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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 are federally designated census tracts where eligible investments made through Qualified Opportunity Funds may qualify for federal tax benefits. Opportunity Zones were originally created in 2017 (1.0) and became a permanent part of the tax code with legislation enacted in 2025, initiating a new round of tract designations (Opportunity Zones 2.0).

Current Status

Michigan’s selections have been submitted to and confirmed by the US Department of Treasury. These are final and cannot be revised.

Explore Michigan’s 2.0 Zones

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About Opportunity Zones

Opportunity Zones are federally designated census tracts where eligible investments made through Qualified Opportunity Funds may qualify for federal tax credits.

Governors can nominate up to 25% of their state’s eligible census tracts every ten years. The Opportunity Zones 2.0 tracts recently confirmed by the federal Treasury will be eligible for federal tax benefits starting January 1, 2027, through December 31, 2036.

  • To review a comparison of OZ 1.0 and 2.0 legislation, visit the US Department of Housing and Urban Development’s (HUD) Opportunity Zone update page.
  • Review guidelines for OZ 2.0 investors by visiting the HUD’s guide for investors.

Benefits of Investing in an Opportunity Zone

Investments made into a Qualified Opportunity Fund receive the following federal tax incentives:

  • Deferral: Investors may defer taxes on capital gains invested in a Qualified Opportunity Fund for up to five years. 
  • Basis Step-Up: Opportunity Zone Investors receive a step-up in basis on their deferred capital gains liability. The step-up basis increases to 30% for investments in rural Opportunity Funds.
  • Exemption for long-term investments: Any gains made on investments held in an Opportunity Zone for 10 or more years are exempt from capital gains tax.

To begin making qualifying investments, visit the US Department of Housing and Urban Development’s guide for investors.

About Michigan’s Nomination Process

Research and stakeholder outreach to support Michigan’s Opportunity Zone 2.0 nominations were led by Michigan Economic Development Corporation (MEDC) with substantial research and analytical support from Michigan State Housing Development Authority (MSHDA). Additional support was provided by the department of Labor and Economic Opportunity (LEO), Michigan Department of Agriculture and Rural Development (MDARD), and Michigan Department of Treasury.

Nominations seek to align OZ nominations with the broader strategic economic goals of the state and to attract projects that have been successful under past OZ legislation. These goals include the creation of more housing and commercial opportunities in Michigan. Both a quantitative model and public input were used to arrive at final tract nominations. MEDC hosted 13 public input events across the state of Michigan between July 15 – August 4, 2026, as well as an online submission form. Public engagement generated over 700 unique tract selections across in-person and online channels. Final tracts were selected by Governor Whitmer and sent to the US department of Treasury for certification on October 28th, 2026.