Congress passed the Tax Cuts and Jobs Act in December 2017, and construction contractors are still figuring out have these tax reform measures will affect the, how to stay compliant and how to maximize tax savings.
Most contractors will receive a tax savings from the new measures. Contractors organized as flow-through entities will see a new deduction of up to 20% of their business income. Bonus depreciation measures also allow for 100% cost recovery in the year of equipment acquisition prior to 2023.
On the flip side, interest expense is now capped at 30% of a company's federal adjusted gross income unless a company's average gross receipts are under $25 million. An increase in IRS audit activity can also be expected.
(more on how recent tax reform may affect the construction industry...)
