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Tax Efficiencies
You’ve probably discussed the One Big Beautiful Bill Act (OBBBA) with your team and tax advisors already and how you may implement certain aspects of the bill. But when it comes to savings within a construction or expansion project, we can help.
We are able to work with you during and after the construction process to help navigate through the cost segregation process or any other scenarios that are applicable to your project.
Quick Reference Table
| Provision | Key Benefit | How We Support You |
|---|---|---|
| Section 168(k) update | Immediate tax deduction of project costs using bonus depreciation. | Assist in the cost segregation study analysis of your project to maximize the amount of property that can be expensed in the current year versus recovering over 39 years. |
| Section 168 (n) addition | Immediate tax deduction of new or substantially improved manufacturing building. | Assist in identifying eligibility during project planning |
| Section 179 increase | Increase in the immediate tax deduction to $2.5 million for the purchase price of qualifying equipment and software placed into service during the year. | Assist in identifying asset placement timing and qualification |
In addition, provisions for deductions related to to energy efficiency improvements in commercial buildings are set to expire in June 2026.
Here’s a slightly deeper dive on the key business provisions.
Section 168(k): Full expensing of qualified property
OBBBA extends the immediate 100% expensing of the cost for qualified property placed in service after January 19, 2025. This includes tangible personal property with a recovery period of 20 years or less. (Examples: machinery, equipment, qualified improvement property.)
Why it matters
This improves the benefits of cost segregation studies. We can work with you to break down a construction plan into component parts to allocate assets into highly-accelerated depreciation.
Section 168(n): 100% cost deduction for qualified production property
This section provides 100% expensing of certain non-residential real property used in a “qualified production activity” which includes manufacturing, production or refining of personal property.
important note
Any portion of a property that is used for offices, parking, software engineering or certain other functions is not eligible for the deduction.
Section 179: Increased expensing
This change increases the maximum amount a taxpayer can expense under Section 179 to $2.5 million. This is for qualifying equipment and software assets placed in service during the year.
significance
This more than doubles the maximum deduction amount in 2024, which was $1.22 million.
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The information provided on this website is for general informational purposes only and does not constitute tax advice. The tax treatment of construction services varies based on individual circumstances and local, state, and federal laws. Customers should consult a qualified tax professional for advice regarding their specific tax situation. Ideal Builders is not responsible for any tax liabilities or consequences incurred by its clients.
