The deduction gap
Your CPA sees your books once a year. They file what's in front of them. But if your books aren't set up for construction, they're missing deductions that only apply to builders.
Here are the 7 we find most often.
1. Section 179 on equipment
That skid steer, that dump trailer, that excavator — if you bought it this year, you can deduct the full cost in year one (up to $1.22M in 2026). Most CPAs depreciate it over 5–7 years. That's legal. But Section 179 puts the cash back in your pocket now.
2. Vehicle deductions (the right way)
If you drive a truck over 6,000 lbs GVWR (most F-250s and above), the deduction is significantly higher than the standard mileage rate. Keep a simple log. The difference can be $8K–$15K a year.
3. Home office deduction
Yes, contractors can take it. If you do estimates, scheduling, or bookkeeping from a dedicated space at home, you qualify. It's not just for remote tech workers.
4. Tools and small equipment
Every drill, saw, level, and laser you buy is deductible. The issue is tracking it. Most contractors pay cash or use a personal card and never record it. That's money you earned and spent but never deducted.
5. Per diem and travel
If you or your crew travel more than 50 miles from your tax home, per diem rates apply. In 2026, the federal rate is $59/day for meals. For a crew of 4 on a 60-day out-of-town job, that's $14,160 in deductions.
6. Retirement contributions (SEP-IRA or Solo 401k)
You can shelter up to $69,000 per year in a SEP-IRA (2026 limits). Many contractors don't know this exists. It reduces taxable income dollar-for-dollar.
7. Cost segregation on buildings you own
If you own your shop, warehouse, or office, a cost segregation study can accelerate depreciation on components like HVAC, electrical, and paving. Typical savings: $25K–$100K in the first year.
The bottom line
These 7 deductions alone can put $10K–$50K back in your pocket every year. Not new revenue. Just money you already spent that you're not writing off.
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