Contractor tax deductions most builders miss.
Ten deductions we see construction contractors leave on the table — every single year. If you claim even half of these, you can drop your taxable income by $20K–$100K depending on your size.
This is general information, not tax advice. Every contractor's situation is different — talk to your CPA. We work with your CPA, not instead of one.
Section 179 — equipment expensing
In 2026, you can expense up to $1.22M of qualifying equipment, trucks, and machinery in the year you buy it — instead of depreciating it over years. If you bought a skid steer, a work truck, or a trailer this year, this alone can be a five-figure deduction.
Work vehicles over 6,000 lb GVWR
Heavy work trucks (most 3/4 ton and up) qualify for Section 179 treatment AND bonus depreciation. If it's a 100% business-use vehicle, the whole thing can go on the first year. Document mileage logs.
Tools, small equipment, expendables
Nail guns, saws, hand tools, generators, ladders, compressors, fuel for job sites, drill bits, blades — all deductible. Many builders forget to track the $50–$500 purchases. They add up to $10K+ a year.
Home office deduction
If you run the business out of your house — even part of the garage or a dedicated room — you can deduct a portion of utilities, insurance, and depreciation. Most builders never claim this because they think it's a red flag. It isn't, if you're actually using the space.
Per diem + job site meals
Meals while on a job site or traveling for work are 50% deductible. If you're sending crews out of town, IRS per diem rates apply. Most contractors miss this entirely.
Subcontractor 1099s
Every dollar you pay a 1099 sub is deductible — but only if you actually issue the 1099-NEC by January 31. Miss the filing and you can lose the deduction plus face penalties. We handle this for every BuilderCFO client.
Retirement contributions — SEP-IRA or Solo 401(k)
A SEP-IRA lets you contribute up to 25% of net self-employment income. A Solo 401(k) can get even higher. For a $200K-profit builder, this can be a $40K+ deduction. Most contractors don't set one up because their books aren't clean enough to calculate it.
Health insurance premiums
Self-employed health insurance is fully deductible above the line. If you're paying premiums for yourself and family, you likely qualify.
Licensing, bonding, CE, and trade dues
Contractor's license renewal, surety bond premiums, NAHB membership, continuing education, and subscriptions to trade tools (Buildertrend, Procore, estimating software) are all deductible.
Cell phone, internet, software
Business-use portion of cell phone and home internet is deductible. So is every SaaS tool you use for work — including QuickBooks, your PM software, your bookkeeping fees, and your CPA fees.
It's not your CPA's fault. It's your books.
Your CPA can only deduct what they can find. If your tools, fuel, and sub payments are lumped under "other expenses" in a generic chart of accounts, your CPA has to choose between spending hours sorting it out or just taking what's easy.
When your books are set up with an NAHB chart of accounts and every expense is tagged by job and cost type, your CPA walks into tax season with a clean list. That's where the deductions live.
You'll meet with
Cory Salisbury
Want a second look at your books before tax season?
Book a free 30-minute call. We'll flag the deductions your current bookkeeper is missing.
What we'll cover
- A 10-minute look at where your numbers are today.
- 3 specific profit leaks I'd chase first for a business your size.
- Whether we're a fit — honest yes or no, no pressure either way.
Pick a date
Weekdays, 11:00 AM – 2:00 PM MT
“Recovered $34,000 in forgotten retainage in Q1.” — Rachel K. · specialty trade, 8 GCs