The Treasury Department and IRS released new guidance outlining how states will nominate census tracts for designation as Qualified Opportunity Zones (QOZs).
In Context: Opportunity Zones were permanently extended under the One Big Beautiful Bill Act signed into law last summer, with updates that better target investment through expanded rural incentives and a more structured selection process.
- Beginning July 1, states will have a 90-day window to submit eligible low-income census tracts, with final designations taking effect January 1, 2027.
- States may designate up to 25% of eligible tracts, with more than 25,000 census tracts identified nationwide as potential candidates.
- Treasury will allow states to nominate tracts outside the pre-approved list if they can justify eligibility, with the state holding the burden of proof.
- All submissions made during the nomination window will be treated as if received at the end of the period.
- Guidance also clarifies that existing Opportunity Zone designations in Puerto Rico will expire at the end of 2027, one year earlier than previously expected, and that 2020 census tract boundaries will remain in place for the full duration of the next designation cycle, regardless of any changes following the 2030 census.
Go Deeper: Novogradac released an Opportunity Zones 2.0 mapping tool with new data that will continue to be further updated. A Notes from Novogradac blog post on the tool explains more.
