The One Big Beautiful Bill (OBBBA) has rescued the qualified opportunity zone program from expiration and made significant tax changes that will take effect in 2027.
In the meantime, new investments in existing qualified opportunity zones may dwindle.
What Is a Qualified Opportunity Zone?
The qualified opportunity zone program was created by the Tax Cuts and Jobs Act back in 2018 to spur investment in low-income communities.
Thousands of lower-income census tracts were designated as qualified opportunity zones (QOZs). Several thousand Qualified Opportunity Funds (QOFs)—corporations, partnerships, or limited liability companies (LLCs)—have been organized to pool money from taxpayers to invest in QOZs.
Most QOFs invest in residential real estate development, followed by commercial development, and then followed by hospitality, renewable energy, and operating businesses in QOZs. Taxpayers who invest capital gains with these QOFs receive substantial tax benefits.
To date, over $160 billion has been invested in QOZs.
The QOZ program was scheduled to end December 31, 2026. The OBBBA has made it permanent and will create new QOZs and tax incentives for those that invest in them.
The initial QOZ regime—QOZ 1.0—will remain in place through 2026. The new regime—QOZ 2.0—starts January 1, 2027.
QOZ 1.0
Back in 2018, 8,764 census tracts in ... Log in to view full article.
