Key takeaways
- Construction Contractors file as 1099 / self-employed, so business expenses are deductible on Schedule C.
- Deductions cut both income tax and the 15.3% self-employment tax.
- The biggest write-offs for construction contractors and tradespeople are listed below, with what each covers.
- You need receipts and a mileage log to claim them.
Tax write-offs for construction contractors and tradespeople
Here are the deductions construction contractors and tradespeople most commonly claim. Each one lowers your net profit, and therefore your tax:
| Deduction | What it covers |
|---|---|
| Tools and equipment | Hand tools, power tools, and machinery, expensed or depreciated. |
| Vehicle and mileage | Driving between job sites and to suppliers, by mileage or actual cost. |
| Materials and supplies | Job materials and consumables not billed separately to the client. |
| Safety gear (PPE) | Hard hats, gloves, boots, glasses, and protective clothing. |
| Licenses and permits | Trade licenses, certifications, and job permits. |
| Insurance | Liability and, if applicable, workers compensation coverage. |
| Subcontractors | Crew and specialists you pay (1099-NEC over $600). |
| Equipment rental | Tools and machinery rented for specific jobs. |
| Phone | The business-use share of your cell phone. |
| Continuing education | Trade courses and certification renewals. |
Tools and equipment: expense or depreciate?
Hand tools and smaller gear are deducted in the year you buy them. Larger equipment, a compressor, generator, or heavy power tools, can be expensed in full under Section 179 (when used more than half the time for business) or depreciated over time. Equipment you rent for a job is fully deductible as a rental expense. Keep receipts, tools are a trade's single biggest recurring write-off.
Your work vehicle and driving
Driving between job sites, to suppliers, and to clients is deductible, either the standard mileage rate or the actual-expense method for the business share of gas, repairs, insurance, and depreciation. A work truck used heavily for the business can make the actual-expense method larger. Commuting from home to a single regular shop is not deductible, but travel between sites is.
How these deductions lower your tax
As a construction contractor, your tax is based on net profit, which is your income minus these business expenses. Because both self-employment tax and income tax are calculated on that profit, every dollar you deduct is taxed at neither rate, saving most contractors roughly 25 to 40 cents on the dollar. The catch is documentation: you can only deduct what you can prove, so capturing receipts and miles through the year is what turns this list into real savings.
See what these deductions save you with our free calculators, then let NeoReceipt make sure you capture every one.