Recent Retainage Reforms in Illinois: First Private Projects, Then Local Government, and Now State Agencies
By James Rohlfing
Construction Law,
October 2025
On June 1, 2025, the Illinois legislature passed House Bill 1224 (HB1224), restricting retainage permitted to be withheld from contractors on construction projects with certain Illinois state agencies. The bill was signed by Governor Pritzker on August 15, 2025 and created Public Act 104-0168, which will become effective June 1, 2027. It will be the third new law in the last six years enacted by the Illinois legislature restricting the withholding of retainage under Illinois construction contracts.
Illinois’ New Retainage Law
By James Rohlfing
Construction Law,
October 2019
Effective August 20, 2019, Illinois law provides that a maximum of 10 percent retainage may be withheld from payments under private construction contracts and, after the contract is one-half complete, retainage must be reduced to 5 percent for the remainder of the contract.
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