List of the Best Tax Deductions for Construction Workers
There are several tax deductions for construction workers that contractors and business owners can claim on their tax returns. This includes a range of work-related expenses, such as safety equipment, work-related travel, vehicle expenses, and tools.
If you work in construction, there are two main things you can do to take advantage of as many tax deductions as possible. Firstly, keep detailed records and receipts of everything you spend. Secondly, contract a tax professional to help you maximize your tax return.
The Top Tax Deductions for Construction Workers
There are several common tax deductions for construction workers that you should know about to get the most out of your tax return this tax season. Though these are the most common deductions, qualified tax professionals may find more ways to reduce your tax bill.
1. Safety Equipment and Uniforms
Keep your receipts for any special clothing or safety equipment that you need for construction work because they may qualify for a deduction. Examples include:
Steel-toed boots
First aid kits
Safety glasses
Hard hats
Gloves
Road cones
Construction vests
Gloves/hand protection
Clothing must be specifically for construction work to claim it as a deduction. If you are required to wear specific protective clothing or even a uniform, these are tax-deductible expenses.
2. Business Travel Expenses
If you are a self-employed construction worker and your job requires you to travel to another location, or if you have to travel between jobs, the expenses may qualify as a write-off.
Travel expenses you can take advantage of while traveling are:
Public transportation/taxi costs
Accommodation
Food and drink
Making calls to a different state/country
Costs can only be claimed during the days you are working, and expenses don't extend to any family members who are traveling with you. For example, if you are sent from Jacksonville, Florida to a job in Orlando, Florida, and want your family to accompany you, you can only claim your own expenses for the period of time you are working in Orlando.
3. Vehicle Expenses
There are two IRS-approved deduction methods for the business use of a vehicle: miles and the actual expenses incurred. If your travel meets all of the necessary criteria, you can deduct 100% of the costs of your business vehicle or the costs of your plane, train, and bus tickets if you’re not traveling in a private vehicle.
Mileage Method
If you are self-employed, you can claim the miles you drive for work purposes using the IRS mileage rate. To keep track of the miles you drive for work, simply:
Download a mileage log template.
Calculate your total miles and multiply this figure by the IRS mileage rate. In 2023, the standard IRS mileage rate is $0.655 per mile.
Please note: Construction company employees can ask for reimbursement for their work-related mileage from their employers, but only self-employed individuals can deduct these costs on their tax returns. If you’re an employee and your employer hasn’t reimbursed you for work-related mileage, you should try to resolve the issue directly with your employer.
Actual Expense Method
If you use the actual expense method for claiming vehicle costs when completing your taxes, there are several deductions you may qualify for:
Gasoline
Lease payments
Insurance
Maintenance/repair costs
Tire purchases
Car washes
Depreciation
Car registration
Parking fees
You can only deduct the business-related portion of these expenses. Keep records such as receipts and mileage logs to claim vehicle expenses on your tax return.
4. Education Expenses
You can claim education expenses that are directly related to your current employment if the aim is to improve your skills or increase your income in your current role.
Tax deductions for education aimed at changing your position can't be deducted, but the interest paid on any job-related student loans can be deducted up to a limit of $2,500 per year.
5. Home Office Expenses
If you have a home office space that’s used exclusively for work, you may qualify for a tax deduction. There are two ways to go about this: the regular method and the simplified method.
Regular Method
For the regular method of deducting your home office costs, you can write off things like:
Utilities, including water bills, internet, and electricity
Mortgage interest
Insurance
Office repairs
Depreciation of office equipment that is expected to last for more than one year
Take note of all of these costs (and keep your receipts) to ensure that you can claim all the tax deductions you’re eligible for.
Simplified Method
Simply deduct $5 for each square foot of your home office when using this method. The deduction is limited to $1,500 per year, so you can’t claim the deduction for any more than 300 square feet.
6. Equipment and Tools of the Trade
Construction tools and equipment used solely for business purposes are tax-deductible.
Examples of the tools that you can deduct are:
Hammer
Electric drills
Wheelbarrows
Saws
Screwdrivers
Work phone
Shovels
Nail pullers
Wrenches
Ladders
For any heavy machinery or tools you purchase that are expected to last for more than one year, you will deduct the relevant amount of depreciation rather than the total cost.
7. Advertising
Reasonable advertising or marketing expenses such as Google Ads, Facebook ads, newspaper advertisements, and billboards are tax-deductible.
8. Phone Bill
Self-employed construction workers can write off the relevant percentage of their phone bill (if used for work as well as personal purposes) or 100% of their phone bill for a phone that’s used for business purposes only.
9. Legal Fees and Professional Service Fees
Any legal fees relating to your business, plus accounting and tax advice fees can be written off as tax deductions.
10. Labor Costs
Both contracted and self-employed workers can deduct the costs of subcontracting an independent contractor or ongoing employees.
A Tax Professional Can Help You Get the Most Out of Your Tax Return
Whether you are a contracted worker, self-employed construction professional, or own a construction business, you can benefit from expert tax return help. Tax professionals who specialize in construction accounting can help you make the most of the deductions and tax credits that are available to you when you file your taxes, saving you not only time but also money.
Moreover, tax professionals can uncomplicate the onerous task of filing taxes for businesses and contractors in the construction industry. Spending less time on your taxes frees up precious time to spend with your friends and family, or to develop the parts of the business you love the most.
