If you’re like most construction business owners, tax planning probably isn’t your favorite part of running a company. You’d rather be on the job site, managing projects, or landing that next big contract. But here’s the thing: 2026 brings some serious tax advantages that could put tens of thousands of dollars back into your business. And honestly? Ignoring them would be like leaving money on the table.
The One Big Beautiful Bill Act (OBBBA) that passed last year has changed the game for construction companies. Whether you’re a small contractor or running a mid-sized operation, these new rules create opportunities you absolutely need to know about. Let’s break down what matters most and how you can take action this quarter.
What exactly changed with the OBBBA?
The tax landscape for construction companies got a major upgrade with the OBBBA. Think of it as Congress finally recognizing what we’ve known all along: construction businesses need flexibility and incentives to keep building America’s infrastructure.
Here’s what’s now on the table: 100% bonus depreciation is back permanently, meaning you can write off the full cost of qualifying equipment in year one. The residential construction accounting rules got simpler with expanded exemptions. And if you’ve been working on energy-efficient projects, there’s a critical deadline coming up on June 30, 2026, for Section 179D deductions.
The qualified business income (QBI) deduction is also now permanent at 20%, and the SALT cap was raised through 2029. For construction companies dealing with high state and local taxes, that last one’s a big deal.
Making bonus depreciation work for your equipment purchases
Let’s talk about equipment. You know that excavator you’ve been eyeing? Or the new fleet of trucks your crew desperately needs? With 100% bonus depreciation, you can deduct the entire purchase price in 2026 instead of spreading it over several years.
This isn’t just about reducing your tax bill; it’s about improving your cash flow right when you need it most. Buy a $150,000 piece of equipment, and you could save $30,000 to $45,000 in taxes this year, depending on your tax bracket. That’s real money you can reinvest in your business.
The key is timing. Make those equipment purchases before year-end to maximize your deduction. And keep excellent records, the IRS will want to see documentation that the equipment is actually being used in your business.
How the new residential construction rules can save you money
If you’re building residential properties, the completed contract method (CCM) just became available for more projects. This means you can defer recognizing income and expenses until the project is finished.
Why does this matter? Cash flow. Instead of paying taxes on progress billings throughout a multi-year project, you only deal with the tax hit when everything’s wrapped up. For many contractors, this means better cash management and potentially landing in a lower tax bracket.
The residential construction exemptions have also expanded, giving smaller and medium-sized contractors more flexibility in how they account for their projects. If you’ve been struggling with percentage-of-completion accounting, this could be your way out.
Section 179D: The deadline you can’t afford to miss
Mark June 30, 2026, on your calendar in big red letters. That’s when the Section 179D energy efficiency deduction expires. If you’ve worked on any commercial buildings, government facilities, or retrofits that meet energy efficiency standards, you could claim up to $5.00 per square foot in deductions.
Here’s where it gets interesting: designers, engineers, and contractors can all potentially benefit from this deduction. Even if you worked on the building for someone else, you might be able to claim it if the building owner assigns the deduction to you.
But you need to move fast. The project must begin before the June deadline, and you’ll need proper documentation from a qualified professional. This isn’t something to handle on your own; get your accounting team involved now.
Why outsourced accounting makes sense for maximizing these benefits
Look, I get it. You’re busy running projects, managing crews, and keeping clients happy. The last thing you want to do is become a tax expert. But missing out on these deductions because you didn’t have the right accounting support? That’s a costly mistake.
This is exactly where specialized construction accounting services become invaluable. A team that understands construction-specific tax rules can identify opportunities you might miss, ensure you’re documenting everything correctly, and handle the complex compliance requirements.
Think about it this way: if proper tax planning saves you $50,000 this year, and outsourced accounting costs you $15,000, you’re still $35,000 ahead. Plus, you get your time back to focus on what you do best: building great projects.
Your Q1 2026 action plan
Don’t let this quarter slip by without taking action. Start by reviewing your equipment needs and timing major purchases to maximize bonus depreciation. If you’re working on energy-efficient projects, get your Section 179D documentation in order immediately.
Meet with your accounting team (or find one if you don’t have construction specialists) to create a comprehensive tax strategy. Review all your current and pipeline projects to determine the best accounting method for each one.
The bottom line? The tax advantages available to construction companies right now are significant. But they won’t help you if you don’t know about them or fail to implement them correctly. This is one area where getting professional help isn’t an expense; it’s an investment that pays for itself many times over.
People Also Ask
Q1. What is the One Big Beautiful Bill Act (OBBBA), and how does it affect construction companies?
A1. The OBBBA is a comprehensive tax legislation passed in 2025 that restored and enhanced several key tax benefits for construction businesses. It permanently reinstated 100% bonus depreciation, expanded residential construction accounting options, made the QBI deduction permanent, and raised SALT caps through 2029. These changes provide construction companies with significant opportunities to reduce their tax burden and improve cash flow.
Q2. Can I still claim Section 179D deductions after June 30, 2026?
A2. No, the Section 179D energy efficiency deduction expires on June 30, 2026. Projects must begin before this deadline to qualify. This deduction allows up to $5.00 per square foot for qualifying energy-efficient commercial buildings. If you have eligible projects in the pipeline, it’s critical to start them and complete the necessary documentation before the deadline passes.
Q3. What’s the difference between bonus depreciation and the Section 179 deduction?
A3. Bonus depreciation allows you to deduct a percentage (now 100%) of qualifying property costs in the first year, with no dollar limit. Section 179 lets you deduct the full cost of qualifying equipment up to a specific dollar limit ($1.22 million in 2025).
Bonus depreciation is generally better for larger purchases, while Section 179 works well for smaller equipment buys. Many construction companies use both strategically.
Q4. Should my construction company use the completed contract method or the percentage-of-completion method?
A4. It depends on your project types and business situation. The completed contract method (CCM) offers better cash flow management by deferring taxes until project completion, but it’s now primarily available for residential construction and smaller contractors. Percentage-of-completion is required for most commercial projects over certain thresholds. Your construction accounting specialist should analyze your specific projects to recommend the best approach.
Q5. How much can construction companies actually save with proper tax planning?
A5. The savings vary significantly based on your revenue, project types, and equipment purchases, but they’re often substantial. A mid-sized contractor spending $500,000 on equipment could save $100,000+ through bonus depreciation.
Section 179D could add another $50,000-$100,000 for eligible projects. Combined with proper QBI deduction planning, many construction companies save 15-25% of what they would have paid without strategic tax planning.
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