📈 Mixed Market Forecast: Boom or Bust?
Depending on your region or sector, the 2025 forecast can look like either a bull or a bear market. Some contractors are riding the wave of massive government infrastructure investments, while others are feeling squeezed by rising costs and a tight labor market.
Key Influences:
- Mega-project momentum from the Infrastructure Investment and Jobs Act (IIJA), the Inflation Reduction Act (IRA), and the CHIPS Act
- Persistent labor shortages, though slightly easing, still affect project delivery timelines
- Interest rate uncertainty continues to impact project financing and client spending
- Sector-dependent growth — manufacturing, tech, healthcare, and infrastructure are hot, while traditional commercial construction may be flat
Anirban Basu, CFMA’s Economic Advisor, summed it up best: “For contractors associated with mega-projects, the outlook remains bright… But for those outside of these segments, the general outlook is not nearly as strong.”
🏗️ Trends to Watch in 2025
To stay competitive, contractors must adapt to the macroeconomic and cultural shifts driving change in the industry.
1. Urbanization & Housing Pressure
With the global population topping 8.1 billion and more people migrating to cities, residential construction remains a growth area—especially where affordable housing initiatives are in play.
2. Remote Work is Evolving
As companies reverse course on remote work, demand for suburban housing is flattening while interest in urban commercial renovations and mixed-use developments is growing.
3. Health Care & Education Projects
Aging infrastructure and public funding are fueling steady investment in hospitals, clinics, and schools—especially in fast-growing metros and rural hubs.
4. Digital Infrastructure Demands
The explosion of data usage is fueling a boom in data centers, tech campuses, and 5G buildouts. Contractors working in these niches should prepare for sustained demand.
5. Green Building on the Rise
With growing ESG pressure and incentives under the IRA, sustainable construction is no longer optional—it’s strategic. From green roofs to smart HVAC systems, eco-friendly upgrades are an important differentiator.
💼 Tax Law Changes Ahead: What Contractors Need to Know
As provisions from the Tax Cuts and Jobs Act (TCJA) begin to sunset at the end of 2025, now is the time to assess how your business may be affected.
Key Expiring Provisions:
- Top individual tax rate rises from 37% to 39.6%
- Section 199A deduction for pass-through entities may expire
- Bonus depreciation phases out completely by 2027
- Estate & gift tax exemption drops from $13.61M to ~$5M
Section 174 Warning:
Contractors involved in any R&D or innovation should be aware of IRC §174, which now requires capitalization and amortization of R&D expenses. This change has significantly increased tax liability for many construction businesses.
Action Step: Meet with a tax advisor early to model your 2025 tax exposure and plan accordingly. Waiting until Q4 may limit your options.
📊 Year-End Planning: It’s More Than Just the Books
Outside of tax compliance, smart year-end planning also includes revisiting your corporate strategy, goal-setting process, and financial controls.
Corporate Goals:
Evaluate the goals you set for 2024. Which ones did you hit? Which ones fell short—and why? The best firms don’t just set goals; they track, measure, and adjust them regularly.
Personal Goals:
Your own growth impacts your company’s growth. Want to become a firm owner, move into CFO leadership, or win more contracts? Break that big goal into smaller ones—like completing your CPA or CCIFP, attending leadership trainings, or deepening relationships with clients and lenders.
🧠 Strategic Tips to Prepare for 2025
Here’s how to future-proof your construction business for what’s ahead:
- Get proactive on tax strategy – Plan now for the TCJA sunset and capitalize on any available deductions and credits (energy, R&D, Section 179, etc.).
- Revisit your entity structure – If Section 199A goes away, some contractors may benefit from becoming a C-corp.
- Monitor your financial KPIs – Stay on top of A/R aging, project profitability, labor costs, and pipeline projections.
- Invest in sustainability – Align your construction practices with green building trends to access incentives and appeal to future clients.
- Refine your talent strategy – Upskill your team, improve retention, and create clear career paths in response to ongoing labor shortages.
- Adopt tech where it counts – Tools that support better budgeting, project tracking, and client communications can give you a serious edge.
🏁 Final Word: Build the Future You Want
2025 is shaping up to be a year of transition. The most successful contractors will be those who balance today’s challenges with tomorrow’s opportunities. That means getting ahead of tax changes, sharpening your strategy, and setting goals that connect the day-to-day to your long-term vision.
At J&S Moore Financial Group, we specialize in helping construction firms navigate change with confidence—from accounting and tax strategy to growth planning and assurance support.
Let’s build something strong—together.
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