Most contractors remember the big items: trucks, fuel, materials. The money left on the table is usually in the smaller, recurring costs that never make it to the bookkeeper. Here are ten deductions we regularly find for construction businesses, often for clients who had already filed with someone else.
1. Small tools and equipment under $2,500
Under the IRS de minimis safe harbor, you can generally expense items costing up to $2,500 each right away instead of depreciating them. Drills, saws, ladders and laser levels add up fast. You need to elect the safe harbor on your return each year, so make sure your preparer does.
2. Safety gear and protective clothing
Hard hats, safety glasses, gloves, harnesses, high-visibility vests and steel-toe boots are deductible when they're required for the work. Everyday clothing isn't, even if you wear it on site.
3. Equipment rentals
Rented lifts, excavators and dumpsters are fully deductible in the year you pay for them. They're easy to miss when they're paid on a personal card.
4. Licenses, permits, bonds and certifications
Contractor licenses, building permits, surety bond premiums, OSHA training and continuing-education courses are all business expenses.
5. Insurance, including your own health insurance
General liability, commercial auto, workers' comp and tool insurance are deductible business expenses. If you're self-employed and not eligible for an employer plan, your own health insurance premiums are usually deductible too, as an adjustment on your personal return.
6. Parking, tolls and dump fees
Even if you use the standard mileage rate, parking and tolls are deducted separately. Disposal and dump fees count as job costs.
7. Travel to out-of-town jobs
When a job keeps you away from home overnight, lodging is deductible and meals are generally 50% deductible. Self-employed contractors can use the federal per diem rate for meals instead of saving every receipt, but lodging still needs actual receipts.
8. Phone, software and subscriptions
The business share of your phone plan, plus estimating software, QuickBooks, project management apps and plan-viewing tools, are all deductible.
9. A home office used for the business
If you run estimates, billing and scheduling from a dedicated space at home and have no other fixed office, you may qualify for the home office deduction. The space has to be used regularly and only for business.
10. The QBI deduction
The qualified business income deduction lets many owners of pass-through businesses deduct up to 20% of their business income. It's now permanent, and construction isn't a "specified service" business, so contractors often keep the full benefit even at higher incomes that would phase out a consultant or lawyer. Wage and property limits apply at higher incomes, so it's worth planning.
The pattern behind missed deductions
Most of these get missed for the same reason: no one asked. If your accountant only sees a shoebox of receipts in April, they can't deduct what isn't there. A short check-in during the year catches far more than a rushed review at filing time.
Think you've missed deductions?
We'll look over last year's return and tell you what might have been left out. If something was missed, amending can still put money back in your pocket.
Book a Free 30-Minute CallKeep the records that prove it
- Use one business bank account and card for all business spending
- Snap a photo of receipts the day you get them
- Keep a mileage log, either an app or a notebook
- Note which job each expense belongs to
Want a quick list to work through before December 31? Download our free 2026 Year-End Tax Checklist for Contractors.