Now, as Donald Trump begin a new term as President of the United States, many working in the construction industry find themselves wondering what kinds of changes may be on the horizon.

While there’s no way to predict what the future will hold, there have been some educated predictions regarding the kinds of changes that the construction industry may see after Donald Trump officially takes office in 2025 and beyond.

What About Tariffs?

One of the most significant changes that Donald Trump promised during his campaign was that he would introduce and enact new tariffs on imported goods, particularly those coming from China, in an effort to reduce the country’s reliance on foreign imports while keeping more business here in the United States. While this has been a controversial policy proposal, the fact remains that Trump will likely impose tariffs ranging anywhere from 10% to 60% on such imports as steel, lumber and aluminum.

Of course, these are all materials that construction firms rely on to complete their work. So, what will these tariffs mean for construction companies? There’s a good chance that these firms will be forced to seek domestic sources of these materials—though it’s not yet clear whether the domestic supply will be able to meet the demand. Some others have speculated that construction firms will have to absorb increased expenses related to these new tariffs, which could have a significant impact on construction firms and their bottom lines.

Bonus Depreciation for Tax Savings

While tariffs may become an issue for construction businesses, one proposed change under the new Donald Trump administration that may work to their benefit is the reintroduction of a 100% bonus depreciation rule. This would allow construction companies to deduct the full costs of any large capital investments, which could help these firms better utilize their resources while increasing cash flow. This depreciation rule would apply to any significant capital investments, including equipment and machinery. And with more cash flow, it is possible that construction firms could invest more in innovative technology and equipment.

Scaling Back on Environmental Tax Credits

Compared to the Biden administration, it is also likely that the new Trump administration will be less focused on clean energy and environmental issues. With this in mind, some have suggested or speculated that current tax credits offered on clean-energy investments as part of the Inflation Reduction Act may be scaled back or eliminated altogether.

If this does occur, then construction firms will need to revisit their strategies when it comes to sustainability and environmentally friendly practices. If there is no financial incentive to opt for sustainable building practices, construction companies may be less likely to employ these practices.

Qualified Business Income Deductions

Finally, it is also worth noting that the Trump administration has mentioned plans to extend the current qualified business income (QBI) deduction that was originally set to expire in 2025. If this occurs, then smaller to mid-sized construction firms could benefit from significant tax savings in the coming years. Specifically, this deduction allows qualifying businesses to deduct as much as 20% of their QBI, which could significantly reduce taxable income and overall tax liability. There are even rumors that this deduction could be made permanent, but this won’t be clear until after the new administration takes office in 2025.

How the Construction Industry Should Prepare

Although only time will tell what the future holds for the incoming administration, there’s a good chance that the country will see some major changes when it comes to business taxes, credits and tax incentives. These changes will have notable impacts on many industries, including the construction industry.

For those who own and operate construction firms of any size, now would be a good time to start thinking about how these potential changes would affect their businesses. Meeting with a qualified business planner, financial advisor or tax planner ahead of the new year could also be a good way to prepare and start making any changes that may be needed. With a little foresight and preparation, construction industry business owners can stay on top of changes and keep their businesses running as smoothly as possible under a new administration.

Corrigan Krause Can Help

The Corrigan Krause Construction Services Group is here to help you navigate any changes coming in 2025 and beyond. Click here to request more information about becoming a Corrigan Krause client and sign up for our Construction Services newsletter.