What is retainage, and how is it calculated?

Retainage is a percentage of each progress payment that the owner (or a general contractor, when it is withholding from a subcontractor) holds back until the job is finished. It is commonly 5 to 10 percent, but your contract sets the rate.

How it is calculated

Multiply the total work completed to date by the retainage percentage, then subtract the retainage already held on earlier applications to see what is added this month.

For example, on a 10 percent contract with $260,000 of work completed to date, the total retainage held is $26,000.

Where to read more

A full pay application, worked month by month, is in Retainage explained with a real example. State laws and contracts vary on how much can be held and when it must be released, so check yours.