The big new benefit for contractors is the “standard deduction” for manufacturers. It starts out at 3% and goes to 9%. It is calculated as a percentage of “qualified production activities income”, and guess what — construction performed in the United States qualifies for the deduction. Nice, isn’t it?
The deduction is limited to 50% of W-2 wages paid or the taxable income of the taxpayer. If you generate taxable income, this will work for you as long as you perform a qualified activity.
It will be worth it to you to review your situation to see if this new rule applies. It will also be worth it to you to do whatever is needed to generate the proper records to maximize the deduction. Of course, there are rules and regulations to follow. What did you expect — we are dealing with the IRS after all.
There are a few other new rules to watch for, especially those related to SUVs. SUVs have limits imposed on any 179 deductions you can take.