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Construction Companies: Year-End Payroll Checklist (2026)
Year-end payroll for construction companies is W-2s and any 1099-NEC to employees and contractors by January 31, the fourth-quarter 941 and annual 940, and the construction company items that decide which boxes are right: IRS Notice 2025-54. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Construction company items that shape the W-2 and 1099s
For per diem allowances paid for travel away from home on or after October 1, 2025, the IRS high-low substantiation rates are $319 per day for high-cost localities and $225 for all other localities in the continental United States, of which $86 and $74 are treated as paid for meals. The incidental-expenses-only rate is $5 per day.
On Davis-Bacon covered work the prevailing wage is the basic hourly rate plus the fringe benefit amount listed in the wage determination. The contractor may satisfy it by paying the whole amount as cash wages or by a combination of cash wages and bona fide fringe benefits, and it must be paid for all hours worked on the site of the work.
Contributions made or costs reasonably anticipated for bona fide fringe benefits on behalf of laborers or mechanics count as wages paid under the Davis-Bacon Act, and regular contributions made for a period longer than a week but at least quarterly are treated as made during the weekly periods they cover.
The January calendar
W-2s and W-3 to the SSA and copies to employees by January 31; 1099-NEC for each contractor paid $2,000 or more in the year, the threshold for tax years after 2025, by the same date; Form 940 and the fourth-quarter 941 by January 31 as well, with a 10-day extension where all deposits were on time. Ten or more information returns of any kind, counted together, must be filed electronically. For construction companies the reconciliation that matters is that the pay codes for prevailing wage compliance, certified payroll and union vs non-union landed in the right W-2 boxes for every employee.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- For per diem allowances paid for travel away from home on or after October 1, 2025, the IRS high-low substantiation rates are $319 per day for high-cost localities and $225 for all other localities in the continental United States, of which $86 and $74 are treated as paid for meals. The incidental-expenses-only rate is $5 per day. [IRS Notice 2025-54]
- On Davis-Bacon covered work the prevailing wage is the basic hourly rate plus the fringe benefit amount listed in the wage determination. The contractor may satisfy it by paying the whole amount as cash wages or by a combination of cash wages and bona fide fringe benefits, and it must be paid for all hours worked on the site of the work. [DOL Fact Sheet #66]
- Contributions made or costs reasonably anticipated for bona fide fringe benefits on behalf of laborers or mechanics count as wages paid under the Davis-Bacon Act, and regular contributions made for a period longer than a week but at least quarterly are treated as made during the weekly periods they cover. [29 CFR 5.5(a)(1)]
Read the full guide to how to handle year-end payroll and W-2s, and the rest of the construction company payroll library.
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Frequently Asked Questions
Year-end for construction companies: IRS Notice 2025-54
For per diem allowances paid for travel away from home on or after October 1, 2025, the IRS high-low substantiation rates are $319 per day for high-cost localities and $225 for all other localities in the continental United States, of which $86 and $74 are treated as paid for meals. The incidental-expenses-only rate is $5 per day.
Year-end for construction companies: DOL Fact Sheet #66
On Davis-Bacon covered work the prevailing wage is the basic hourly rate plus the fringe benefit amount listed in the wage determination. The contractor may satisfy it by paying the whole amount as cash wages or by a combination of cash wages and bona fide fringe benefits, and it must be paid for all hours worked on the site of the work.
When are W-2s and 1099s due for a construction company?
January 31 for both, to the recipient and to the SSA or IRS. The 1099-NEC threshold is $2,000 for tax years after 2025, and 10 or more information returns of any type must be e-filed.
What does managed payroll cost for a construction company?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Prevailing wage compliance, certified payroll and union vs non-union are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Construction Companies. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Understanding Employment Taxes
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