The year 2026 is bringing significant tax changes for construction that could save contractors thousands of dollars.
However, these new deductions and higher limits only work if your bookkeeping is properly organized. As a bookkeeper and fractional CFO who specializes in construction accounting, I see contractors lose even more money each year simply because their books are not CPA-ready.
Your CPA can only work with the information you provide. If your financial records are incomplete or miscategorized, you will pay more in taxes than necessary. This blog post breaks down the biggest 2026 tax changes and shows you exactly what to track in your books right now.
The standard deduction is increasing significantly in 2026. Single filers can claim approximately $16,100, while married couples filing jointly can deduct around $32,200. Seniors over 65 receive an additional bonus deduction of up to $6,000 if their income falls below certain thresholds.
This increase matters because you and your CPA must decide whether to take the standard deduction or itemize. You cannot make an informed decision without accurate bookkeeping records.
For example, if you donated $15,000 to charity, paid $8,000 in property taxes, and had $12,000 in mortgage interest, your total itemized deductions would be $35,000. For married couples, this exceeds the standard deduction by nearly $3,000. However, if these expenses are not properly categorized in QuickBooks, your CPA will default to the standard deduction.
Create specific accounts for charitable donations and track every contribution, including cash, checks, and donated goods. Categorize property taxes and state income taxes separately rather than lumping them together. Track mortgage interest separately from principal payments so your CPA can clearly see deductible amounts.
Starting in 2026, tax changes for construction contractors who financed business vehicles allow them to deduct up to $10,000 of interest paid on auto loans, even without itemizing. This is a brand new deduction that applies to work trucks, vans, and any vehicle used for business purposes.
If you financed a $60,000 truck and paid $4,000 in interest with 100% business use, that is a $4,000 deduction you did not have before. Your lender will send you a 1098 or statement showing total interest paid. Make sure you track your business use percentage accurately.
The state and local tax deduction cap has increased from $10,000 to $40,000 for 2026. This change is especially beneficial for contractors in high-tax states like California, New York, and New Jersey.
If you pay $30,000 annually in state income tax and property tax, you can now deduct the full amount instead of being capped at $10,000. This is particularly helpful if you own rental properties or have a home office.
Retirement contribution limits are increasing across the board. For 2026, you can contribute up to $7,500 to an IRA or $8,600 if you are over 50. The 401k employee contribution limit rises to $24,500. Self-employed contractors with solo 401k plans can potentially contribute between $72,000 and $83,000 depending on plan design.
HSA limits are also increasing to $4,400 for self-only coverage and $8,750 for family coverage.
Retirement contribution limits are tied directly to net business income or W2 wages. Your CPA relies on accurate books to calculate legal contribution amounts. If income is overstated, you risk excess contribution penalties. If understated, you miss major tax savings.
Create a separate equity account in QuickBooks called owner retirement contributions to track how much you have already contributed throughout the year. Do the same for HSA contributions so your CPA has exact figures at tax time.
Bonus depreciation is back at 100% for 2026. This means if you purchase qualifying equipment, vehicles, or tools for your construction business, you can write off the entire purchase price in the year you buy it.
Many contractors make strategic equipment purchases at year end specifically to offset taxes. Even if you finance equipment with zero money down, you can still take the full deduction. However, your CPA needs proper documentation.
Your CPA needs to know what you bought, the exact date it was placed in service, how much you paid including any financed portion, and your business use percentage. The asset must be used more than 50% for business purposes.
Create a fixed asset account in QuickBooks for every major equipment purchase. Enter purchases as fixed assets rather than expenses to keep your balance sheet accurate. If financing equipment, record the loan as a liability and split payments correctly between principal and interest.
Even if you take the standard deduction in 2026, you can still deduct up to $1,000 in charitable donations if single and $2,000 if married. This is a new benefit that requires proper tracking.
Code every charitable check as charitable donations in QuickBooks and keep all donation receipts in a physical or digital folder for CPA documentation.
Your CPA isn’t a detective who will dig through bank statements. They’ll review your profit and loss report, balance sheet, and payroll summary. If these reports are wrong or incomplete, they will file taxes based on what they see, and you’ll end up overpaying.
Review your QuickBooks chart of accounts and ensure you have separate categories for all deductible expenses. Check your payroll setup and track equipment purchases as fixed assets with proper documentation. Reconcile accounts every month rather than waiting until December. Communicate regularly with your CPA and ask what they need to make their job easier.
Clean, accurate bookkeeping is the foundation of tax savings. If your books are organized correctly, your CPA can leverage every new deduction and higher limit available in 2026. If your books are a mess, you will lose thousands of dollars.
For construction business owners who want to stop overpaying on taxes, Beyond Books Solutions specializes in bookkeeping and fractional CFO services designed specifically for the construction industry. We ensure your books are clean, accurate, and set up so your CPA can maximize your tax savings. Visit (book a call link here) to schedule a free consultation and get your books tax-ready before the deadline.
