest only applies as a penalty when retainage is released late. A few states, like Tennessee and Louisiana, extend interest-bearing escrow requirements to private projects as well.

Can my contract override my state's retainage cap?

In states with a mandatory, non-waivable cap — New York and California are the clearest examples — no. A contract term requiring more than the statutory maximum is void and unenforceable, and the statutory cap controls. In states without a statutory cap on private projects, the contract is the rule, so the percentage you agree to is the percentage that applies.

Sources

Foundation of the American Subcontractors Association (FASA), Retainage Law in the 50 States — statutory citations and per-state summaries.
Levelset / Procore, state-by-state Retainage Guides & FAQ library.
Construction Coverage, What is Retainage in Construction? 2026 Guide to Laws & Rules (updated May 2026).
State legislative sources and law-firm advisories for recent amendments: California SB 61 (Civil Code §8811); New York S3539 / S5655 (GBL §§756-a, 756-c); Georgia Act 781 (O.C.G.A. §13-10-80); Florida §§255.077–255.078; Illinois HB 1224.

Verify before you rely on this. This survey is provided for general informational purposes only and is not legal or financial advice. Retainage statutes change frequently, vary by project type and contract value, and contain exceptions this summary does not capture. The figures here reflect Breva's research as of June 2026 and should be confirmed against the current statute and qualified legal counsel before you act on any specific project. Breva is a financial operations platform, not a law firm or a lender. Cadence Financial Group, Inc. DBA Breva®.

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Your State Decides How Much of Your Money They Can Hold: A 50-State Retainage Survey