Do all states cap construction retainage at the same percentage?

No. Percentage limits, release rules, thresholds, exceptions, and remedies vary by jurisdiction and project type. Private, state and local public, direct federal, and federally assisted projects may follow different rules.

Is contractual retainage always the same as a statutory reserve?

No. For example, Texas private-work law requires an owner to reserve funds for qualifying lien claimants. That statutory reserve is related to, but not necessarily identical to, retainage negotiated in a contract or displayed on a pay application.

Can PayAppPro determine the lawful retainage rate?

No. PayAppPro can calculate and track a rate selected for billing, but cannot decide which law applies, whether an exception applies, or whether funds may legally be withheld or must be released.

Is this retainage-law guide legal advice?

No. It is editorial research based on public sources, has not been reviewed by a lawyer, and is not a substitute for advice from qualified construction counsel.

Retainage lawsPublic informationNot legal advice

Construction Retainage Laws by State

Retainage rules can change with the state, project owner, contract date, project value, funding source, contracting tier, completion status, and dispute. This hub summarizes selected public sources for California, Texas, Florida, Michigan, New York, and direct federal construction.

Research status: Last researched September 1, 2026. Prepared by the PayAppPro editorial team from the official sources linked on this hub and each state guide. None of these pages has been reviewed or approved by a lawyer. Review schedule: quarterly and after relevant legislative changes.

Important legal-information disclaimer

This site provides general educational information based on public sources. It does not provide legal advice, create an attorney-client relationship, or replace review by a qualified lawyer. PayAppPro is a billing-software provider, not a law firm.

We have not reviewed your contract, project ownership, funding, bond, payment chain, notices, completion facts, disputes, or deadlines. The cited statutes contain definitions, conditions, exceptions, cross-references, effective dates, and remedies that cannot be reduced safely to a short table.

Never use this site to calculate a lien, bond, notice, payment, or lawsuit deadline. Verify current official law and obtain project-specific advice from qualified construction counsel.

Choose a state guide

California

New 2026 private-work 5% rule, public-works 5% rule, exceptions, and release timing.

California guide

Texas

Private owner reserve, lien-claim notices, value-based public caps, and federal distinctions.

Texas guide

Florida

State and local public 5% rules, thresholds, closeout, and private prompt-payment law.

Florida guide

Michigan

Covered public-agency limits, the 50% completion turning point, agency exclusions, and private-work cautions.

Michigan guide

New York

Covered private and public 5% rules, scope exclusions, bond exceptions, and release mechanics.

New York guide

Comparison snapshot

Jurisdiction/project	Public-information snapshot	Major caution
California private	For many contracts entered on or after Jan. 1, 2026, generally 5% per payment and contract price.	Low-rise residential and bonding exceptions; earlier contracts need separate analysis.
California public	Generally 5%.	Substantially complex project and bonding exceptions; separate dispute rules.
Texas private	Owner generally reserves 10% for qualifying lien claimants during work and 30 days after completion.	Statutory reserve is not necessarily the same as contractual retainage; notice and lien rules are critical.
Texas public	Generally 10% below $5 million; 5% at $5 million or more.	Dam projects and specified governmental entities have special provisions.
Florida state/local public	Generally 5% on covered contracts.	$200,000 threshold, federal funding, transportation, disputes, and closeout rules.
Florida private	Contractual retainage is permitted under the cited prompt-payment statute.	Do not assume the public 5% cap; milestones, punch lists, payment-chain conditions, and interest rules matter.
Michigan covered public agencies	Up to 10% until work is 50% in place; generally no additional retainage after 50% absent unsatisfactory progress or another specific performance cause.	The statute expressly excludes several public entities; private projects require separate analysis.
New York covered private	Generally no more than 5%, with owner release generally within 30 days after final approval.	Article 35-E has a $150,000 threshold and significant residential and public-work exclusions.
New York state/local public	Generally no more than 5% on covered projects.	No-bond provisions can permit higher withholding; state and local statutes are separate.
Direct federal fixed-price construction	Full payment when satisfactory progress is achieved; up to 10% may be retained when it is not.	Actual contract and agency supplements control.

Snapshot only. It intentionally does not state that every contract in a category is governed by the summarized rule.

Classify the project before applying a percentage

Identify the owner: private party, state agency, local government, special district, or United States.
Identify funding: state/local money, direct federal procurement, or a federal grant flowing through another entity.
Identify the contract and tier: owner-prime, prime-subcontractor, or lower tier.
Confirm contract date and value: statutes may use effective dates and dollar thresholds.
Check special categories: residential, transportation, dams, bonds, and specially designated public projects.
Separate percentage from release: the maximum rate, permissible disputed withholding, completion definition, and release deadline are different questions.

A clean G702/G703-style calculation does not prove that the chosen rate is lawful. Billing software applies the input and documents the history; legal analysis determines what the contract and law permit.

Federal construction is not simply another state category

FAR 52.232-5(e) governs retainage when that clause is incorporated into a direct federal fixed-price construction contract. It calls for full payment when satisfactory progress is achieved and allows up to 10% when satisfactory progress has not been made. FAR 32.103 says retainage should be case-specific and not a substitute for good contract management.

A federally assisted state or local project is different from a direct federal contract. Grant and program rules can modify the payment clauses, so the funding documents and prime contract must be checked.

Primary-source library

California

Texas

Florida

Michigan

New York

Federal

All sources were reviewed September 1, 2026. Links point to government publications. A cited provision may not apply to your facts.

Frequently asked questions

Do all states use the same retainage cap?

No. Even within one state, private, public, and federally funded projects can differ.

Is a statutory reserve the same as contractual retainage?

Not always. Texas is an important example: its private-work owner reserve protects qualifying lien claimants and should not be treated as identical to every contractual billing holdback.

Can PayAppPro select the correct legal rate?

No. PayAppPro performs billing calculations using project inputs; it does not practice law or determine legal entitlement.

Have lawyers reviewed these pages?

No. They are editorial summaries of linked public information. Users should obtain legal review for their projects.

Billing resources

What Is Retainage? · Calculate Retainage on G702/G703 · AIA-style billing software