Tax Return Changes for Construction Contractors | HelloBooks Overtime reporting for crews, full expensing for equipment, a $2,000 1099 threshold for subs and the interest limit. What contractor clients need.
Construction clients run overtime, buy heavy equipment, carry debt and pay subcontractors. Almost every business-side change touches them.
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Crew overtime deduction, up to
$12,500 ($25,000 joint)
Applies: Tax years 2025 and 2026From IRS.gov · checked October 10, 2026
Hourly crews can deduct the overtime premium, and from 2026 the employer must report qualified overtime separately. Equipment acquired after January 19, 2025 qualifies for 100% bonus depreciation, and the Section 179 limit is $2,500,000 for 2025.
Payments to subcontractors made in 2026 need a 1099-NEC only from $2,000. Contractors with heavy borrowing should also rerun the business interest limit, now that depreciation is added back again.
Track subcontractor payments by vendor so the 1099 totals are a report at year end. HelloBooks marks a vendor 1099-eligible once a W-9 is on file and totals each reportable payment toward the threshold, then prepares federal and state 1099 files in the Combined Federal/State Filing format for you or your filing agent to submit.
The plain-English summary for business owners
Schedule 1-A · qualified overtime
Business returns · Form 4562
Business returns · Form 8990
General information for tax professionals, not advice on a specific return. Figures are from IRS.gov on the date shown; check the current IRS instructions before filing.
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