Contractor License Classes & Monetary Thresholds

Contractor License Classes & Monetary Thresholds

Quick Answer: Virginia assigns contractor licenses to Class A, Class B, or Class C based on the dollar value of a single contract or project or the contractor's total 12-month volume. Current statutory thresholds are in Va. Code § 54.1-1100. Class A has no upper monetary limit once the $150,000 / $1 million triggers are met; Class B and Class C remain capped. License class (money authority) is separate from license classification/specialty (type of work).

In Virginia, contractor licenses are not one-size-fits-all. To align regulatory oversight with financial and structural risk, the Board for Contractors categorizes licenses into three distinct classes: Class A, Class B, and Class C. A business entity's license class determines the maximum dollar value of single contracts it may undertake and the total annual volume it may collect. The Designated Employee business exam (Virginia Portion — Regulation of Contractors) regularly tests these exact dollar figures, the dual-trigger logic, and the related financial-responsibility rules.

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The Three Contractor License Classes

The current definitions in Virginia Code § 54.1-1100 are the figures tested on the PSI Designated Employee business exam. DPOR's Contractor Licensing Information sheet (A501-27INTRO, revised 09/01/2025) restates the same thresholds for applicants.

1. Class A Contractor License (Unlimited once triggered)

• Single contract / project: $150,000 or more
• 12-month volume: $1 million or more
• Monetary limit once licensed Class A: Unlimited — authorized to bid and perform contracts of any dollar magnitude within the licensed classification/specialty
• Net worth / equity: $45,000 minimum (18VAC50-22-60), or a $50,000 surety bond on the Board's bond form in lieu of the net-worth showing (Va. Code §§ 54.1-1106 and 54.1-1108)

2. Class B Contractor License (Intermediate Tier)

• Single contract / project: $30,000 or more, but less than $150,000
• 12-month volume: $250,000 or more, but less than $1 million
• Net worth / equity: $15,000 minimum (18VAC50-22-50), or the same $50,000 Board-form surety bond alternative

3. Class C Contractor License (Entry Tier)

• Single contract / project: over $1,000 but less than $30,000
• 12-month volume: less than $250,000
• Net worth / equity: No minimum net-worth requirement under Board regulations

Exam Trap: Do Not Use Older Thresholds

Older study materials and secondary websites still quote superseded figures (for example, $120,000 / $750,000 for Class A triggers, or $10,000 single-contract Class C caps). Those figures are not current law. For exam and compliance purposes, use only the § 54.1-1100 amounts in the table above.

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Dual Triggers: Single Contract or Annual Volume

Class is determined by either trigger. A firm that stays under the single-project cap can still be forced into a higher class by cumulative 12-month volume — and the reverse is also true.

Worked examples candidates should memorize:

• A $175,000 single residential project requires Class A because $175,000 is $150,000 or more, even if year-to-date volume is only $200,000.
• A $90,000 project falls in the Class B single-project band ($30,000 to less than $150,000), provided 12-month volume stays under $1 million.
• A $25,000 project is Class C territory (over $1,000 but less than $30,000), provided annual volume stays under $250,000.
• A Class C firm that has already completed $240,000 of work this year cannot take another $20,000 job without first upgrading, because the new work would push 12-month volume to $260,000 (Class B territory).
• A Class B firm planning several projects totaling $1,200,000 in a 12-month period must upgrade to Class A before exceeding the Class B annual volume ceiling of less than $1 million.

When in doubt, apply for the highest class the firm's planned bidding and production will require. Bidding or performing above the licensed class is a prohibited act, not a paperwork inconvenience.

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Dollar-Amount Exception: Landscape Irrigation and Water Well

DPOR expressly notes that Landscape Irrigation and Water Well contractors must be licensed as Class A, Class B, or Class C regardless of the dollar amount of the project or contract. Do not assume that a $800 irrigation job falls outside licensing merely because it is under the ordinary Class C $1,000 single-contract floor. Specialty scope and this dollar-amount exception are tested separately from the ordinary A/B/C money thresholds.

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How Class Selection Works in Practice

A firm must hold the class that matches the highest work level it will perform. Exceeding the class limits without upgrading is unlawful. Under Va. Code § 54.1-1115, undertaking work without any required contractor license or without the proper class of license is a Class 1 misdemeanor and can also trigger a civil fine of up to $500 per day for each day of violation, in addition to Board discipline under 18VAC50-22-260. Working without a required license can also be treated as a Virginia Consumer Protection Act prohibited practice when a consumer transaction is involved.

Contract enforceability is also at risk. § 54.1-1115(C) provides that a construction contract entered into by a person undertaking work without a valid Virginia contractor's license is generally not enforceable by the unlicensed contractor, unless the contractor gave substantial performance in good faith and did not have actual knowledge that a license was required. Failure to renew creates a rebuttable presumption of actual knowledge. Exam questions often pair the criminal/civil fine with this civil-enforcement consequence.

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Financial Responsibility Documentation (Class A and B)

Class A and Class B applicants must document financial position by one of the Board-accepted methods (Board financial statement A501-27FINST, CPA review/audit, or surety bond):

1. A completed Board financial statement with supporting documentation
2. A CPA-reviewed financial statement
3. A CPA audit
4. A $50,000 surety bond on the Board's form (in lieu of the net-worth showing)

Critical computation rules from 18VAC50-22-50 and 18VAC50-22-60:

• Net worth / equity is measured for the firm applying for the license.
• Exclude any property owned as tenants by the entirety from the net-worth calculation.
• The bond alternative is the same $50,000 Board-form amount for both Class A and Class B; it is not a "$15,000 Class B bond."
• Class A firms must also disclose adverse financial history for the five years prior to application; Class B disclosure looks back four years under the current regulation text.
• Class C applicants do not face a net-worth or surety-bond entry requirement, but they still pay initial licensing fees and the Contractor Transaction Recovery Fund assessment applicable to initial contractor applicants.

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Classification vs. Specialty Designation

License class controls monetary authority. License classification / specialty (for example, Residential Building Contractor, Commercial Building Contractor, Electrical, Roofing) controls the type of work the firm may perform. Every specialty on the license must have a Qualified Individual with the experience and any technical exam or credential required for that specialty. Holding Class A money authority does not authorize specialty work that is not listed on the license, and holding the right specialty does not authorize projects that exceed the firm's class limits.

Plan upgrades early: if a Class B Residential Building contractor expects a $160,000 addition next quarter, the firm must complete the Class A upgrade (including Designated Employee exam portions and financial documentation) before bidding or contracting at the Class A level.