By Mary Klett , ASA Communications Team
(This article is a synopsis of the ASA webinar held on October 31, 2025, where Mason Brady, of Brady CFO; and Jacob Wood, of Capstan Tax Strategies discussed with participants the impacts of the OBBB)
The One Big Beautiful Bill (OBBB), signed into law in July 2025, represents a sweeping reshaping of U.S. economic and tax policy. Building upon and expanding the 2017 Tax Cuts and Jobs Act (TCJA), the OBBB makes permanent many of the prior reductions while introducing new credits and deductions aimed at energizing U.S. manufacturing, construction, and domestic job creation.
For the construction industry, this legislation is a catalyst. From bonus depreciation and qualified production property (QPP) incentives to R&D reforms, overtime tax relief, and energy-efficiency phase-outs, the OBBB weaves construction directly into the nation’s broader manufacturing and infrastructure strategy.
1. The Big Picture: An “America-First” Manufacturing Revival
It’s important to note that the OBBB cannot be viewed in isolation—it is one leg of a three-part economic framework combining:
- Tax incentives for U.S. production and facility investment.
- Protective tariffs designed to favor domestic manufacturing.
- Efforts to maintain low interest rates to ease borrowing for developers and manufacturers.
Together, these policies form what we call a “three-legged stool,” encouraging companies to build—and build here.
The economic agenda is unmistakably nationalist: lower taxes, deregulation, and incentives to “make it in America.” For construction firms, this means new opportunities to design, build, and service the manufacturing infrastructure reshoring to U.S. soil.
2. The Manufacturing Boom: Construction’s New Frontier
Apple’s $500 billion expansion in U.S. manufacturing, along with major domestic investments from Honda, Johnson & Johnson, and others, confirm that the OBBB’s incentives are already influencing corporate decisions.
Many of these projects were conceived in anticipation of the legislation, but 2026 onward is expected to be the breakout period. As the incentives mature, construction firms positioned in industrial and manufacturing markets stand to see a surge of bids for new plants, distribution hubs, and retrofits.
Contractors and suppliers who haven’t yet entered the industrial or manufacturing construction sectors should begin networking now—with developers, local economic development agencies, and manufacturers—so they can compete for upcoming design-build opportunities.
3. 100% Bonus Depreciation: The Core Incentive
At the heart of the OBBB is the restoration and expansion of 100% bonus depreciation, which had been phasing out under prior law.
- Under the TCJA, bonus depreciation was scheduled to drop from 60% in 2024 to 40% in 2025.
- The OBBB reinstates a permanent 100% deduction for eligible property with a class life of 20 years or less.
- That includes vehicles, heavy equipment, furniture, and office fixtures—core assets for construction companies.
But the OBBB goes further by introducing a temporary “full expensing” provision for Qualified Production Property (QPP)—an entirely new category that could transform industrial construction.
Qualified Production Property (QPP)
QPP encompasses property “used in manufacturing or production,” including facilities traditionally excluded from bonus depreciation because of their 39-year class life. In simple terms, manufacturing facilities themselves can now qualify for 100% bonus depreciation in the year they are placed in service.
While the IRS has yet to issue final regulations, we expect QPP to cover:
- New or expanded manufacturing plants,
- Remodels or significant improvements to existing industrial facilities, and
- Possibly certain assembly or processing centers that transform raw or semi-finished goods.
This provision applies to construction begun after January 19, 2025 and before January 1, 2029, with placement-in-service required by January 1, 2031.
The temporary nature of the rule is expected to spur a surge of building activity between 2025 and 2029, as companies rush to capture the deduction window.
How Bonus Depreciation Changes the Math
This tax treatment dramatically alters the cost equation for developers and owners. A property previously depreciated over 39 years can now be written off in a single year—creating a substantial upfront tax shield.
For example, on a $23 million facility, prior law yielded roughly $1.4 million in tax savings; under the OBBB’s 100% rule, the savings could reach $3 million or more.
That liquidity can be redeployed into additional projects, accelerating both construction demand and reinvestment cycles.
4. Opportunities in Rural and Opportunity Zones
We also want to underscore that the OBBB pairs perfectly with Opportunity Zone (OZ) incentives. Many designated OZs are low-income or rural regions, and building manufacturing sites there can trigger stacked benefits:
- Bonus depreciation or QPP eligibility,
- Deferral or exclusion of capital gains under the OZ rules, and
- Potential state or local grants and abatements tied to job creation.
We predict a coming wave of rural manufacturing campuses, with corresponding needs for worker housing, retail services, schools, and infrastructure. Construction firms with capabilities in those complementary sectors—utilities, housing, commercial—will find abundant follow-on opportunities.
5. Section 179D: The Energy-Efficiency Deduction Winds Down
While the OBBB largely eliminates or reduces “green” tax incentives, Section 179D remains in a transitional phase.
What It Is
Section 179D allows deductions for energy-efficient property placed in service within commercial buildings—covering lighting, HVAC, hot-water systems, and building-envelope improvements. Both building owners and designers of systems for tax-exempt entities (schools, hospitals, tribal governments, etc.) can claim it.
What’s Changing
The OBBB phases out 179D for projects beginning after June 30, 2026, but crucially the cutoff is based on construction start date, not completion. That distinction allows projects with long lead times—such as hospitals or government facilities—to remain eligible for several more years.
Despite this sunset, industry lobbying is already seeking an extension, reflecting the credit’s popularity among design-build and mechanical contractors. Until official repeal, construction professionals engaged in public or non-profit projects should continue leveraging 179D, particularly where HVAC and lighting systems exceed the ASHRAE 90.1-2007 efficiency baseline.
6. Workforce-Focused Incentives
The OBBB also includes several workforce provisions that indirectly benefit contractors struggling with labor shortages.
6.1. No Federal Income Tax on Overtime
Construction and trade workers now enjoy zero federal income tax on overtime wages, a change intended to encourage longer workweeks and alleviate skilled-labor scarcity.
Employers and payroll services must adjust reporting systems to correctly segregate overtime earnings. The IRS has provided grace periods while payroll providers adapt, but accurate tracking will be essential for compliance.
6.2. Pell Grant Expansion for Trades
The bill broadens Pell Grant eligibility to include short-term, high-tech, and skilled-trade training, allowing workers to pursue certifications or apprenticeships without incurring debt. This reform directly supports workforce development in construction, welding, HVAC, and electrical trades—fields hit hardest by shortages.
6.3. Auto Loan Interest Deduction
In a nod to the bill’s heavy emphasis on U.S. manufacturing—particularly the automotive sector—employees can now deduct up to $10,000 in interest on personal car loans, provided the vehicle was assembled in the United States. The rule reinforces the “buy American” ecosystem while offering modest relief to workers.
7. The R&D Tax Credit: A Major Win for Construction Innovators
Perhaps the most transformative element for construction firms is the modernized Research & Development (R&D) tax credit.
Construction is often overlooked as an R&D industry, but the presenters stressed that design-build contractors, engineers, and specialty trades regularly engage in qualifying activities, such as:
- Design development and CAD modeling,
- Structural or systems engineering,
- Prototype or mock-up testing,
- Problem-solving for unique site or material conditions, and
- Development of proprietary means and methods.
The Pre-OBBB Problem: Mandatory Amortization
The TCJA introduced a rule requiring companies to amortize R&D expenses over five years domestically (15 years internationally), rather than deducting them immediately. This “mandatory amortization” tied up cash flow and discouraged firms from claiming credits—especially small and mid-sized businesses unaware they even had R&D expenses.
The Fix: Amortization Repeal and Domestic Preference
The OBBB repeals this requirement for domestic R&D, restoring immediate expensing of qualifying research wages and materials. However, foreign R&D must still be amortized over 15 years.
The result: outsourcing design or engineering overseas is now far more expensive, while domestic development has become dramatically cheaper.
This change aligns perfectly with the bill’s goal of reshoring manufacturing and engineering. Software, CAD, and design roles are already rebounding in U.S. job data—a trend likely to continue as tax advantages compound.
Retroactive Opportunities
For “small and mid-sized businesses” (under $31 million in gross receipts), the OBBB allows one year to retroactively amend past returns and remove prior amortization. Firms have until July 2026 to file amended returns and recapture lost deductions from 2022–2024.
For many construction companies—especially those with internal design or pre-construction teams—this could translate to tens or hundreds of thousands of dollars in recovered tax savings.
8. Broader Implications: A Construction-Led Industrial Renaissance
The OBBB positions the construction industry not merely as a beneficiary but as a central driver of the national economic strategy.
What to Expect
- A surge in manufacturing and industrial projects (2026–2030)
- Semiconductor plants, logistics hubs, vehicle assembly, pharmaceutical manufacturing, and more.
- Massive demand for general contractors, MEP firms, and specialty trades with industrial experience.
- Rural development waves
- Construction of roads, utilities, and housing to support new manufacturing campuses.
- Secondary growth in healthcare, education, and local commerce.
- Renewed private-sector investment
- Bonus depreciation and QPP incentives dramatically improve project ROI.
- Expect an uptick in speculative industrial construction and private financing deals.
- Skill and labor intensification
- Overtime exemptions and Pell Grant expansions will attract more workers into trades, though competition for skilled labor will remain fierce.
- Regulatory clarity pending
- IRS guidance on QPP definitions and cost-segregation boundaries will be critical.
- Advisors recommend proactive planning but caution against major commitments until official rules are finalized.
9. Practical Next Steps for Contractors
- Engage Specialized Advisors
The OBBB’s complexity demands collaboration between CFOs, CPAs, and tax attorneys familiar with construction. A nuanced understanding of depreciation classes, QPP eligibility, and R&D qualification is essential. - Identify QPP-Related Markets
Build relationships with manufacturers, developers, and economic-development councils targeting new plants or facility expansions. - Maximize Immediate Deductions
Review equipment purchases, vehicles, and building improvements for 100% bonus depreciation opportunities. - Audit Energy-Efficiency and Design Projects
Before 179D expires, claim eligible deductions on HVAC and lighting retrofits for schools, hospitals, and government buildings. - Claim or Amend R&D Credits
Map internal design, engineering, and problem-solving activities to Section 41 and 174 definitions. File amendments before the July 2026 deadline to capture retroactive benefits. - Educate Your Workforce
Inform employees about overtime tax exemptions and Pell Grant access—both help with recruitment and retention.
10. Conclusion: Building America’s Next Boom
The One Big Beautiful Bill is more than a tax package—it’s a blueprint for an industrial and construction renaissance. By realigning incentives toward domestic manufacturing, empowering the workforce, and restoring immediate expensing for capital and research, the OBBB makes it cheaper and more rewarding to build, innovate, and produce in America.
For construction firms, it is both an opportunity and a challenge. The next five years will reward those who:
- Understand the tax levers,
- Position themselves near manufacturing growth, and
- Invest in talent and innovation.
In brief, this bill is “a love letter to U.S. manufacturing.” For construction businesses, it may well be the most profitable love letter in a generation.
About the Authors:
As President of Brady CFO, Mason leads a team of Fractional CFOs to support values-oriented CEOs and owners in the agricultural and construction industries.
Mason has served as CFO & Head of Supply Chain for an Organic Food Company, managing financial operations across farming, manufacturing, warehousing, distribution, and logistics to ensure efficient product movement to client fulfillment centers. To date, Mason has personally served 10+ clients in a fractional capacity, supporting companies with annual revenues ranging from $2 to $100 million.
Jacob partners closely with his clients—planning, building, and celebrating successes together. Known for creating lasting relationships rather than short-term transactions, he combines sharp analytical skills and financial expertise to serve as a trusted strategic advisor. Jacob frequently speaks to audiences nationwide, bringing clarity, practical insight, and a touch of humor to complex tax and financial topics.
Over the past decade, Jacob has overseen thousands of R&D, Cost Segregation, and 179D studies, generating more than $800 million in tax benefits for his clients. His deep experience spans architecture, engineering, construction, manufacturing, software, and life sciences.
Jacob holds a Juris Doctor from Indiana University Maurer School of Law and a Bachelor of Arts from Duke University. He is a member of the Texas Bar Association.
