United States, August 12, 2025
News Summary
The federal tax bill, known as the One Big Beautiful Bill Act, introduces significant tax reforms that benefit construction companies. Key updates include a 100% bonus depreciation for qualified property, a permanent Qualified Business Income deduction, and increased SALT deduction limits. These changes enhance cash flow and reduce tax liabilities, urging contractors to consult with tax advisors for optimal asset purchase strategies and compliance with new energy-related tax regulations.
New Tax Legislation Introduced in the “One Big Beautiful Bill Act” Provides Major Updates for Construction Companies
The federal tax bill known as the One Big Beautiful Bill Act (H.R. 1) was signed into law by President Trump on July 4, 2025, bringing significant changes that will impact construction firms across the nation. These modifications focus especially on bonus depreciation, the Qualified Business Income (QBI) deduction, and adjustments to state and local tax (SALT) deductions, all of which aim to optimize tax benefits for construction entities.
Bonus Depreciation Changes
One of the standout updates is the restoration of bonus depreciation, which is now permanently set at an impressive 100% for qualified property that is acquired and placed in service after January 19, 2025. Under the previous legislation, known as the Tax Cuts and Jobs Act, this beneficial 100% bonus depreciation only covered properties placed in service from September 27, 2017, to December 31, 2022. This old law put a phased reduction in place, decreasing the benefit by 20% each year following 2022.
This change allows construction companies to enjoy the substantial advantage of immediate expensing for new and certain used machinery, vehicles, and building improvements. By making these purchases, construction firms can significantly lower their taxable income for the year in which they acquire the assets. It is advisable for companies to strategically plan major asset purchases to align with anticipated placement-in-service dates on or after 2025, allowing them to maximize their deductions efficiently.
Permanent QBI Deduction
Another vital adjustment is related to the QBI deduction (Section 199A), which is now made permanent. This allows eligible owners of S Corporations, partnerships, and sole proprietorships to claim a deduction of up to 20% on their qualified business income. For individuals with taxable incomes below $394,600 for married couples and $197,300 for singles, full deductions are available. As an enhancement, the phase-out ranges have also expanded to $75,000 for singles and $150,000 for married couples, providing construction firms with much-needed tax relief.
Increased SALT Deduction Limits
Another significant change pertains to the federal deduction limits for state and local taxes (SALT). The previous cap of $10,000 has been raised to $40,000 for tax years through 2029, with adjustments for inflation. Starting in 2030, the limit will revert to the original $10,000 cap. This adjustment is particularly beneficial for construction companies operating across multiple states, where exceeding the former $10,000 limit was a frequent issue. It is recommended that contractors engage tax advisors to assess their situations regarding SALT deductions under this new legislation.
Aims of the New Legislation
The overarching goal of this legislation is to enhance cash flow and reduce tax liabilities for construction companies. By encouraging strategic actions such as scheduling capital asset purchases and optimizing ownership structures, the law aims to give construction firms the flexibility they need to thrive in a changing business environment.
In addition to these tax updates, the legislation includes amendments to the Inflation Reduction Act of 2022 (IRA), which introduces specific deadlines and restrictions affecting wind and solar facilities. These will take effect from July 4, 2026, and any construction projects that start after designated deadlines may face limitations on claiming various tax credits, including restrictions against assistance from certain foreign entities.
To emphasize the serious nature of compliance, new penalties have been established for those claiming unauthorized energy credits, particularly in regard to disallowance based on foreign entity violations. Such measures further underline the importance of understanding the adjustments made by the One Big Beautiful Bill Act for construction contractors.
Frequently Asked Questions (FAQ)
What are the main benefits of the new bonus depreciation provision?
The new bonus depreciation provision allows construction firms to immediately expense 100% of qualified property, significantly lowering their taxable income for the purchase year.
How does the permanent QBI deduction affect construction company owners?
Eligible owners can deduct up to 20% of their qualified business income, enhancing their overall tax savings, especially for lower-income brackets.
What changes were made to SALT deductions?
The federal SALT deduction limit has increased from $10,000 to $40,000 until 2029, which will provide significant benefits for firms spanning multiple states.
Will these tax changes apply to construction projects that started already?
Most provisions will apply to property placed in service after specified dates, so it’s essential for firms to be aware of eligibility requirements based on their project timelines.
Deeper Dive: News & Info About This Topic
Additional Resources
- RSM US: One Big Beautiful Bill Tax Impact on Real Estate and Construction
- JD Supra: New Law Changes IRA Tax Credits Update
- Dentons: Romania Updated Special Construction Tax Rules
- White & Case: Executive Order Directs Treasury to Update Guidance on Beginning Construction Tax Credits
- Journal of Accountancy: Tax Changes in Senate Budget Reconciliation Bill
- Wikipedia: Taxation in the United States
Author: Construction CA News
CALIFORNIA STAFF WRITER The CALIFORNIA STAFF WRITER represents the experienced team at constructioncanews.com, your go-to source for actionable local news and information in California and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Rose Parade, Coachella, Comic-Con, and the California State Fair. Our coverage extends to key organizations like the California Building Industry Association and Associated General Contractors of California, plus leading businesses in technology and entertainment that power the local economy such as Apple and Alphabet. As part of the broader network, including constructionnynews.com, constructiontxnews.com, and constructionflnews.com, we provide comprehensive, credible insights into the dynamic landscape across multiple states.
