Opportunity Zones
Opportunity Zones are one of the largest federal community development tax incentives in the United States and were recently renewed by federal tax changes.Opportunity Zones were designed to mobilize private investments in lower-income communities by incentivizing the reinvestment of capital gains into projects in designated census tracts. Incentives include deferral of tax liability, step-up in basis, and tax-free growth. Qualifying investments include real estate, business expansion, manufacturing, energy, and other projects.
As part of this renewal of Opportunity Zones through federal tax changes, the new round of designation is currently underway and set to take effect on January 1, 2027. The Executive Office of the Governor must send nominations to the federal Department of Treasury.
Background
In April, the federal government released its list of eligible census tracts under Opportunity Zones 2.0 (OZ 2.0). See map below.
By the end of September, the state will officially nominate up to 25% of eligible tracts for designation as OZ 2.0 tracts. Designations are set to take effect on January 1, 2027, and will last 10 years; these designations cannot be revised.
MEDC is a convener of statewide stakeholders. Questions about policy definitions, tract eligibility requirements, and project applications can be directed to the U.S. Department of Treasury and U.S. Department of Housing and Urban Development (HUD):
- To review a comparison of OZ 1.0 and 2.0 legislation, visit the HUD Opportunity Zone update page.
- To review OZ 2.0 eligibility criteria, visit the U.S. Department of Treasury policy documentation.