CONSTRUCTION
TOP 10
LIST of Provisions Included
in 2017 Tax Reform
By Sarah Windham
Special to North Carolina Construction News
The last major tax reform legisla-
tion was passed in 1986. Since
then, the tax rules – Internal Rev-
enue Code amendments, regula-
tions, procedural guidance and
court case law – have morphed into
a complex system for tax paying
contractors. The recently signed bill
is a significant modification to the
existing system and the consensus
is clear. Most businesses expect
their income tax expense to de-
crease, including contractors.
Though there are many moving
8 — Winter 2018 — The North Carolina Construction News
parts in the new tax law with the
potential to affect businesses and
individuals to varying degrees, this
article highlights what we consider
10 of the most significant changes
for construction companies.
1. Individual tax rates and
corporate tax rates
The final bill settled on keeping
the same number of individual tax
brackets as in current existence:
seven. However, the new tax law re-
duces individual income tax rates to
10, 12, 22, 24, 32, 35 and 37 per-
cent, and raises the income levels
subject to each tax rate. These rates
apply to tax years beginning after
Dec. 31, 2017 and beginning before
Jan. 1, 2026, unless subsequently
extended by future legislation. On
the corporate side, the current grad-
uated tax rate was removed in favor
of a flat 21 percent rate for tax years
beginning after Dec. 31, 2017.
2. Increase in Small
Contractor Exemption
Amount Under prior tax law, contractors
whose average annual gross re-
ceipts were less than $10 million
were exempt from using the per-
centage of completion (PCM)