Construction and engineering companies—and workers on jobsites or in offices—would benefit from the “framework” of an agreement between President Obama and congressional Republicans on a package of new tax breaks and two-year extensions of current rates and other incentives.

The framework deal, which Obama announced on Dec. 6, next goes to Congress. Key Democrats there appear not to be on board yet. Leading Republicans’ initial reactions were positive. Lawmakers must take action by Dec. 31, when many of the tax provisions at issue are slated to lapse.

Construction and engineering industry officials like the framework in general and expect its elements to make it through Congress, with a final bill to arrive on Obama’s desk by the end of the year. But before the measure gets to the White House, construction groups hope lawmakers will add other provisions.

For example, some construction-backed tax breaks that are due to expire—such as Build America Bonds and the renewable-energy credit—are not in the package.

A senior administration official says the House and Senate need to make decisions on a “long list of rather small ‘extenders,’ ” which would include Build America Bonds and the energy credit. He adds, “I don’t think there are any major differences” on Capitol Hill concerning those items.

A key part of the framework is a two-year extension for individual tax rates dating from 2001 and 2003 that were scheduled to expire on Dec. 31.

Besides the rate extensions, another benefit for individual taxpayers is the plan’s proposal to reduce employees’ Social Security payroll taxes to 4.2% from the current 6.2% for one year.

A senior administration official says that provision would cost $120 billion over two years. He adds that other federal funds would be transferred to make the Social Security trust fund whole.

Also in the package is a continuation of a provision that protects many individuals from being subject to the alternative minimum tax.

Rate Cuts Would Aid Some Small Firms

Those provisions for individuals also would be a boost for small design and construction firms organized as partnerships or S Corporations, which are taxed at individual, not corporate, rates.

“So many of our members, especially the smaller [companies], file their business taxes under individual tax rates,” says Geoff Burr, the Associated Builders and Contractors’ vice president for government affairs. “So some of the tax rates on so-called higher earners would have had an extremely negative impact on our members that are extremely hard-hit.”

Family-owned construction companies would gain from the framework’s proposed change in the estate tax, effective in 2011. The plan would exempt estates of up to $5 million from the federal tax, compared with a $1-million exclusion in 2011 under current law.

In addition, the plan would tax estates exceeding $5 million at a 35% rate, compared with a 55% rate in 2011 under current law.

There also are other incentives for businesses, notably a provision allowing all companies to write off the full cost of capital goods in the year those items are purchased. Moreover, the research-and-development tax credit, which is popular among businesses, would be extended for two years.

The framework is a set of compromises. For example, Republicans—reflecting views of businesses, including those in the construction industry—had wanted the 2001 and 2003 rates to be extended permanently for all income levels. But the GOP negotiators settled for a two-year extension.

On the other hand, Obama, like many other Democrats, had wanted the rates to rise for those earning more than $250,000 per year, but dropped that in exchange for other provisions.

They include a 13-month extension of unemployment benefits and...