In offsite construction, margins are measured with a microscope. Materials rise and fall in cost like the tides, labor shortages never seem to ease, and project delays chew through profits faster than a dull saw blade through plywood. And yet—despite all the hand-wringing over the economics of building—an astonishing 36% of construction companies are missing out on tax incentives they are eligible for.
That finding, revealed in the 2025 CBIZ Construction Industry Survey, is less a statistic and more a wake-up call. Because in an industry where every penny counts, passing on incentives is the financial equivalent of leaving a pallet of cash sitting in the job trailer.
Why So Many Companies Overlook Tax Incentives
The natural assumption is that the tax code is simply too complicated. After all, most contractors don’t have time to sift through hundreds of pages of IRS guidelines while trying to finish a hospital wing or an apartment building. But that’s only part of the story.
What really drives the oversight is complacency mixed with overconfidence. Many owners believe tax credits are designed for tech firms in Silicon Valley, not builders in Sioux Falls. Others assume their accountants would have flagged anything relevant—never realizing that most generalist CPAs aren’t familiar with construction-specific incentives. And some simply think the potential savings are too small to bother with.
The truth? Some of these credits are game-changers. A single project can generate tens of thousands of dollars in deductions. Multiply that by dozens of projects a year, and the math becomes downright painful for those firms ignoring them.
The Most Overlooked Tax Incentives in Construction
To understand the size of the leak, it helps to look at the types of credits most often left on the table:
1. The R&D Tax Credit
Mention “R&D,” and most people picture scientists in lab coats tinkering with beakers. In reality, construction firms often qualify when they experiment with new building techniques, prefabrication methods, or unique materials. Designing a more efficient HVAC system, testing a modular assembly approach, or even developing custom software to streamline project scheduling can all fall under R&D. Yet, survey after survey shows contractors rarely file for it.
2. The Section 179D Deduction (Energy-Efficient Commercial Buildings)
This one rewards firms that design or retrofit buildings with energy-efficient lighting, HVAC, or building envelope improvements. Architects, engineers, and contractors who lead the work can claim it. With energy codes tightening nationwide, the deduction is practically lying on the table for projects completed every year.
3. The Section 45L Tax Credit (Energy-Efficient New Homes)
Builders of residential projects—especially multifamily—often qualify if they meet certain efficiency standards. With the housing market desperate for new units, 45L could be a lifeline for builders trying to keep costs competitive while delivering affordable housing.
4. State-Level Credits and Incentives
Every state has its own menu of tax goodies. Some support green building, others workforce training, and still others reward companies that build in distressed areas. Yet many firms never check beyond their federal return.
Taken together, these incentives could cover new equipment purchases, fund apprenticeships, or help a company weather the storm of material cost spikes.
The Real-World Cost of Complacency
Let’s put numbers to it. Imagine a mid-sized commercial contractor building a $25 million mixed-use project that includes energy-efficient systems. With proper documentation, they could qualify for the 179D deduction of up to $5 per square foot—potentially saving hundreds of thousands in taxes. Add in R&D credits for experimenting with prefabricated bathroom pods, and the tax break grows.
Now picture that same contractor missing those filings entirely. The money goes back to the IRS, while a competitor down the street pockets the savings, reinvests in new robotics for their prefab line, and underbids the next job.
The survey’s 36% isn’t just a number. It represents firms handicapping themselves financially in an industry that already has razor-thin profit margins.
Why Missing Out Hurts Competitiveness
In construction, cash flow is the oxygen that keeps a company alive. When firms ignore incentives, they’re effectively raising their own tax bills—money that could have funded better wages, retention bonuses, or technology investments.
This matters because the industry is in the middle of a transformation. Companies investing in automation, AI-driven project management, and offsite construction methods are gaining ground. If those firms are also claiming every available incentive while their competitors aren’t, the gap widens even faster.
In other words, not claiming credits doesn’t just hurt the bottom line today—it can also mean being outpaced tomorrow.
How Companies Can Stop Leaving Money on the Table
The solution isn’t rocket science, but it does require a shift in mindset:
- Audit the Past Three Years
Many incentives can still be claimed retroactively. A company that thought it was too late may discover a significant refund waiting. - Work with Industry-Specific Advisors
A general CPA may not have the specialized knowledge needed. Construction-focused tax advisors, or firms that specialize in energy efficiency credits, know where to look. - Integrate Tax Planning into Project Bidding
Instead of treating tax season as an afterthought, firms should identify potential credits at the project planning stage. This way, documentation can be tracked in real time rather than reconstructed later. - Assign Ownership Internally
Someone in management should be tasked with making incentive discovery part of the company’s annual rhythm—just like safety audits or insurance renewals.
A Cultural Shift: Seeing Incentives as Strategy, Not Perks
Perhaps the biggest hurdle is cultural. Many construction leaders pride themselves on their grit, resourcefulness, and ability to survive on slim margins. There’s almost an unspoken badge of honor in doing more with less. But refusing to pursue incentives doesn’t make a firm tough—it makes it less competitive.
Claiming credits isn’t about cutting corners. It’s about building smarter—using every tool available to create stability, protect jobs, and strengthen profitability.
Looking Ahead
The CBIZ survey should make every construction leader pause. If over a third of the industry is walking past free money, then the problem isn’t just individual—it’s systemic. Training, awareness, and perhaps even industry-wide advocacy are needed to close the gap.
Because in the end, the IRS isn’t going to send a thank-you note for overpaying. They’ll simply take the money and move on. Meanwhile, those companies that wise up will have a stronger balance sheet, better technology, and more staying power when the next economic downturn hits.
In construction, resilience has always been about more than hammer and nails. It’s about strategy, foresight, and knowing where to find hidden value. Tax incentives are one of the easiest wins available—if companies can muster the discipline to stop leaving them on the table.
