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Retainage

Retainage is a portion of each payment that the county holds back until the project is finished, to make sure the work is completed properly. It is released at the end.

On public construction contracts, counties typically withhold a percentage of each progress payment. State law sets the maximum and when it must be released.

Iowa example: starting July 1, 2025, Iowa law (Code chapter 573) limits retainage on public improvement contracts to 3% of each monthly payment, down from 5%.

Plan your cash flow

Retainage is money you've earned but won't receive until completion and acceptance, sometimes months later. Build it into your financing, and pass the same terms down to subcontractors only as your contract allows.

Sources

Last reviewed Oct 30, 2026. This is general information, not legal advice. Laws and thresholds change; check the current statute and the bid documents.