Construction Tax Credits: Can You Claim It? Yes You Can!

Written by Corporate Tax Incentives. Updated Mar 26, 2019.

ConstructionFor about 20 years now, young children have been welcoming the animated character Bob the Builder into their homes on their favorite kids television station. In fact, I personally have fond memories of cuddling on the couch with my kids on quiet Saturday mornings, watching Bob and the Can-Do Crew tackle any project while exclaiming “Can we fix it? Yes we can!”

As the name implies, Bob works in construction. As a building contractor, Bob the Builder and his anthropomorphized machine team are always ready to help with renovations, construction, and repairs all while demonstrating the power of positive thinking, innovative problem-solving, teamwork, and follow-through.

Learn more about the stages of a typical construction project that potentially qualify for the Research and Development Tax Credit

Perhaps surprisingly for a kids show, Bob and the team often engage in real-world construction-related experiences. With each new job, they face unique challenges to overcome, requiring some level of concept development, design, and determining new and improved ways to use materials, building processes, and technique.

Construction Tax Credit Advice for Bob

Even though Bob is already wildly successful, imagine how much more he could achieve with knowledge about the Research and Development Tax Credit (R&D Tax Credit). Much of the activity that he and his team are engaged in most likely qualifies as research according to the broad definition of “research” that satisfies the legal tests for the R&D Tax Credit.

How about you? As a construction firm owner, did you know that tax credits for construction companies may be available to you, all from your design and build professionals doing their daily jobs? Many of the activities they perform can qualify for the R&D Tax Credit.

Here are some specific examples of qualifying activities that can lead to tax credits for contractors:

  • Exploring construction techniques
  • Preparing structure and facility design for constructability
  • Developing and improving construction equipment
  • Designing LEED/green initiatives
  • Designing new or improved HVAC systems
  • Researching and designing new electrical system designs
  • Utilizing Building Information Modeling (BIM)
  • Analyzing designs for improving performance, reliability, quality, safety or lifecycle costs
  • Improving mechanical equipment sizing

Look to Your Supporting Cast for Tax Savings

The R&D Tax Credit has the potential to increase your tax savings when you capture all the qualified research expenses (QREs) related to those research activities. For construction firms, significant QREs come from wages paid to in-house computer-aided design/manufacturing (CAD/CAM) designers, technical drawers, engineers, project foremen and similar technical personnel who perform research activities for the firm.

Additionally, construction firms often hire contractors/subcontractors to help them design and build their construction projects.  These activities might be QREs if they meet the legal definition of “research” and the construction firm has substantial rights to the research done on their behalf and they take on the risk of development. 

CTI Can Get the Job Done!

The R&D credit is one of the largest incentives available to construction contractors and can possibly save your company hundreds of thousands of dollars annually.

Let CTI’s elite tax professionals do the work to navigate through substantiation and documentation to achieve a superior outcome, maximizing credits for your business.

Partner with CTI, allowing our team of attorneys, CPAs, engineers, and scientists with ‘Big 4’ experience to identify which activities are eligible for the credit and what expenses can be used to maximize tax savings for your construction business.

See what you can learn from a kids show?


What Can R&D Do For You?  Discover a practical approach to maximizing your federal research and  development tax credit. Download Guide

Topics: R&D Tax Credit

Corporate Tax Incentives

Written by Corporate Tax Incentives

CTI is a tax incentives specialty firm that secures greater tax credits for businesses with our proven project methodology and unparalleled personalized service. For almost 20 years, our elite tax professionals have proactively engaged clients to deliver unmatched value with transparency and efficiency thorough secure in-house software, comprehensive audit-ready deliverables, and 24x7 access to real-time dashboards. We are tax consultancy experts passionate about maximizing credits and incentives for powering the success of your business.