Spring 2018 issue of Horizons

INDUSTRY UPDATE CONSTRUCTION

New Tax Law has Direct, Positive Impact on the Construction Industry by Tim Kendrick, CPA

T he Tax Cuts and Jobs Act of 2017 has already and will continue to create a ripple effect through every industry. However, the impact on the construction industry is almost completely considered positive. The highlights and benefits of the bill include a reduction in the corporate tax rate from 35% to 21%. Changes to accounting methods will ease tax burdens for many small contractors and the doubling of the estate tax exemption to $11 million will help the industry’s family-owned businesses.

The lower corporate tax rate will free up cash for construction firms to invest in their businesses through capital expenditures, new hires and increased salaries and benefits for employees. Construction firms set up as pass-through entities, including architectural and engineering firms, could see a reduction in their effective flow-through tax rate due to the new 20% deduction on pass-through income. The bill also includes massive changes to how income earned or kept offshore is treated.

20 New Tax Law has Direct, Positive Impact on the Construction Industry