The newly enacted One Big Beautiful Bill (OBBB), signed into law on July 4, 2025, introduces reforms that will significantly reshape tax planning for the construction industry. Several provisions are already effective retroactively to the beginning of 2025. Others will take effect in 2026. Contractors, developers, and pass-through entities should begin planning now to optimize their tax positions and manage cash flow.
Key Provisions Affecting Construction
Highlights of the bill include:
- Permanent 100% bonus depreciation on qualifying equipment and property, which creates long-term certainty for capital investments.
- Expanded Section 179 expensing with higher thresholds, allowing small and mid-sized firms to deduct more upfront.
- Restored R&D expensing for domestic innovation, benefiting firms that invest in new construction methods or sustainable technologies.
- Permanent 20% Qualified Business Income (QBI) deduction for pass-through businesses, aligning their tax rates more closely with C corporations.
Implications for Cash Flow and Projects
The law expands the exception to the percentage-of-completion method for certain residential projects, provides greater interest deductibility for capital-intensive firms, and temporarily increases the SALT deduction cap. At the same time, several popular green energy incentives such as the 179D deduction and 45L credit will end earlier than expected, creating an impact on developers who specialize in energy-efficient design.
Estate and Charitable Planning Provisions
Looking ahead, OBBB raises estate and gift tax exemptions beginning in 2026. This offers relief to privately held construction businesses concerned about succession planning. The law also introduces new “floors” for charitable contribution deductions, which changes how individuals and corporations can claim those benefits.
What Construction Leaders Should Do Now
With so many provisions taking effect quickly, proactive planning is essential. Contractors and developers should revisit 2025 tax estimates, consider timing for capital expenditures, and evaluate entity structures. Working closely with your YHB advisor ensures your business remains compliant while maximizing the opportunities available under the new law. Contact us today and let’s get the conversation started.
