Construction adds 15K jobs as tax reform fuels industry optimism
The construction industry is entering a pivotal phase, marked by renewed policy support and stronger labor market signals. On July 4, President Trump signed H.R. 1, formally titled the “One Big Beautiful Bill,” a sweeping tax reform package that has been lauded by Associated Builders and Contractors (ABC) as a long-awaited victory for contractors, developers, and skilled trades. Coinciding with this legislative shift, the industry added 15,000 jobs in June, marking a strong midpoint for 2025. Together, these developments suggest that contractors may be poised to navigate the second half of the year with new incentives and stronger hiring capacity.
June’s job report reflects a resilient construction sector
According to ABC’s analysis of the latest Bureau of Labor Statistics data, construction employment grew by 15,000 positions in June. Specialty trade contractors accounted for the majority of gains, with an additional 12,400 jobs, while nonresidential employment expanded by 9,200. These gains helped offset losses in civil and nonresidential building segments.
The sector’s unemployment rate dropped to 3.4 percent, significantly below the national average of 4.1 percent. With 121,000 new construction jobs added year-over-year, the industry continues to defy broader market slowdowns. Chief Economist Anirban Basu noted that this trend reflects underlying economic momentum, aided by moderating inflation and firm demand for labor in infrastructure and commercial builds.
While the report projects continued strength, Basu also warned that contractor backlogs are being squeezed by rising material prices, tariffs, and borrowing costs. Even with job creation on an upswing, cost management and pricing discipline remain critical.
What the new tax law means for contractors and developers
Signed just one day after the June employment report, the One Big Beautiful Bill includes several provisions that directly benefit construction firms, especially small businesses operating as pass-through entities. These include the permanent establishment of Section 199A, which allows up to a 20 percent deduction on qualified business income, and the restoration of 100 percent bonus depreciation. Firms can now fully deduct qualifying equipment in the year it is placed into service, incentivizing capital investment.
The law also repeals tax penalties on overtime pay, permits immediate expensing of research and development costs, and expands the use of 529 accounts for skilled trades education. For family-owned construction companies, the permanent estate tax relief ensures generational continuity without triggering burdensome liquidity events.
Collectively, these measures are expected to reduce tax liabilities across the board. Analysts estimate that pass-through firms could save up to $11,000 per $1 million of taxable income. These savings can be reinvested in equipment, hiring, or upskilling, elements that drive project capacity and long-term competitiveness.
Economic and policy tailwinds support short-term expansion
Beyond tax benefits, the legislation introduces or extends provisions that align with sector-specific opportunities. One standout is the expanded Low-Income Housing Tax Credit, projected to support the development of more than one million affordable housing units through 2035. This is expected to trigger both residential and mixed-use projects across urban and suburban markets.
Additionally, skilled trades stand to benefit from the broader use of 529 savings plans, which now include accredited programs for apprenticeships and construction-related certifications. Industry groups view this as an important step in reversing labor shortages and promoting career pathways within construction.
In the second half of 2025, many firms are expected to accelerate project launches, especially as green building incentives face tighter implementation deadlines. A recent executive order has added complexity by requiring stricter milestone tracking to qualify for renewable energy credits, creating urgency for project sponsors.
Risk factors behind the headlines
Despite strong tailwinds, challenges remain. Many construction executives are concerned about the impact of tightening credit standards. As borrowing costs rise and banks pull back on commercial lending, developers may struggle to finance larger-scale initiatives. Tariffs on imported materials have also contributed to cost volatility, raising concerns about margin compression on fixed-price contracts.
Solar and clean-energy contractors face additional uncertainty. The new tax law phases out several residential solar incentives and places new restrictions on commercial energy credits. Industry advocacy groups warn that the changes could lead to the loss of up to 330,000 solar-related jobs nationally and higher energy costs for households and small businesses.
The executive order related to construction milestone enforcement adds another layer of scrutiny, particularly for firms working under public-private partnerships or green infrastructure mandates. As compliance requirements grow more complex, legal and project management risks will need to be closely monitored.
The convergence of tax reform, job growth, and fiscal stimulus presents an opportunity for construction firms to reassess strategic priorities. Companies that capitalize on equipment write-offs, workforce development programs, and housing tax credits may find themselves better positioned to absorb macroeconomic shocks.
However, the market is not without contradictions. Labor is expanding while credit tightens. Policy incentives are growing even as compliance hurdles increase. For nonresidential builders, maintaining flexibility will be key.
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