Illinois prompt payment for contractors: a short guide
Illinois builds payment deadlines, late interest and retainage caps into many private construction contracts. Here is who is in, who is out and the day counts.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on October 29, 2026.
The Illinois Contractor Prompt Payment Act (815 ILCS 603) writes payment deadlines, late interest and retainage limits into many private construction contracts. It names no enforcing agency. It matters to owners, contractors and subcontractors, like the other Illinois laws here. We check jobs with the Pay-App Stopwatch Review. The official text is on the Illinois General Assembly website.
- Excluded: contracts that use public funds, single-family homes, and multi-family buildings with 12 or fewer units.
- The owner has 15 calendar days from approving a payment application to pay.
- Unless a written withholding statement is sent first, an application is deemed approved once 25 days pass from receipt.
- Late payment carries 10% interest a year, and the contractor may suspend work after giving 7 calendar days' written notice.
Who it covers
| Group | Covered? | Note |
|---|---|---|
| Private contracts and subcontracts for work on Illinois real property | Yes | No size threshold. |
| Contracts requiring public funds | No | Excluded. |
| Single-family homes; multi-family buildings with no more than 12 units | No | Excluded. |
The numbers
| Item | Amount or limit | Year |
|---|---|---|
| Owner pays after approval | 15 calendar days, if the contractor performed | 2026 |
| Deemed approval | 25 days after receipt, without a written withholding statement | 2026 |
| Pay-down to subcontractors | Due 15 calendar days from receipt | 2026 |
| Late interest | 10% per year | 2026 |
| Notice before suspending | 7 calendar days, written | 2026 |
| Retainage cap | 10% before 50% complete; 5% from 50% on | 2026 |
Source: 815 ILCS 603/10 and 603/15
Our checklist
The Pay-App Stopwatch Review asks five questions about a covered job.
- Start: what date did the payment application arrive?
- Day 25: did a written statement go out first, giving the amount withheld and the reason?
- Day 15: was payment made, and passed down, within 15 days?
- Retainage: is no more than 10% held before halfway, and 5% after?
- Stop: was 7 calendar days' written notice given before work was suspended?
Mistakes people make
- Missing the day 25 deadline, so the application is deemed approved.
- Treating a message to the architect or lender as approval. Under the Act, it is not approval.
- Withholding everything for a small defect instead of the reasonable value of the faulty part.
Call an attorney about lien claims, suspension, retainage clauses or jobs mixing public and private money.
Common questions
What can a contractor do if the owner pays late?
Interest of 10% a year applies, and work may be suspended without breach after 7 calendar days' written notice. Lien rights come from the Mechanics Lien Act.
Is retainage capped at 10% for the whole job?
No. Before the job is half done, the cap is 10% of each payment. From 50% complete, no more than 5% may be held.
Does the Act cover home remodeling?
Usually not. The Act excludes work on single-family homes and on multi-family buildings with 12 or fewer units. Public-funds contracts are excluded too.
Official sources
- Illinois General Assembly: Contractor Prompt Payment Act, 815 ILCS 603
- Illinois General Assembly: House Bill 1224 status
- Illinois General Assembly: Public Act 104-168
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