Month: August 2025

Union Strong, Cyber Smart: The Importance of Cybersecurity Plans for Unions

In an increasingly technology-centric world, data security is unsurprisingly among the top concerns for many organizations in 2025—and unions are no exception. Unions are responsible for storing and protecting sensitive digital data, including members’ personal details, union financial information, and collective bargaining strategies. Unfortunately, this data can attract cyber criminals seeking to profit from stolen confidential information.

Recent cyberattack incidents involving unions have demonstrated the serious level of damage these attacks can inflict. In July 2024, the Pennsylvania State Education Association (PSEA) experienced a data breach that exposed the personal information of more than 500,000 education professionals. The exposed data included member names, contact information, social security numbers, driver’s license and passport information, banking information (account/routing numbers, PINs, card numbers, etc.), usernames and passwords, health insurance information, and medical records. The PSEA now faces a class action lawsuit by current and former members whose personal data was breached. UNITE HERE, a New York-based union representing workers in the hospitality and food service industries, recently faced a similar class action suit as a result of a 2023 data breach. The union has agreed to pay $6 million to resolve the lawsuit. Unfortunately, these are just two of many examples.

All it takes is one security breach to damage a union both financially and reputationally. Cybersecurity plans are crucial for unions to protect their members, assets, and operational integrity. A strong cybersecurity plan consists of clearly established protocols put in place to minimize the risk of cyber-attacks, as well as a plan for responding to security incidents.

Below are some of the essential components of a comprehensive cybersecurity plan.

Training and Awareness

Raising awareness is one of the most important preventative measures you can take to safeguard your union against threats. Regular cybersecurity training helps employees to recognize cyber threats, implement safe cyber practices, and prevent potential attacks.

Password Policies

Just like you wouldn’t leave your house unlocked at night, you should never leave your devices and accounts unsecured. In fact, you should double-lock them…and change the locks out frequently. Strong passwords, multi-factor authentication, and regular password changes help to secure devices and accounts containing important data.

Encrypted Data

Encrypting sensitive data and communications ensures that your information is unreadable to unauthorized parties.

Firewalls, Anti-Malware, and Antivirus Software

Protections such as network firewalls, anti-malware, and antivirus software help to secure your online systems by detecting and blocking malicious activity, including viruses, malware, spyware, and ransomware. These defenses act like gatekeepers for your network, monitoring and controlling what goes in and out.

Updated Software

Outdated software systems are more vulnerable to attack. Regularly updating your union’s software is essential for maintaining your network’s resilience to threats.

Regular Risk Assessments

Regular risk assessments—conducted either internally or by a third-party cybersecurity service provider—are necessary for identifying system weaknesses and areas for improvement.

Response Plan

All unions should create a response plan outlining the steps to be followed in the case of a cybersecurity threat or incident. CISA (Cybersecurity and Infrastructure Security Agency) provides this guide for creating an Incident Response Plan (IRP), identifying actions that should be taken by an organization before, during, and after a cyber incident.

Protect Your Union’s Financial Health

Creating and implementing a comprehensive cybersecurity plan is a critical step you can take to safeguard your union’s sensitive information. When it comes to protecting your union’s financial health and integrity, partnering with RBT CPAs is another measure you can take. RBT CPAs has been serving organizations in the Hudson Valley and beyond for over 55 years. Our experts are here to support all of your union’s accounting, advisory, audit, and tax needs. Contact RBT CPAs today to find out how we can be Remarkably Better Together.

Innovation in the Hospitality Industry: How New Tech Can Help Boost Profits and Efficiency

It’s no secret that technology is transforming the hospitality industry. From online ordering to virtual reality hotel tours, nearly every aspect of hospitality has been reshaped by recent advances in technology.

Let’s take a look at some of the latest developments in the digital revolution—and how restaurants and hotels can leverage these technologies to improve their operations and increase profitability.

Point-of-sale (POS) Systems:

POS systems act as command centers for all transactions and data within a business, enabling hospitality businesses to manage food orders, payments, invoicing, inventory, sales tracking, staff scheduling, and more—all from one central location. POS systems automate many of these processes, leading to increased accuracy, consistency, and efficiency across the board.

Online Ordering and Reservations:

Online ordering systems let customers place orders directly from a restaurant website or via third-party mobile apps. Similarly, online reservation systems allow customers to make reservations from their phones or computers, while at the same time enabling restaurants to better manage seating plans and wait times.

Digital and QR Code Menus:

Digital menus, electronic menu displays, and mobile QR code menus allow restaurants to update menus in real-time and display eye-catching visuals.

Contactless and Mobile Payments:

Contactless payment enables customers to tap their credit cards or smartphones on a payment terminal to pay without cash or a PIN, while mobile payments allow customers to pay directly from their phones.

Self-Order Kiosks:

Self-service kiosks and tableside ordering tablets enable customers to view menus and place orders using a touchscreen.

Self-Check-in/Check-out Kiosks:

Similar to self-order kiosks, self-check-in kiosks allow hotel guests to check in and out of their rooms without the need for a physical staff member. These self-service kiosks create a faster and more convenient check-in experience for guests while also reducing staffing costs.

Automated Email Marketing:

Specialized software enables hospitality businesses to automate emails to customers based on pre-established triggers, cutting down on administrative time and costs.

Personalized Marketing through AI:

Artificial intelligence has the ability to learn user preferences and tailor marketing strategies and experiences to meet those unique preferences.

AI Chatbots:

Customer service chatbots answer questions for guests in place of a human employee, ensuring consistent service and responsiveness, and saving hospitality employers on labor costs.

Virtual Tours:

Virtual reality tours offer guests an immersive look at buildings, grounds, and amenities prior to booking.

Sustainable Technology:

Sustainable tech, such as smart thermostats and lighting, renewable energy sources, and waste reduction systems, can help restaurants and hotels save on energy and operational costs.

Data Analytics:

Automated data analytics technology helps hospitality managers identify purchasing patterns, customize guest experiences, and optimize pricing.

Demand Forecasting:

AI-driven predictive analytics allow businesses to more accurately forecast future demand, guiding important operational decisions.

Social Media:

Hotels and restaurants are increasingly turning to social media marketing on platforms like TikTok and Instagram to engage with customers, especially among younger audiences.

Are You Taking Advantage of Available Technologies?

Hospitality businesses are seeing real benefits as a result of embracing AI, automation, and other technologies. Based on a 2024 survey conducted by TouchBistro and research firm Maru/Matchbox, nearly all of the 600 restaurant owners and managers participating in the survey reported benefits from automation, “with 42% reporting more productive staff, 41% reporting an increase in sales, and 40% reporting business growth.” EHL Insights lists several benefits for hospitality businesses adopting new technologies, including more personalized guest experiences, increased operational efficiency, cost optimization, and improved competitive advantage. While you consider the benefits new technology could bring to your business, let RBT CPAs take care of your accounting, audit, tax, and advisory needs. Reach out to RBT CPAs today to find out how we can be Remarkably Better Together.

What are the Fiscal Responsibilities of Board Members?

Members of the governing board are responsible for developing and overseeing the municipality’s fiscal policies and operations. This article provides an overview of the fiscal responsibilities of board members, as outlined in the Local Government Management Guide by the Office of the New York State Comptroller.

Developing Fiscal Policies

Board members are responsible for developing, adopting, and reviewing fiscal policies. These policies must be communicated clearly to all relevant members of management and staff. Local governments should review their fiscal policies annually and update them as needed. Below are the fiscal policies required by general municipal law, as well as policies that, while not required by general municipal law, are recommended to prevent fraud and abuse within the municipality. Descriptions of each of these policies can be found in the OSC’s guide.

Policies Required by General Municipal Law:

Code of Ethics, Investment Policy, Procurement Policy.

Recommended Policies:

Wire Transfer and Online Banking Policy, Travel and Conference Policy, Credit Card Policy, Computer Use Policy, Cell Phone Use Policy, Capital Asset Control Policy.

Additional policies may be developed for other aspects of financial operations, including budgeting, cash receipts and disbursements, managing fund reserves, retirement reporting, billing procedures, claims processing, financial reporting and network security.

Monitoring Fiscal Operations

Interim Reports:

Applicable adopted policies should include instructions regarding the timing and content of periodic or “interim” reports. Board members are responsible for reviewing regular financial reports from senior management and department heads. Interim reports contain information related to financial position, results of operations, budget status, policy compliance, service or project costs, performance measures, and legal compliance matters.

Budgetary Status Reports:

The governing board is responsible for adopting and monitoring the budget. The CFO, designated budget officer, and department heads should monitor actual revenues and expenditures, reporting these numbers to the board. These numbers can then be compared to budget estimates to identify any variances or need for corrective action. It is the duty of the board to review budgetary status reports, question any unfavorable variances, and ensure the necessary corrective action is taken.

Correcting Budgetary Problems:

When the budgetary status report indicates unfavorable variances or issues, the governing board is obligated to implement corrective action in a timely manner. Corrective actions may include restricting additional expenditures in that particular area or making a budgetary amendment. A budgetary amendment can be accomplished by:

- transferring between appropriations within the same fund
- appropriating available fund balance
- appropriating aid, grants, gifts, or insurance proceeds
- issuing budget notes

Special Purpose Reports:

Local officials may prepare special purpose reports for certain categories to be reviewed such as construction projects, procurement, personnel, receivables, and particular revenues or expenditures.

Conducting Audits

Lastly, the governing board is responsible for conducting audits. Audits are used to assess the municipality’s financial operations, identify issues, and ensure the proper management of public funds.

Claims Auditing:

The role of the board in auditing claims serves as an important internal control because it separates the purchase of goods/services and the authorization of payments for those goods/services.

Annual Audits:

The board is required to conduct an annual audit—or to arrange an annual external audit (depending on specific audit requirements)—of the municipality’s financial records, books, and documents.

Board-Directed Annual Audits:

Annual audits conducted by the governing board should ensure that all financial records are complete and up-to-date, that all transactions are recorded properly, that accountability is computed monthly, and that all required reporting is done accurately and timely.

Corrective Action Plans:

Any municipality that receives an audit report or management letter with recommendations should prepare a corrective action plan. A corrective action plan is a written document detailing the corrections planned in response to each recommendation. The governing board is responsible for reviewing and approving the corrective action plan.

Additional Resources and Guidance

The governing board’s oversight is integral to the financial health of a municipality. As such, it is crucial that board members are aware of their responsibilities regarding fiscal operations. Additional resources and reference information for board members, including specific audit and recordkeeping requirements, can be found in the appendices at the end of the OSC’s guide. The OSC’s “Academy for New York State’s Local Officials” also provides training, resources, and webinars on various financial topics designed specifically for local government officials. And as always, RBT CPAs is here to support your municipality’s accounting, tax, audit, and advisory needs. Contact us to learn more.

How the OBBBA’s New Student Loan Limits Could Impact Veterinary Students

According to the American Veterinary Medical Association (AVMA), “thirty-nine percent of graduating veterinarians reported having debt between $200,000 and $400,000 in 2024, with just under 16.6% having no debt at all. However, the same percentage (16.6%) of last year’s veterinary graduates had educational debt of $300,000 or higher.”

Between tuition, academic materials, and living expenses, the cost of attending veterinary school in the U.S. amounts to hundreds of thousands of dollars per individual. Facing significant costs, the majority of veterinary students rely on some form of federal financial aid to help cover their schooling expenses. However, the recently passed One Big Beautiful Bill Act (OBBBA) makes several significant changes to the student loan landscape in our country. This article discusses one of the major student loan changes imposed by the OBBBA—new limits on federal financial aid—and how this policy change might impact veterinary students and the industry as a whole.

Below are the new federal student loan limits set by the OBBBA, as reported by the American Veterinary Medical Association (AVMA):

Beginning with loans disbursed after July 1, 2026, professional students, including veterinary students, may borrow up to $50,000 per year in Direct Unsubsidized Loans, with a lifetime cap of $200,000. Graduate students are limited to $20,500 a year, with a maximum aggregate limit of $100,000.
Parent PLUS Loans, which are unsubsidized federal loans available to parents supporting their dependent undergraduate children, are now limited to $20,000 annually per student, up to a lifetime total of $65,000 per student.

The OBBBA also establishes a lifetime federal student loan borrowing cap of $257,500, excluding Parent PLUS loans.

As of July 1, 2026, the OBBBA also eliminates the Graduate PLUS Loan Program, which allows graduate and professional students to borrow up to the full cost of attendance. According to the Association of American Medical Colleges (AAMC), nearly half of all medical students rely on Grad PLUS loans to supplement the cost of medical school.

The changes to federal student loans under the OBBBA could reshape educational financing for many veterinary students. Many are concerned that the new caps on federal borrowing and the elimination of the Grad PLUS program will limit financing options for professional students facing significant educational costs. With limited access to federal loans, some students may need to turn to private loans to help cover the cost of their education. Private loans can come with higher interest rates, stricter terms for borrowing and repayment, and more stringent eligibility requirements. These financial hurdles could lead some prospective veterinary students to delay or reconsider their educational plans altogether. As a result, the ripple effects of these policy changes may ultimately impact the broader veterinary workforce and industry as a whole.

Time will tell how the changes to federal borrowing under the OBBBA will impact veterinary students’ financial outlook and educational decisions. But for now, prospective students should consider the new federal loan policies when making their educational and financial plans. RBT CPAs will continue to monitor the effect of federal policy changes on the veterinary industry. As always, RBT’s veterinary accounting team is here to support all of your practice’s accounting, tax, audit, and advisory needs. Contact us today to find out how we can be Remarkably Better Together.

Selecting Your Structure: Entity Structure Options for Commercial Brokers

The choice of entity structure for commercial real estate brokers is an important one, as it determines factors such as the business’s taxability, liability protection, administrative complexity, and level of flexibility. In this article, we’ll highlight three entity structure options we recommend for commercial real estate brokers, along with the advantages and disadvantages of each.

The following entity types are preferable as they are all taxed at the owners’ individual rates (meaning the business itself doesn’t pay a separate federal income tax) and all have asset protection.

Single-Member LLC

A single-member LLC (SMLLC) is a limited liability company with a single owner. This business structure offers the liability protection of a corporation—shielding the owner’s personal assets from business debts and liabilities—while providing the tax benefits of a sole proprietorship or partnership, such as pass-through taxation and simpler tax filing. SMLLCs involve less administrative burden, as owners report the business’s taxes on their personal tax return. However, SMLLCs are subject to self-employment tax and are not eligible for the state PTET deduction.

Pros

- Pass-through taxation—avoids double taxation from both federal and individual income tax
- Personal assets are protected
- Less administrative burden—taxes are reported on the owner’s personal tax return

Cons

- Subject to 15.3% self-employment tax (equivalent to FICA tax): combined 12.4% Social Security tax (capped at $176,100 for 2025) and 2.9% Medicare tax (no cap)
- Not eligible for state Pass-Through Entity Tax (PTET) deduction

S Corporation

An S corporation can have a single owner or multiple owners. Like a C corporation, an S corporation offers limited liability protection—but unlike a C corporation, an S corp is classified as a pass-through entity, preventing double taxation. Owners of S corps who are also employees are required to pay themselves a “reasonable salary,” which is subject to FICA taxes. However, the remaining profits can be distributed to the owner(s) as dividends, which are not subject to FICA taxes. By strategically dividing business income between salary and distributions, owners of S corps are able to limit their FICA exposure. S corps can also elect to participate in the state Pass-Through Entity Tax as a way of bypassing the State and Local Tax (SALT) deduction cap and reducing tax liability. However, owners of S corps may face higher administrative costs and burdens due to factors such as compliance requirements and the need to file separate corporate and individual tax returns. S corps must also adhere to more rigid rules. For example, 50/50 shareholders are required to split distributions equally to maintain S corp status. A shareholder can also only deduct losses up to the amount of their basis in the S corp (basis limitation rule).

Pros

- Pass-through taxation—avoids double taxation from both federal and individual income tax
- Personal assets are protected
- Limited exposure to FICA taxes
- Can elect to participate in PTET

Cons

- Higher administrative costs and burden
- Subject to more rigid rules

Multi-Member LLC

A multi-member LLC (MMLLC) is a business structure with more than one owner that provides the added benefit of limited liability protection. Like SMLLCs and S corps, multi-member LLCs enjoy pass-through taxation. They can elect to participate in PTET. MMLLCs offer increased flexibility regarding income and loss allocation among members (unlike S corps, in which distributions must be divided in proportion to ownership interests). MMLLCs are, however, subject to a 15.3% self-employment tax and face the additional administrative cost and burden associated with filing separate tax returns. The flexibility of MMLLCs can also present complexities such as the need for operating agreements, more complicated tax returns, and the potential for disagreements between members.

Pros

- Pass-through taxation—avoids double taxation from both federal and individual income tax
- Personal assets are protected
- Flexibility in income/loss allocations
- Can participate in PTET

Cons

- Higher administrative costs and burden
- Subject to 15.3% self-employment tax
- Increased flexibility can create complexities

Reach Out for Further Guidance

For many real estate brokers, the best structure choice is an LLC, which can be taxed as any of the above structures, offering greater flexibility. As you can see, each of these entity structures comes with its own tax, legal, and administrative considerations. Our accounting and tax professionals at RBT CPAs can help you decide which entity structure works best for your tax planning needs, in coordination with your legal counsel. Reach out to our real estate accounting team for individualized tax guidance. As always, RBT CPAs is here to support all of your accounting, tax, audit, and advisory needs. Contact us today to make an appointment.

The OBBBA and Your Estate Plan: Key Changes and Considerations

The One Big Beautiful Bill Act (OBBBA) has introduced sweeping changes across the economic and legal landscape of our country, impacting individuals, families, and businesses in a range of ways. These changes will affect various aspects of financial planning—and estate planning is no exception. From revised estate and gift tax exemptions to expanded uses for 529 savings plans, the legislation includes provisions that could affect your family’s financial future. In this article, we break down the key changes introduced by the OBBBA that may impact your long-term estate planning strategy.

Federal Estate, Gift, and GST Exemption

Beginning in 2026, the OBBBA permanently increases the lifetime exemption amount for the federal estate, gift, and generation-skipping transfer (GST) tax to $15 million per person ($30 million for married couples), indexed annually for inflation. The OBBBA eliminates the previously scheduled sunset of the higher exemption threshold. Please note that the New York State estate tax exemption amount remains at $7.16 million per person.

Permanent Extension of TCJA Tax Rates

The OBBBA makes permanent the tax rates and brackets established by the Tax Cuts and Jobs Act (TCJA) of 2017.

Qualified Small Business Stock (QSBS)

For QSBS acquired after enactment of the OBBBA, the percentage of gain excluded from gross income will rise from 50% to 75% if the stock is held for four years. If held for five years or more, the exclusion percentage will increase to 100%.

Expansion of 529 Plans

The OBBBA expands permitted uses of funds in 529 education savings plans by broadening the definition of “qualified expenses.” Tax-exempt distributions from 529 savings plans now apply to additional expenses (beyond tuition) related to enrollment in private, public, or religious elementary or secondary schools, including books, materials, testing fees, tutoring costs, dual enrollment fees, and educational therapies. The OBBBA also increases the annual limit for 529 account distributions for K-12 expenses from $10,000 to $20,000. Additionally, the OBBBA allows 529 plan funds to be used for “qualified postsecondary credentialing expenses,” including tuition, fees, books, supplies, testing, equipment, and continuing education required for participation in recognized postsecondary credential programs.

Trump Accounts

The OBBBA establishes a “Trump account,” a new tax-deferred investment account for children who are U.S. citizens under the age of 18. Contributions to these accounts are capped at $5,000 a year (adjusted for inflation after 2027) and can be made by parents, relatives, employers, and other taxable entities, as well as non-profit and government entities. Accounts opened for children born between January 1, 2025, and December 31, 2028 will include a one-time $1,000 government contribution.

Charitable Contributions

For taxpayers who do not itemize, the OBBBA creates a charitable contribution deduction of up to $1,000 for single filers for certain charitable contributions ($2,000 for married couples filing jointly). For taxpayers who choose to itemize, the OBBBA establishes a 0.5% floor on the charitable contribution deduction. For corporations, the bill establishes a 1% floor for charitable deduction contributions. Deductions for corporate charitable contributions cannot exceed 10% of the corporation’s taxable income.

Estate Planning Outlook

All in all, the One Big Beautiful Bill Act protects and expands policies favorable for family wealth management and estate planning. RBT CPAs will continue to provide updated information to our clients as more detailed guidance on the OBBBA is issued. In the meantime, to find out how the recent tax law changes might impact your estate plan, we encourage you to reach out to our Trust, Estate & Gift team at RBT CPAs. As always, RBT CPAs is here to support all of your estate planning, accounting, tax, and advisory needs. Contact us today to find out how we can be Remarkably Better Together.

Key Takeaways for Manufacturers from the One Big Beautiful Bill Act

The One Big Beautiful Bill Act—or the OBBBA for short—was signed into law in early July, implementing several significant tax law changes. The act’s provisions will have impacts on businesses across a wide range of industries. Here is a list of tax law changes and updates under the OBBBA that manufacturers should be aware of.

100% Bonus Depreciation Restored

The OBBBA permanently restores 100% bonus depreciation for qualified property placed in service as of January 19, 2025, reversing the planned phase-down of this provision. This change will benefit manufacturing firms investing in new equipment or machinery, allowing these purchases to be written off immediately.

Depreciation for Qualified Production Property

The OBBBA also introduces an elective first-year 100% depreciation deduction for “qualified production property,” that is, nonresidential real property used in manufacturing or production activities.

Increased Section 179 Deduction

The Section 179 deduction allows businesses to deduct the full cost of qualifying equipment in the year it is placed into service. The OBBBA increases the Section 179 expensing limit to $2.5 million, reduced by the amount by which the cost of qualifying property exceeds $4 million (new phasedown threshold).

Immediate R&D Deductions Restored

U.S. research and development expenditures, previously required to be amortized over five years, can now be deducted in the year paid. Small businesses averaging $31 million or less in annual gross receipts may elect to apply the change retroactively for tax years beginning after December 31, 2021. All businesses that made domestic R&D expenditures between 2022 and 2024 may elect to accelerate the remaining deductions for those expenditures over one or two years. Unlike domestic expenditures, foreign R&D costs continue to require a 15‑year amortization under Section 174.

Manufacturing firms planning to innovate their processes, explore new technologies, and develop new products stand to benefit from this provision.

Limitation on Business Interest

The OBBBA reinstates the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) limitation under Sec. 163(j), effective for tax years beginning after December 31, 2024. Adjusted taxable income (ATI) will be computed without regard to the deduction for depreciation, amortization, or depletion.

QBI Deduction Extended

The OBBBA permanently extends the Qualified Business Income (QBI) deduction, which allows eligible taxpayers to deduct up to 20% of their qualified business income. The permanent extension includes additional modifications that expand the phase-in range of the wage and investment limitation and introduce a minimum deduction for businesses in which the taxpayer materially participates.

Changes to Clean Energy Incentives

The OBBBA terminates, phases out, or curtails many clean energy tax incentives, including the Section 179D energy-efficient commercial buildings deduction, the Section 48E clean electricity investment credit, the Section 45Y clean electricity production credit, and certain credits for wind and solar projects. On the other hand, the bill extends the Section 45Z clean fuel production credit through 2029.

Advanced Manufacturing Investment Credit (AMIC) Increased

The Advanced Manufacturing Investment Credit is a tax credit available to manufacturers of semiconductors and semiconductor manufacturing equipment for eligible investments. The OBBBA increases the AMIC rate from 25% to 35%.

International Tax Provisions

Significant adjustments have been made to international tax provisions, including the following changes. The deduction rates for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) have been updated starting after 2025. The OBBBA also renames the FDII to FDDEI (foreign-derived deduction eligible income) and the GILTI to NCTI (net CFC tested income). The FDII (now FDDEI) deduction rate is reduced to 33.34% and the GILTI (now NCTI) deduction rate is lowered to 40%. Additionally, the Base Erosion and Anti-abuse Tax (BEAT) minimum tax rate will be permanently set at 10.5% (previously scheduled to rise to 12.5% after 2025).

Outlook for Manufacturers

In general, the changes under the One Big Beautiful Bill Act are favorable for many manufacturing companies, extending many key tax incentives and supporting domestic growth. RBT CPAs will continue to provide clients with updated information as IRS guidance on the OBBBA is released. Meanwhile, if you have any questions about how the recent tax law changes may affect your business strategy, please don’t hesitate to reach out to our manufacturing accounting professionals at RBT CPAs. Our team is here to support all of your tax, audit, accounting, and advisory needs. Give us a call today to find out how we can be Remarkably Better Together.

How Does the One Big Beautiful Bill Impact the Construction Industry?

Signed into law early last month, the One Big Beautiful Bill Act (OBBBA) extends many provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 and establishes several new tax and spending policies. This article highlights the provisions of the OBBBA applicable to the construction industry.

QBI Deduction Extended

100% Bonus Depreciation Restored

The OBBBA permanently restores 100% bonus depreciation for qualified property placed in service as of January 19, 2025, reversing the planned phase-down of this provision. This change will benefit construction companies investing in new equipment or machinery, allowing these purchases to be written off immediately.

Depreciation for Qualified Production Property

Increased Section 179 Deduction

Immediate R&D Deductions Restored

This provision will benefit construction companies looking to improve building processes, experiment with new technologies, innovate design processes, and more.

Limitation on Business Interest

Low-Income Housing Tax Credit (LIHTC) Expanded

The OBBBA permanently increases allocations for 9% LIHTC by 12%, and also permanently reduces the private activity bond financing requirement for 4% LIHTC from 50% to 25%, effective January 1, 2026. This expansion is expected to increase demand for affordable housing construction significantly.

Qualified Opportunity Zones and New Markets Tax Credit

The OBBBA makes the Opportunity Zones (OZ) tax incentive permanent, with several modifications, including a narrower definition of “low-income community” and expanded reporting requirements. Every ten years, state governors will propose new opportunity zones. The bill also includes additional incentives for rural opportunity zones. The OBBBA also makes the Sec. 45D New Markets Tax Credit (NMTC) permanent. These provisions offer incentives for investment and construction in economically distressed communities.

Exception from Percentage-of-Completion Method

The OBBBA expands the exception from the percentage-of-completion method requirement to certain residential construction contracts.

Removal of Clean Energy Incentives

The OBBBA terminates, phases out, or curtails many clean energy tax incentives, including the energy-efficient commercial buildings deduction (section 179D) and the new energy-efficient home credit (Section 45L). The removal of these incentives will require some construction firms to restructure their business strategy.

What’s Next?

Overall, the OBBBA expands opportunities for construction companies to reduce their taxes, improve cash flow, and plan for growth. RBT CPAs will continue to provide clients with updated information as IRS guidance on the OBBBA is issued. Meanwhile, if you have any questions about the recent tax law changes and how they could affect you, please don’t hesitate to reach out to our construction accounting professionals at RBT CPAs. Our team is here to support all of your tax, audit, accounting, and advisory needs. Give us a call today to find out how we can be Remarkably Better Together.