Last week President Bush signed the “American Jobs Creation Act,” which will reduce taxes for contractors and generate millions of dollars for the highway trust fund.
The new law contains numerous tax revisions, including a 9-percent tax deduction for contractors. Under the law, the net income a contractor earns for construction services performed within the United States is eligible for the deduction. According to the Associated General Contractors, to figure the deduction, contractors should take the total costs of completing a project and subtract the costs of building it — materials, wages, overhead, etc. The deduction, which will start at 3 percent and increase to 9 percent, is taken off the final “net cost” figure.
According to AGC, the money deducted from taxes will be available for hiring new employees, buying more equipment or working on additional projects.
“This deduction for construction in the United States is a direct benefit to our industry,” said Stephen Sandherr, chief executive of AGC. “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.”
In addition to the law’s tax provisions, the “American Jobs Creation Act” also reroutes ethanol fuel tax revenue from the general fund to the highway trust fund. To read a previous article on the ethanol legislation, click the link to the right.