The short version
Each pay application bills the net earned to date, which is the work completed less the retainage held, minus whatever earlier applications already billed. The held retainage is not lost. It comes back as its own bill when the client releases it, and on a $100,000 contract at 5% that is $5,000.00.
Retainage calculator
Nothing you enter leaves this page. Enter the contract value including approved change orders.
How a pay application works out
- Work completed to date = the part of the contract finished so far, in dollars.
- Retainage held to date = work completed x retainage percent.
- Net earned to date = work completed - retainage held.
- This application = net earned to date - net billed on earlier applications.
Working from totals to date, not from each month's work, means a correction in one month fixes itself in the next application.
A $100,000 contract with 5% retainage
The contract is $100,000 and the client holds back 5%. At 40% complete the work to date is $40,000.00. The client holds $2,000.00 and the first application bills $38,000.00. At 70% complete the work to date is $70,000.00, the retainage held is $3,500.00 and the net earned is $66,500.00. Less the $38,000.00 already billed, the second application is $28,500.00. The calculator above is set to this second step.
| Application | Work completed to date | Retainage held to date | Net earned to date | Billed before | This application |
|---|---|---|---|---|---|
| 1 | $40,000.00 | $2,000.00 | $38,000.00 | $0.00 | $38,000.00 |
| 2 | $70,000.00 | $3,500.00 | $66,500.00 | $38,000.00 | $28,500.00 |
| 3 (job complete) | $100,000.00 | $5,000.00 | $95,000.00 | $66,500.00 | $28,500.00 |
After the third application the client holds $5,000.00, which is 5% of the whole $100,000. That money is billed once, when the client releases it. If the contract releases half at substantial completion, you bill $2,500.00 then and the other $2,500.00 at final completion.
What goes on the invoice
- The contract value and the work completed to date.
- The retainage held, as its own line, with the percent.
- What earlier applications billed.
- The amount due on this application.
The progress billing guide goes through the stages of a larger job, and the retainage entry gives the short definition. If your trade bills by stage, the contractor invoicing guide shows how the lines look.
What this calculator does not decide
The contract sets the retainage percent, when it is released and what triggers release. State law can limit or shape those terms, and this page lists no state caps or deadlines. If the client wants to hold more than the contract allows, or will not release it after completion, talk to a construction attorney and read your state's statute.
Common questions
What is retainage?
Retainage is a percentage of each progress payment that the client holds back until the work is finished and accepted. It protects the client if the job is left incomplete or needs fixes. Five and ten percent are common figures, but the contract sets the number.
How do I calculate retainage on a pay application?
Take the work completed to date, multiply it by the retainage percent, and subtract the result to get the net earned to date. Then subtract what earlier applications already billed. At 70% complete on a $100,000 contract with 5% retainage, the work is $70,000.00, the retainage is $3,500.00 and the net earned is $66,500.00.
When do I get the retainage back?
When the contract says it is released, usually after substantial or final completion and any punch list. You bill it as its own amount or on the final invoice. The calculator shows the full amount that will be held at the end, which is the retainage percent times the whole contract.
Is there a legal limit on retainage?
The contract sets the percentage and the release terms, and state law can limit or shape both. This page does not list state rules. Check the statute for your state or ask a construction attorney before you rely on a number.
Is retainage the same as a deposit?
No. A deposit is money paid before the work starts. Retainage is money withheld from payments for work already done. A job can have both.
Should retainage show on the invoice?
Yes. Show the work completed to date, the retainage held as its own line, and the amount billed this time, so the client's accounts team can match each application to the one before.
What this is. A calculator and guide written by InvoiceTools. It is general information, not legal advice. The example job is made up.
Last reviewed by InvoiceTools, Houston, Texas, on 11 November 2026.