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Chris Coleman is an accounting partner in RubinBrown’s Construction Services Group. The opinions are the author’s own.
For years, contractors have had to make long-term decisions under short-term tax rules that could change with the next budget deal. While a future Congress could make changes, the One Big Beautiful Bill Act, or OBBBA, is an important budget and tax bill that ends this uncertainty for the foreseeable future.
Chris Coleman
Courtesy of RubinBrown
The law makes permanent several tax policies that construction companies have come to rely on, even though they were previously temporary in nature. Now, contractors know what rules they will be operating under for years to come. For an industry built on long project timelines and thin margins, stability is worth as much as any new incentive.
This new certainty is especially relevant in the remaining months of 2025. Now, decisions made before the end of the year can have long-term effects on cash flow, project pricing and capital budgets, potentially giving savvy operators an edge. In other words, through the balance of the fourth quarter, construction companies can use the OBBBA changes to their advantage to lock in lasting cash flow gains for 2025 and beyond.
Here are four ways construction companies should take advantage of the new tax bill before 2026.
Take advantage of your new found permanence
OBBBA now allows construction companies to restructure their purchasing plans to improve cash flow. For example, OBBBA blocks 100% bonus depreciation for qualified property placed in service after January 19, 2025. By restoring the immediate write-off that had been phased out since 2023, construction companies have more time to buy equipment, vehicles and software, knowing that in the coming years the deductions will continue to increase tax cash flow.
The law also makes the 20% qualified business income deduction permanent for pass-through entities, keeping many construction companies’ tax rates competitive with corporations. And by restoring the limitation on business interest to 30% of adjusted taxable income calculated based on EBITDA, the law eases pressure on leveraged companies that face higher borrowing costs.
Overall, construction companies have more flexibility to reexamine their long-term investment strategies to optimize cash flow and reassess their capital investments. Instead of holding off on asset purchases or equipment upgrades, companies can think long-term, knowing that deduction rules won’t change mid-term to short-term.
Lock in your winnings before December 31st
Other OBBBA provisions provide opportunities for construction and real estate companies to potentially reduce fourth quarter estimated tax payments:
- Qualified expenses of production property. Taxpayers who build qualifying manufacturing or processing facilities can deduct 100% of costs if construction begins between January 20, 2025 and January 1, 2029 and the structure is placed in service by 2031. As an additional potential bonus for contractors, this accelerated depreciation of otherwise long-lived assets could spur construction in these industries.
- R&D expenses. Design and engineering firms can fully deduct domestic research costs again in the year they are incurred. Those who capitalized expenses from 2022 to 2024 can write off remaining balances now.
- QBI deduction. The 20% transitory deduction is permanent and offers contractors long-term rate certainty.
- Interest deduction. The 30% EBITDA limit expands the amount of interest that can be deducted, improving the flexibility of debt-financed equipment or assets.
- Completed contract accounting. Starting in 2026, most multi-unit residential projects can defer taxable income until completion rather than reporting it as work progresses.
Each benefit depends on time and documentation. Contractors should consult their tax advisors for specific benefits for their own circumstances.
Grab the disappearing incentives
While OBBBA creates long-term stability, it also accelerates the end of some popular credits and deductions, including several that construction companies in the green energy industry should consider.
Sections 45L and 179D energy efficiency incentives now have a cutoff date of June 30, 2026. Contractors working on residential or commercial energy upgrades should plan to begin qualifying projects as soon as possible to preserve eligibility.
The act also presents new rules on the qualification of overtime pay for employees from 2025 to 2028. It is modest in scope and designed to directly benefit workers, but adds new W-2 reporting requirements that employers must prepare for.
Review contracts and assets now
The end of the year is the time to turn politics into planning. The best opportunities under OBBBA require an active review of contracts, assets and project schedule, not just awareness.
Contractors should start by reviewing their equipment lists and breaking down project costs to ensure they are claiming every dollar of bonus depreciation available. R&D-heavy companies should look back at filings from 2022 to 2024 and identify any expenses that can be taken as immediate deductions.
Builders taking on residential projects in 2026 should assess which contracts qualify for completed contract accounting and model the effect on cash flow.
And for everyone, it’s time to check payroll and reporting systems with the new overtime pay reporting rules.
Ignoring these changes until tax season could lead to unexpected hassles or costly fixes later on.
A short window, long consequences
At the macro level, OBBBA is expected to do so expand business investment in 2026 and 2027. The Congressional Budget Office projects a $4.1 trillion increase in federal deficits over the next decade as a result of the bill, with much of the stimulus coming over the next three years. This may support upcoming construction growth, but also signals tighter fiscal conditions later, another reason for bank cash flow advantages now while rates remain favorable.
The One Big Beautiful Bill is in many ways a return to normalcy for an industry that has spent a decade planning for uncertainty. The rules are clear and there are incentives. What matters now is execution before the end of the year
