--- title: "Nailing Down the Numbers: How the One Big Beautiful Bill Reshapes Construction Tax Strategies" description: BE tax experts delivered a session on essential updates on how recent tax legislation impacts construction companies & their planning strategies. image: https://blog.becpas.com/hubfs/Nailing%20Down%20the%20Numbers%20How%20the%20One%20Big%20Beautiful%20Bill%20Reshapes%20Construction%20Tax%20Strategies.jpg --- [Twitter ** ](https://www.facebook.com/BrownEdwardsCPAs?utm_source=BE+Website&utm_medium=Website+Icon&utm_campaign=BE+Website+Social+Icon&utm_content=Facebook) [Facebook-f ** ](https://www.linkedin.com/company/brown-edwards/?utm_source=BE+Website&utm_medium=Website+Icon&utm_campaign=BE+Website+Social+Icon&utm_content=LinkedIn) [Linkedin ** ](https://www.youtube.com/channel/UC3ReCSn6AFfdQiCUsH4oopA?utm_source=BE+Website&utm_medium=Website+Icon&utm_campaign=BE+Website+Social+Icon&utm_content=YouTube) [Youtube ** ](https://www.youtube.com/channel/UC3ReCSn6AFfdQiCUsH4oopA?utm_source=BE+Website&utm_medium=Website+Icon&utm_campaign=BE+Website+Social+Icon&utm_content=YouTube) [ Client Portal ](https://becpas.sharefile.com/Authentication/Login) [ Make A Payment ](https://becpas.com/payments/) [ Request Proposal ](https://becpas.com/request-for-proposal/) ![](https://blog.becpas.com/hubfs/Nailing%20Down%20the%20Numbers%20How%20the%20One%20Big%20Beautiful%20Bill%20Reshapes%20Construction%20Tax%20Strategies.jpg) # Nailing Down the Numbers: How the One Big Beautiful Bill Reshapes Construction Tax Strategies Published by [ Corbin Rice and Carla Brown ](https://blog.becpas.com/author/corbin-rice-and-carla-brown) on Oct 30, 2025 3:03:31 PM At Brown Edwards, we understand that navigating complex tax legislation is crucial for construction companies' success. During our recent Construction Symposium, our tax experts Carla Brown and Corbin Rice, both CPAs and CCIFPs, delivered essential updates on how recent tax legislation impacts construction companies and their planning strategies. ## Individual Provisions That Matter to Construction Owners  **Itemized Deductions**  High-earning construction business owners in the 37% tax bracket should expect approximately a 5.5% reduction in their itemized deductions. However, the qualified business income deduction remains unaffected by these changes.  **State and Local Tax (SALT) Deduction**  The deduction limit has increased to $40,000, but you must still itemize deductions and face phase-outs for modified adjusted gross income over $500,000. For high earners, the pass-through entity tax (PTET) election may still provide the best tax strategy.  **Qualified Business Income Deduction**  This critical deduction for construction business owners is now permanent, with a new minimum deduction of $400 for taxpayers with at least $1,000 of qualified business income. Remember: owner salaries and guaranteed payments reduce the amount qualifying for this deduction, so careful planning of compensation structures matters.  ## Game-Changing Business Provisions  **Depreciation Benefits Return**  **100% Bonus Depreciation** is back for property with recovery periods less than 20 years, effective for property placed in service after January 19, 2025. This provides immediate tax savings but requires careful cash flow planning.  **Section 179 Expensing** limits have increased dramatically:  - Expense limit: Up to $2.5 million (from $1.25 million)  - Phase-out threshold: Begins at $4 million (previously much lower)  **New Addition**: Qualified production property now qualifies for 100% bonus depreciation. This applies to non-residential real property used integrally in manufacturing, production, or refining activities that result in substantial transformation of materials.  *Planning Tip*: Consider cost segregation studies for complex projects to identify components qualifying for accelerated depreciation.  **Research and Development Relief**  For small businesses (average gross receipts under $31 million after 2021):  - **Retroactive expensing**: Amend 2022, 2023, and 2024 returns, or  - **Catch-up provision**: Take all deductions in 2025 or spread over 2025-2026  Larger businesses can only elect current-year treatment. The election window closes July 4, 2026, making this time-sensitive for affected companies.  **Interest Deduction Improvements**  The Section 163(j) limitation has been modified to allow calculations based on earnings before interest, taxes, depreciation, and amortization (EBITDA), rather than just EBIT. This higher base allows more interest expense deductions, though it also caps the amount of interest that can be capitalized.  **Residential Construction Method Change**  Large residential projects (more than four units, including high-rise condos, senior living, and multi-family housing) can now qualify for the completed contract method rather than percentage of completion. This defers income recognition until project completion, improving cash flow management.  ## Clean Energy Provisions - Act Fast!  Several clean energy incentives now have accelerated expiration dates:  **Vehicle Credits**: Most expire September 30, 2025 (alternative fuel vehicle refueling property extends to June 30, 2026)  **Residential Credits**: Generally, expire December 31, 2025  **Section 179D Energy Efficient Commercial Building Deduction**: Terminates for projects beginning after June 30, 2026. Architects, engineers, and design-build firms should prioritize government and nonprofit projects to claim these deductions before the deadline.  **Important Note**: Foreign entities can no longer claim these credits as of July 4, 2025.  ## Other Notable Changes  **Reporting Simplifications**  - **1099-K threshold**: Returns to $20,000 and 200 transactions (from $600)  - **1099-MISC and 1099-NEC**: Threshold increases to $2,000 (from $600) for tax years beginning after December 31, 2025   **Business Loss Limitations**  Excess business losses now have revised thresholds, with unused amounts creating net operating losses limited to 80% of future taxable income.  **Qualified Small Business Stock**  For C corporations, the aggregate gross assets limit increases to $75 million (from $50 million), with phased-in exclusions:  - 3 years: 50% exclusion  - 4 years: 75% exclusion  - 5+ years: 100% exclusion (unchanged)  Maximum excludable gain increases to $15 million or 10 times adjusted basis.  ## Strategic Planning for the Next 12-48 Months  **Time-Sensitive Actions**  - **Clean Energy Projects**: Expedite Section 179D projects to meet June 30, 2026 deadline with thorough documentation  - **R&D Transition**: Companies under $31 million gross receipts should evaluate whether to amend prior returns or use catch-up provisions  - **Payroll Systems**: Update systems for new 1099 thresholds and overtime deduction tracking   **Technology Investment Considerations**  The complexity of these changes makes robust accounting and project management software more valuable than ever. Consider systems that can:  - Track costs in real-time for better forecasting  - Handle complex depreciation calculations  - Manage change orders and purchase orders efficiently  - Provide detailed documentation for tax compliance   **Contract Language Review**  Work with legal counsel to update contract language addressing:  - Cost escalation clauses for tariff impacts  - Risk allocation for material delays  - Documentation requirements for tax compliance   **Balancing Tax Savings with Business Needs**  While minimizing tax liability remains important, remember to balance tax strategies with:  - **Financial statement impact**: Consider effects on bonding and lending capacity  - **Cash flow management**: Accelerated deductions require cash outlays  - **Operational efficiency**: Don't sacrifice business operations for tax savings  ## Looking Ahead  These changes represent significant opportunities for construction companies willing to engage in proactive planning. The key is acting quickly on time-sensitive provisions while building systems and strategies that position your company for long-term success.  The construction industry continues to evolve, and tax planning must evolve with it. Whether you're dealing with tariff uncertainties, taking advantage of enhanced depreciation benefits, or planning clean energy projects, the companies that succeed will be those that stay informed and act decisively.  *Stay connected with Brown Edwards through our podcast, [Construct-ive Conversations](https://podcasts.apple.com/us/podcast/construct-ive-conversations/id1764985046), and [LinkedIn ](https://www.linkedin.com/company/brown-edwards)updates for ongoing guidance as regulations and interpretations develop. Our construction team is here to help you navigate these complex changes and maximize the opportunities they present.* ### Contact Us   Tags: [Tax](https://blog.becpas.com/tag/tax), [Construction](https://blog.becpas.com/tag/construction) [Back to Blog](https://blog.becpas.com) ## Related Articles ## [Act Now to Reduce Your Business’s 2022 Tax Bill](https://blog.becpas.com/act-now-to-reduce-your-businesss-2022-tax-bill) Act Now to Reduce Your Business’s 2022 Tax Bill It’s been a tumultuous year for many businesses,... [Read More ](https://blog.becpas.com/act-now-to-reduce-your-businesss-2022-tax-bill) ## [Will Businesses Be Navigating Year-End Tax Planning With New Tax Laws?](https://blog.becpas.com/will-businesses-be-navigating-year-end-tax-planning-with-new-tax-laws) The end of the tax year is fast approaching for many businesses, but their ability to engage in... 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