Construction Tax Credits and Deductions

Opportunities for Tax Savings


Research and Development Tax Credits

The R&D (research and development) tax credit is often the most powerful tax incentive available to construction contractors. It was introduced in the 1980’s by Congress primarily for technological research. The definition of what qualifies as R&D has changed and expanded significantly and now is available to many industries, including construction.

When you think of activities which may qualify as research and development, some think of lab scientists inventing new products. For the construction industry, you are improving processes and creating new products regularly which are considered research and development and could qualify for valuable, government-endorsed tax incentives.

179D Federal Energy Tax Deductions

What are the requirements for a Federal Energy Tax Deduction?

  • Must reduce total annual energy and power costs with respect to the interior lighting, systems, heating, cooling, ventilation and hot water systems by 50%, but partial deductions are allowed.
  • Energy simulation is required to justify the deduction
  • Inspection and testing must be completed by a qualified engineer or contractor registered in the jurisdiction