It's been a little over a month since the One, Big, Beautiful Bill Act (OBBBA) was signed into law. Now that the dust has settled, construction business owners and their leadership teams can begin to really pinpoint the provisions most pertinent to their operations. Here are six to study up on.

1. Accounting exemption

For tax years beginning on or after July 4, 2025, contracts entered into for residential construction projects, per the amended definition under the OBBBA, generally qualify for an exception to the percentage-of-completion method of accounting.

That means, if eligible, you can use the completed-contract method (CCM) or other permissible methods. Under the CCM, for example, you can defer income until a project is substantially completed, which generally improves cash flow.

2. Accelerated depreciation

The OBBBA includes multiple provisions that will allow you to accelerate depreciation on eligible capital expenditures. These breaks can also improve cash flow, as well as make new investments in equipment and machinery more viable.

The law makes permanent 100% first-year bonus depreciation for qualified new and used assets acquired and placed in service after January 19, 2025. It also increases the Section 179 expense deduction limit to $2.5 million, with the phaseout threshold raised to $4 million. Those figures are effective for 2025, with annual inflation adjustments going forward.

In addition, the OBBBA creates a temporary 100% deduction for the cost of building "qualified production property" — for instance, facilities used to fabricate materials. This could boost demand for projects related to manufacturing. Construction must have begun after January 19, 2025, and before January 1, 2029, and the property must be placed in service before 2031.

3. Bigger business interest deductions

If you finance capital purchases, you may be able to deduct more of the interest under the OBBBA. The business interest deduction is generally limited to 30% of your adjusted tax income (ATI). Since 2022, though, deductions for depreciation, amortization or depletion were not added back to taxable income when calculating ATI. So, ATI was effectively measured based on earnings before interest and taxes, not earnings before interest, taxes, depreciation and amortization (EBITDA).

Beginning with the 2025 tax year, the OBBBA provides that ATI will again include depreciation, amortization and depletion in the calculation. In other words, ATI will revert to being calculated based on EBITDA. This will effectively increase the ATI base, generally raising the allowable business interest deduction.

4. Distressed community construction incentives

The quality opportunity zone (QOZ) program generally allows taxpayers to defer, reduce or exclude unrealized capital gains reinvested in qualified opportunity funds (QOFs). These funds invest in designated distressed communities across the country.

The OBBBA establishes a permanent QOZ policy that enhances the original program, which had been slated to sunset after 2026. The law also creates a new type of QOF for rural areas. Plus, the OBBBA permanently enhances the low-income housing tax credit. In sum, these programs could drive higher construction activity — including affordable housing and commercial development.

5. Reduced taxation of overtime

For tax years 2025 through 2028, the OBBBA allows employees to deduct up to $12,500 ($25,000 for joint filers) of qualified overtime pay. This tax break is available regardless of whether a taxpayer itemizes. However, it begins to phase out when an individual's modified adjusted gross income exceeds $150,000 (or $300,000 for joint filers).

The boost to take-home pay may make overtime more enticing to existing construction workers and job seekers considering the industry. But it also requires employers to track and report the amount of qualified overtime pay. What's more, overtime pay will remain subject to payroll taxes and state income taxes.

6. Elimination of clean energy incentives

The OBBBA targets many of the clean energy incentives created or enhanced by the Inflation Reduction Act — including some that have spurred construction plans and projects. For instance, it eliminates the Sec. 179D energy-efficient commercial building deduction for buildings or systems on which construction begins after June 30, 2026.

The new law also eliminates the Sec. 45L new energy-efficient home credit for eligible contractors. The credit was due to expire in 2033, but it's now available only for homes acquired on or before June 30, 2026.

And that's not all

To be clear, the OBBBA provisions we've discussed are only some of those that could affect your construction business. We can help you identify the most relevant tax-law changes and leverage the tax breaks available to your company.