Modular Construction and the New Tax Landscape

Based on BizNow’s article: “One Big Beautiful Bill Clears Final Hurdle, Launching New Tax Era For CRE”

By: Audree Grubesic

We’re diving into something that could be a big turning point for the modular construction industry. A new piece of legislation, called the “One Big Beautiful Bill,” was just signed into law, and it’s already making waves in the commercial real estate world. We came across a great article from BizNow.com that breaks it all down—and it’s clear this new law could bring some serious benefits to the modular space.

So let’s unpack what this means, especially if you're involved in modular design, offsite construction, or you're looking to scale a project using factory-built solutions.

So what’s in this bill, and why should we care?

This legislation is massive. It includes permanent tax reforms, extended housing incentives, and investment opportunities that could make it easier and more profitable to build using modular. The government is showing real support for smarter, faster building solutions—and that’s where we come in.

Here are a few things that stood out:

First, the bill restores something called “100% bonus depreciation.” That might sound technical, but here’s what it means in plain terms: if you run or invest in a modular factory, you can now fully write off the cost of new equipment—things like framing machines, welding gear, cranes—immediately, instead of spreading it over years. That puts money back in your pocket faster, and encourages growth.

Second, this bill gives a major boost to affordable housing through the Low-Income Housing Tax Credit. For modular developers, especially those working on projects that aim to tackle the housing crisis, this is huge. It means more funding, less financial red tape, and a stronger case to build with speed and efficiency.

And finally, Opportunity Zones are now here to stay. These are designated areas—often in underserved communities—where investors get big tax breaks for putting their money into real estate. If you’re building modular housing, mixed-use buildings, or transitional housing in these zones, you now have long-term stability and incentive alignment.

So what does this mean for our industry?

For starters, this is a chance to lean in. We’re always talking about building better, faster, and smarter—but now we have a policy environment that actually supports that vision.

If you’re already building modular, this is your moment to scale. If you’ve been considering a factory or a new line, the tax landscape just became a lot more favorable. And if you’re developing housing—especially in markets where affordability is a crisis—you now have more tools at your disposal.

Here are three key takeaways if you’re thinking about how this applies to you:

1. If you’re investing in equipment or launching a modular factory, you can now fully deduct those expenses in year one. That’s a big deal for budgeting and cash flow.

2. If you're building affordable housing, especially using modular systems, you’ll likely qualify for stronger tax credits and funding programs than before.

3. If your project is in an Opportunity Zone, the rules just got a lot more investor-friendly—and modular can be a fast, clean, and cost-effective solution to meet those investment goals.

Closing Thoughts

At Offsite Dirt Network, we’ve been championing innovation in construction for years. It’s exciting to finally see a legislative shift that aligns with the offsite and modular movement. The article on BizNow.com does a great job of outlining all of this, so I highly recommend checking it out if you want the full picture.

This is the kind of momentum our industry needs. Now is the time to be bold, think differently, and lean into the tools and policies that can help us build a better future. Drop us a message, send your questions, or share how this new legislation could impact your work. Let’s keep the conversation going. Faq's

1. What is 100% bonus depreciation?

It's a tax provision, permanently reinstated by the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, that allows businesses to immediately deduct the full cost of qualifying new and used equipment in the year it's placed in service, rather than depreciating it over time.

2. How can modular construction companies use 100% bonus depreciation?

Modular construction companies can fully write off the cost of new machinery and equipment—like framing robots, welding stations, and cranes—in year one, significantly improving cash flow for reinvestment and expansion.

3. What is the Low-Income Housing Tax Credit (LIHTC)?

LIHTC provides dollar-for-dollar federal tax credits to developers who build or rehabilitate affordable housing, enabling them to secure financing and make low-income projects financially feasible.

4. How do Opportunity Zones benefit modular housing projects?

Investing capital gains in designated Opportunity Zones can defer and potentially eliminate those capital gains taxes. Modular projects in these zones benefit from faster construction, potentially enhancing after-tax returns for investors.