AGC praises passage of Jobs Creation Act

“This legislation increases job opportunities for contractors, while at the same time encouraging companies to invest in the people and equipment necessary to continue to grow the nation’s economy. We applaud the president for signing this bill into law,” said Stephen E. Sandherr, CEO of AGC, in the release.

AGC pushed for many individual provisions in the bill, but specifically was an advocate for what will ultimately be a 9 percent tax deduction aimed at stimulating the economy. AGC worked to ensure all contractors were eligible for this deduction, regardless of company size or structure. The association also lobbied to make sure the contracting, engineering and design services language stayed in the bill.

Under the new law, the net income a contractor earns for construction services within the United States is eligible for the special deduction. For a typical contractor, this deduction will reduce the overall tax burden placed on construction in the United States. A contractor would figure this deduction by taking the total costs of completing the project (the gross receipts), and subtracting the cost of building it (i.e. materials, wages and overhead).

The deduction – starting at 3 percent and eventually reaching 9 percent – is taken off this final “net cost” figure, reducing the amount subject to taxation. The money that is freed up is now available for contractors to use for hiring new employees, buying more equipment, or leveraging additional projects – all positive results that AGC says will keep the American economy moving forward.

“This deduction for construction in the United States is a direct benefit to our industry, especially as we await Congress action on federal construction funding legislation,” said Sandherr. “The bill signed into law today by the president means more jobs and more competition as contractors take advantage of all the different provisions in the bill.”

Other tax provisions that will benefit AGC contractors include small business expensing, the reduced recovery period for leasehold and restaurant improvements, the codification of the tax treatment of off-road mobile machinery, and the extension of the ethanol subsidies through 2010.

Taken together, these provisions provide contractors incentives to create new jobs and buy new equipment, and new project opportunities to bid on.

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