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Forecasted Impact of the Infrastructure Investment and Jobs Act in the Construction Industry

Laura Culp

Nov 24 2021

2 min read

On November 15, President Biden signed the $1.2 billion Infrastructure Investment and Jobs Act (IIJA), offering an economic boost in the construction industry. The bill includes a five-year Surface Transportation Reauthorization Act, devised to invest $304 billion in roads and bridges.

Investment in Infrastructure

The breakdown of the investment in physical infrastructure, according to the Associated General Contractors (AGC) is as follows:

Freight and passenger rail (Amtrak): $66 billion
Broadband deployment and broadband affordability: $65 billion
Water infrastructure: $55 billion
Roads and bridges (in addition to the reauthorization): $47 billion
Modernizing electric grid and clean energy transmission: $73 billion
Transit: $39 billion
Airport projects: $25 billion
Ports: $17 billion

The Cost of the Bill

There is some debate about the cost of the bill. According to the White House, the new spending will be funded with more than $250 billion in unspent COVID-19 relief funds, tax enforcement and new revenue. However, the Congressional Budget Office estimates the bill could add up to $256 billion to the national deficit over the next 10 years.

Minimal Tax Changes under the Infrastructure Act

The infrastructure bill includes limited tax law changes. The most significant provision is the termination of the Employee Retention Credit (ERC) as of September 30, 2021, except for eligible recovery startup businesses. Therefore, the last eligible quarter for the ERC is the third quarter of 2021 for most employers. Other provisions include reporting of cryptoasset transfers and modification of automatic deadline extensions for taxpayers impacted by federally declared disasters.

One tax provision of interest to contractors is the delay of excise fuel tax reductions due to expire on September 30, 2022. The new law extends current excise tax rates on fuels, diesel and special fuels, retail sales of heavy trucks, trailers and tires until after September 30, 2028.

Improvements in the Construction Industry

While the impact of the new infrastructure funding will not be felt immediately, economists generally agree that the bill will allow greater worker mobility and improve transportation of goods, resulting in increased productivity. For the construction industry, the AGC stated that “The IIJA is the most significant infusion of investment in our infrastructure since the enactment of the Interstate Highway System in the mid-1950s,” and will provide opportunities for a variety of contractors.

To see the expected allocation by state, please click here.

Our team has decades of experience working with construction leaders to meet their tax and business goals. To learn more about how the infrastructure bill may impact your construction business, please contact our experts.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

About the Author

Laura Culp

Laura Culp, CPA, PFS, MT, CCIFP, is a director with more than 30 years of experience working with the owners of privately held businesses to help them grow their wealth and implement tax saving strategies. Her extensive knowledge of the unique tax and financial issues that contractors and developers face is valued by her construction and real estate clients. Laura’s planning and wealth management skills provide clients with an integrated level of service, and clients appreciate her down to earth advice.