Treasury Announces New Opportunity Zone Designations

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) have announced new Opportunity Zone designations for more than 6,500 communities nationwide, effective Jan. 1, 2027.

The Tax Cuts and Jobs Act of 2017 created Opportunity Zones as a temporary, place-based tax incentive to encourage investment in distressed communities.

The One Big Beautiful Bill Act, also known as the Working Family Tax Cuts Act, made the incentive permanent and established a process to renew or redesignate eligible census tracts every 10 years.

Treasury identified more than 25,000 eligible census tracts. Governors could nominate up to 25% of their state’s eligible tracts as Opportunity Zones.

For Opportunity Zone investments made after Dec. 31, 2026, taxpayers may defer capital gains taxes on their initial investments for five years from the investment date. At the five-year mark, the initial investment remains eligible for a 10% basis step-up, reducing the tax owed when the gain is realized.

The law preserves the tax exclusion for new capital gains from qualifying investments held for at least 10 years. For investments held longer than 30 years, the stepped-up basis is frozen at the investment’s fair market value on its 30th anniversary.

Investments in rural Opportunity Zones qualify for enhanced tax benefits. A rural area is a city or town with fewer than 50,0000 residents, excluding census tracts adjacent to a city or town with more than 50,000 people.

Initial rural investments receive a 30% basis step-up after five years, rather than 10%. The One Big Beautiful Bill Act also lowered the substantial improvement threshold for properties in eligible rural areas to 50%, effective immediately.

View the complete list and map of new designations here.