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As a construction company owner, you're building something meaningful—but are you building wealth for yourself and your family, or just for the IRS?
The construction industry offers unique tax advantages that most contractors never discover. While you're focused on managing crews, meeting deadlines, and delivering quality work, thousands of dollars in tax savings slip through the cracks every year.
The problem isn't your work ethic or business acumen. The problem is that most accountants treat construction companies like every other business, missing industry-specific deductions that could dramatically reduce your tax burden. Your need to use these tips compiled by our experts at Springpoint CPA.
Consider this: if your construction business has a 20% profit margin and you're overpaying $15,000 in taxes annually, you actually need to generate $75,000 in additional revenue to make up for that lost money. That's roughly 2-3 additional projects that you're essentially working for free.
Most construction contractors know they can depreciate equipment over time, but here's what they don't know: Section 179 allows you to deduct the full cost of qualifying equipment in the year you purchase it, up to $1,160,000 for 2023.
This means that $50,000 excavator you bought in December? You can deduct the entire amount this year instead of spreading it over seven years. For contractors in higher tax brackets, this single strategy can save $12,000-15,000 in taxes on that one purchase alone.
If you're operating as a sole proprietorship or single-member LLC, you're paying self-employment tax on your entire profit—that's 15.3% on top of your regular income tax.
By electing S-Corp status, you can take a reasonable salary (subject to payroll taxes) and distribute additional profits as dividends, which aren't subject to self-employment tax. For a contractor making $150,000 in profit, this strategy typically saves $8,000-12,000 annually.
Even though your work happens at job sites, if you use part of your home exclusively for business activities—project planning, estimates, administrative work—you can deduct those expenses. This includes:
For many contractors, this adds up to $3,000-6,000 in additional deductions.
Construction companies typically have significant vehicle expenses, but most handle this deduction poorly. You have two options:
Standard Mileage Method: 70 cents per business mile in 2025
Actual Expense Method: Deduct actual costs (gas, maintenance, insurance, depreciation)
For contractors with newer, expensive trucks or high mileage, the actual expense method often provides significantly higher deductions. Plus, you can accelerate depreciation on vehicles over 6,000 pounds using bonus depreciation rules.
Unlike other businesses, construction companies often have significant control over when they complete projects and recognize income. Strategic project timing combined with accelerated expense recognition can:
If you use your home for legitimate business meetings (client consultations, team planning sessions), you can rent your home to your business for up to 14 days per year. The rental income is tax-free to you personally, and your business gets a deduction for the rental expense.
SEP-IRAs allow construction business owners to contribute up to 25% of compensation or $66,000 (whichever is less) while reducing current-year taxes. For high-earning contractors, this strategy can defer $15,000-20,000 in taxes annually while building retirement wealth.
Here's the truth most contractors discover too late: these strategies only work when implemented before year-end. Most traditional accountants are reactive, not proactive. They prepare your taxes after the year is over, when it's too late to implement money-saving strategies.
The most profitable construction companies work with accounting professionals who:
Don't let another year pass leaving money on the table. These tax hacks can save your construction company thousands of dollars, but they require proper implementation and ongoing strategy.
Ready to stop overpaying in taxes and start keeping more of your hard-earned profits? Schedule your free Tax Reduction Analysis with Springpoint CPA. We'll review your current situation and identify specific opportunities to reduce your tax burden using these construction-specific strategies.
Because your business deserves more than just tax preparation—it deserves proactive tax planning that puts money back in your pocket.
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