WASHINGTON, D.C. — States will soon be able to nominate new areas for federal tax incentives designed to attract private investment into underserved communities under guidance released by the Treasury Department and Internal Revenue Service.
What This Means for You
- States can nominate communities for tax incentives starting July 1, 2026
- Investments in selected areas may receive federal tax benefits
- Rural and economically distressed communities are a key focus
The guidance outlines how governors, territorial leaders, and the mayor of Washington, D.C., can designate “Qualified Opportunity Zones,” which are specific geographic areas eligible for tax incentives aimed at encouraging private investment.
Opportunity Zones are census tracts—small geographic areas defined for statistical purposes—that meet criteria for economic distress, such as lower income levels or reduced economic activity.
How the Process Works
The nomination period for new Opportunity Zones will open July 1, 2026.
State and territorial leaders will submit eligible census tracts for consideration by the Treasury Secretary. Approved areas will receive designation as Opportunity Zones for a new 10-year period beginning January 1, 2027.
The Treasury Department and IRS identified 25,332 eligible census tracts nationwide, including 8,334 that qualify for additional incentives tied to rural development.
Purpose of the Program
The Opportunity Zone program offers tax incentives to investors who place capital into designated areas through Qualified Opportunity Funds, which are investment vehicles focused on economic development projects.
The goal is to encourage long-term private investment in communities that have historically lacked access to capital, supporting job creation and local economic growth.
“Permanently extending and expanding Qualified Opportunity Zones offers states an opportunity to attract long-term investment into underserved, rural, and economically distressed areas,” IRS Chief Executive Officer Frank J. Bisignano said.
Next Steps and Additional Guidance
Treasury officials said additional guidance will be released in the coming weeks to clarify rules for investors and reporting requirements.
More information about the nomination process is available at https://www.irs.gov/newsroom/treasury-irs-provide-guidance-to-states-for-nominating-census-tracts-as-qualified-opportunity-zones-under-the-one-big-beautiful-bill.
A full list of eligible census tracts and methodology details can be found at https://home.treasury.gov/policy-issues/tax-policy/data-transparency/qualified-opportunity-zones.
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