By Oussama Chicha, EditorUpdated Checked against primary sources · not yet reviewed by a licensed professionalFact-checked
Quick answer
Mississippi's S.B. 2762 (2024) caps retainage on private contracts entered into on or after July 1, 2024 at 5% at every tier; the owner pays it within 60 days after final completion once certificates of occupancy issue. Public retainage under Miss. Code § 31-5-33 is 5%; on contracts of $250,000 or more and on subcontracts, half is returned at 50% completion if on schedule and satisfactory, then 2.5% applies.
Private work
Mississippi · Private workVerified 2026-09-22
Retainage cap
5%
Mississippi enacted a private-project retainage cap in 2024. No more than 5% of the estimated amount of work properly done (plus the value of materials stored on site or suitably stored and insured off-site) may be retained, at every tier: owner from contractor, contractor from subcontractor, subcontractor from sub-subcontractor or supplier. The 5% applies to all items of work required to achieve final completion. The section does not apply to residential homebuilding, improvements intended for residential purposes of 16 or fewer units, contracts of $10,000 or less, or contracts awarded by the State or any political subdivision. The rights created cannot be waived by oral or written agreement.
Deadline
60 days
The owner must release and pay retainage to the contractor no later than 60 days after the final completion of the contractor's work, provided all necessary certificates of occupancy have been issued. 'Final completion' is defined as the stage at which all work is complete in accordance with the contract, including punch list items, contractual close-out documents, equipment manuals, warranty documents and other like required deliverables. Contractors and subcontractors release down the chain per Miss. Code § 87-7-5.
However, there may not be retained more than five percent (5%) of the estimated amount of work properly done and the value of materials stored on the site or suitably stored and insured off-site. If an owner withholds an amount greater than that allowed by this paragraph (a), the owner shall be liable to the contractor for interest accruing on the excess amount withheld at the rate of one percent (1%) per month.
2024 Miss. Laws ch. 387, § 1 (S.B. 2762), new free-standing section; the bill does not assign a Mississippi Code section number. · Official text · retrieved 2026-09-22
Public work
Mississippi · Public workVerified 2026-09-22
Retainage cap
5%
Retainage on a state or political-subdivision construction contract 'shall be five percent (5%)', and the amount a prime retains from a subcontractor may not exceed the percentage the public body withholds from the prime. On a contract of $250,000 or more (or any subcontract, regardless of amount) 5% is retained until the work is at least 50% complete, on schedule and satisfactory in the architect's and/or engineer's opinion, at which point half of the retainage held to date is returned and future retainage drops to 2.5%. The section does not apply to Mississippi Transportation Commission road and bridge contracts.
…such retainage shall be five percent (5%)… five percent (5%) shall be retained until the work is at least fifty percent (50%) complete, on schedule and satisfactory in the architect's and/or engineer's opinion, at which time fifty percent (50%) of the retainage held to date shall be returned to the prime contractor… Provided, however, that future retainage shall be withheld at the rate of two and one-half percent (2-1/2%).
Miss. Code § 31-5-33, as amended by 2024 Miss. Laws ch. 387, § 3 (S.B. 2762). · Official text · retrieved 2026-09-22
Who this applies to
Private projects. Mississippi added a retainage cap for private projects in 2024, through § 1 of 2024 Mississippi Laws chapter 387 (S.B. 2762) [1]. It governs contracts entered into on or after July 1, 2024 [1], and it binds every tier: what an owner holds from its contractor, a contractor from its subcontractor, and a subcontractor from a sub-subcontractor or supplier [1]. Four exclusions apply:
contracts awarded by the State or any political subdivision [1].
Public projects. State and political-subdivision construction contracts follow Mississippi Code § 31-5-33, which the same 2024 act amended [1]. Road and bridge contracts of the Mississippi Transportation Commission are excluded from that section [1].
What the rule says
A private owner, contractor or subcontractor may hold back no more than 5% of the estimated amount of work properly done, together with the value of materials stored on the site or suitably stored and insured off-site [1]. That 5% covers all items of work required to reach final completion [1], and nobody can sign the protection away: the rights the section creates cannot be waived by oral or written agreement [1]. The public rule, in the wording S.B. 2762 gave it [1], reads differently. Retainage on a state or political-subdivision contract is set at 5% [1], and a prime contractor may not hold back a larger percentage from a subcontractor than the public body holds back from the prime [1]. On a contract of $250,000 or more, and on every subcontract whatever its size, the 5% runs until the work is at least 50% complete, on schedule and satisfactory in the architect's or engineer's opinion [1]. Half of the retainage held to date is then returned, and later retainage is withheld at 2.5% [1].
How to comply
On a private job:
The owner releases and pays retainage to the contractor no later than 60 days after final completion of the contractor's work, provided every necessary certificate of occupancy has been issued [1].
Final completion is a defined stage: all work done as the contract requires, including punch list items, contractual close-out documents, equipment manuals, warranty documents and similar required deliverables [1]. Checking those items against the contract's closeout list shows when the release period begins.
Further down the chain, contractors and subcontractors release retainage under Mississippi Code § 87-7-5 [1]; read that section for the timing of each downstream payment.
Any tier that holds back more than 5% owes interest of 1% per month on the excess, and that right to interest cannot be waived by contract [1].
A contractor, subcontractor or sub-subcontractor may sue the party it has a direct contract with, and whoever wins the judgment recovers reasonable attorneys' fees, court costs and reasonable expenses [1].
On a public job:
Mississippi Code § 31-5-15, which the 2024 act also amended, provides for substituting securities for retainage [1].
This page does not cover the deadline for releasing public retainage or interest on late payment; the contract and a Mississippi construction lawyer can answer those questions.
What changed recently
S.B. 2762 was approved by the Governor on 19 April 2024 as chapter 387 [1] and took effect on July 1, 2024 [2]. Its § 1 created the private-project cap for contracts entered into from that date, and its § 3 amended the public retainage section, § 31-5-33 [1]. The same act amended § 31-5-15 on substituted securities [2].
Related
Retainage calculator, including a step-down setting for a rate that changes partway through a job.
