The Standard Test Methods for Tension Testing of Metallic Materials (ASTM E8) mandates a specimen gauge reduction for obtaining the tensile properties of reinforcing steel bars. The standard outlines the specimen preparation requirements and methods to ensure that test results well represent the material properties. On the other hand, some codes differ regarding the approach to specimen preparation. They do not apply gauging, for both deformed and plain steel bars. Thus, the effect of specimen gauge reduction on the tensile properties of reinforcing steel bars was evaluated, and the interconnection of properties to the layer hardness was analysed. The experiment goved a range of deformed hot-rolled bar sizes, tested in tension using precision instruments. The Rockwell hardness test was implemented layerwise on the specimen’s cross section, and the hardness number (HRC) was measured as a function of the layer distance to the centre. A finite element model was constructed to study the stress concentrations induced by a constant indentation, simulating the HRCs, and to numerically construct the stress–strain relationship of ungauged steel bars based on the core properties and the section HRC relationship. Scanning electron microscopy readings were performed to visually and chemically justify the results. It was shown that the specimen gauge reduction significantly influenced the resulting stress–strain behaviour of the material, and the yield and ultimate strengths were reduced. It was also demonstrated that the hardness response is proportional to the distance to the specimen’s axes. The corresponding yield and ultimate strengths thus increased accordingly, from the inner to the outer layers of the bar. Testing a gauged specimen will therefore result in lower strength than that of an ungauged steel bar.