- State and Federal Regulatory Changes
10 Key Tax Changes for Construction Under the One Big Beautiful Bill
1. 100% Bonus Depreciation Now Permanent – You can fully expense eligible equipment and property in the year of acquisition with retroactivity starting January 19, 2025.
2. Section 179 Expensing Increased – The deduction limit rises to $2.5M, phasing out when purchases exceed $4M.
3. Immediate Expensing for U.S. Production Property – Nonresidential property used in manufacturing qualifies for full depreciation if construction begins between January 20, 2025 and the end of 2028 and is placed in service by January 1, 2031 (awaiting additional IRS guidance).
4. Restore R&D Expense Deduction – Domestic research expenses are fully deductible in the year incurred; eligible small businesses may be able to amend 2022-2023 (and in some cases 2024) returns, with an election deadline of July 4, 2026.
5. Permanent 20% QBI Deduction – The pass-through business deduction is now indefinite, lowering effective top tax rates.
6. More Interest Deductions Allowed – The interest expense limit now uses EBITDA instead of EBIT, benefiting capital-heavy companies.
7. Higher SALT Cap (Temporary) – SALT deductions increase to $40K (indexed) through 2029, phasing back to $10K in 2030; high earners face gradual phase-outs.
8. Accelerated Cutoff for Green Energy Credits – Energy-efficient building deductions (179D) and home credits (45L) now expire after mid-2026.
9. Expanded Revenue Deferral for Residential Projects – Larger developments including more than four units can now defer income recognition until project completion.
10. Temporary Overtime Deduction (2025–2028) – Workers may deduct up to $12,500 ($25,000 joint) for qualifying overtime pay, subject to income phase-outs.
👉 Takeaway: The OBBB delivers sweeping, mostly taxpayer-friendly changes by locking in lower income tax rates, boosting standard deductions (especially for seniors), and expanding deductions for tips, overtime, and auto loan interest while also raising the SALT cap and enhancing estate and business tax breaks. Most benefits are front-loaded through 2028, meaning individuals and businesses should act now to maximize opportunities before key provisions phase out or revert. Get with your tax professional to verify how the new changes affect you and your business.
- Case Law Update
Louisiana Court Strikes Down Arbitration and Delegation Clauses:
In Dixon, et al. v. D.R. Horton, Inc., et al., No. C-722407 (19th Jud. Dist. Ct., East Baton Rouge Parish, La. June 28, 2024), a Louisiana state court declined to enforce arbitration and delegation provisions contained in residential sale contracts. The dispute stemmed from a class action brought by homeowners alleging construction defects. The builder sought to compel arbitration under clauses that referenced the “AAA Construction Industry Arbitration Rules.” The court found the clauses unenforceable for three key reasons: the contract referenced “AAA” without defining it or supplying the applicable rules to the homeowners; the delegation clause existed only by incorporation through the AAA rules rather than appearing directly in the agreement; and several contract provisions granted unilateral advantages to the builder, such as the right to terminate, impose liquidated damages, and recover attorney’s fees, without offering equivalent rights to the homeowners. The court stressed that the homeowners’ lack of industry expertise and the absence of clear explanations weighed heavily against enforcement.
This decision illustrates that in consumer transactions, particularly those involving unsophisticated parties, arbitration and delegation clauses must be explicit, well-explained, and even-handed to withstand judicial scrutiny. Reliance on incorporation by reference to external rules without defining terms or providing the rules can undermine enforceability. Builders and contractors should carefully review their form agreements to ensure that dispute resolution provisions are transparent, balanced, and supported by mutual obligations.
👉 Takeaway: Dixon serves as a warning that courts will closely examine fairness and clarity in arbitration clauses, especially where the contracting parties have unequal bargaining power. Clear definitions, mutual remedies, and accessible language are essential to ensuring that such provisions are enforceable in consumer contracts.
- Contract Provision of the Month – Storm-Related Demobilization and Remobilization.
Context: Storm events can trigger unplanned labor, equipment use, and schedule disruptions. These costs are often disputed if the contract is silent. This clause clearly shifts financial responsibility for demobilization and remobilization to the Owner when work must be paused or materials secured for weather protection. By addressing this in advance, contractors can reduce the risk of unpaid costs and schedule disputes while protecting project assets from damage.
Storm-Related Demobilization and Remobilization.
In the event that stored materials, equipment, or work in progress must be secured, relocated, or otherwise protected due to a forecasted or actual storm, hurricane, tropical event, or other severe weather condition, all reasonable costs of demobilization, securing, and subsequent remobilization shall be borne by Owner. Such costs shall include labor, equipment, transportation, and protective measures required to safeguard materials and work. Contractor shall provide Owner with notice as soon as practicable of the anticipated work and associated costs. Payment for such costs shall be made in accordance with the payment provisions of this Agreement, and no extensions of time shall be deemed waived as a result of such storm-related work.
- Claims-Based vs. Occurrence-Based Policies in Construction: Understanding the Difference
In the construction industry, insurance coverage is a critical component of risk management. Occurrence-based and claims-made coverages play distinct roles in protecting contractors, subcontractors, design professionals, and project owners. While both are designed to respond to covered losses, the key differences in how coverage is triggered and the types of risks they typically address, make it essential for construction professionals to understand each.
Occurrence-Based Coverage
An occurrence-based policy covers incidents that take place during the policy period, even if the related claim is submitted at a later date. If the event that gives rise to a claim occurs while the policy is in force, the policy will generally respond even if the claim is made years later. This structure makes occurrence coverage particularly valuable for risks that may take time to surface.
In the construction context, occurrence-based coverage is most commonly associated with Commercial General Liability (CGL) policies (although there can be claims-based CGL policies). A CGL policy typically covers bodily injury, property damage, and certain personal or advertising injuries arising out of the insured’s operations. For example, if a construction defect causes property damage three years after a project is completed, but the damage stems from work performed during the policy period, an occurrence-based CGL policy in place at the time of the work would generally respond.
Generally speaking, because occurrence-based coverage is not tied to the timing of the claim, it provides long-tail protection. This is especially important in construction, where statutes of repose and limitations can extend the window for potential claims years beyond project completion. However, it also means contractors must maintain detailed historical records to confirm what coverage was in place at the time of the alleged incident.
Claims-Made Coverage
A claims-made policy, by contrast, provides coverage only if the claim is made during the policy period (or an extended reporting period, if purchased) and the incident occurred after the policy’s “retroactive date.” This structure ties coverage to the timing of both the claim and the incident, making policy continuity and renewal strategy critical.
In construction, claims-made policies are most often seen in the context of professional liability or errors and omissions (E&O) coverage. These policies typically cover design professionals, engineers, architects, and sometimes contractors performing design-build services for errors, omissions, or negligent acts in their professional services. Because design errors may not be discovered until long after project completion, a claims-made E&O policy must be continuously renewed without gaps to maintain coverage for prior work. Dropping coverage or changing carriers without securing prior acts coverage can leave a significant exposure gap.
👉 Takeaway: In construction, occurrence-based policies like CGL provide long-term protection for incidents arising during the policy period, regardless of when claims are filed, while claims-made policies like E&O require continuous coverage to protect against professional liability exposures. Contractors should work closely with their insurance advisors to maintain both types where needed and to prevent costly gaps in coverage.
- Upcoming Speaking Engagements & Events
- Florida Roofing & Sheet Metal Assocation, Board and Committee Meetings, Delray Beach, FL, September 10-12, 2025.
- Associated Roofing Contractors of Oregon and SW Washington, State of the Industry Webinar, September 15, 2025.
- Roofing Contractors Association of South Florida, Immigration and Tariffs, Fort Lauderdale, FL, September 17, 2025.
Disclaimer: This newsletter is for educational purposes only and does not constitute legal or tax advice or create an attorney-client relationship.