What’s New: Opportunity Zone Designations Expanded
The One, Big, Beautiful Bill (OBBB) has made the Opportunity Zone tax incentive permanent, with periodic designation rounds every 10 years beginning Jan. 1, 2027. (irs.gov) States, territories, and DC may nominate census tracts—including entirely rural tracts— to be designated as Qualified Opportunity Zones (QOZs). (irs.gov)
Treasury and IRS issued Revenue Procedure 2026-14 with guidance for state Chief Executive Officers to nominate qualified census tracts from July 1, 2026 for a 90-day window, with a possible 30-day extension. (irs.gov)
Eligible tracts must be Low-Income Communities (LICs); among those, rural tracts can also be nominated. Maximum nominations per state are capped at 25% of total LICs. (irs.gov)
Who Benefits and How to Plan Ahead
Potential Beneficiaries:
- Real estate developers, entrepreneurs, investors seeking capital gains deferral, basis step-up, or tax-exempt growth by investing in QOZ Funds.
- States and local governments that want to direct development into underserved or economically distressed areas.
Planning Tips:
- Monitor state nominating periods (Summer 2026) and be ready to submit nominations if you’re a state official or collaborate with local governments.
- Identify eligible census tracts early—use IRS and Treasury tools to verify LIC and rural tract status.
- Align investment timelines—since new designations take effect Jan 1, 2027, work your capital raises, funds, or project timelines accordingly.
Practical Example
Suppose you’re starting a QOZ Fund focused on rural renewal. You could target a rural tract in your state that’s an LIC. Work with your Governor’s office or State CEO to nominate it in the 90-day window starting July 1, 2026. Once designated, investments placed in that tract qualify under the permanent QOZ framework under OBBB.
Key Pitfalls to Avoid
- Missing the nomination window: If the state doesn’t submit nominees by the deadline (or extension), the existing designations stand—but new functionality cannot be accessed until next round.
- Over-designating: Stay within state limits (25% of complement LICs).
- Postponed guidance or uncertain tools: Additional guidance and online tools are forthcoming—don’t rely solely on early drafts.
Actionable Steps
- For investors: map out potential census tracts where you have or plan investment operations.
- For state officials: prepare data and outreach to stakeholders so nominations reflect priorities for economic development.
- For entrepreneurs in rural communities: monitor whether your area qualifies and if you can edge in on fund creation or partnership.
Bottom line: The permanent QOZ framework under OBBB presents tremendous opportunity to channel capital into overlooked areas. With careful planning and timely action this summer, individuals, investors, and communities can benefit from generational incentives starting in 2027.
NomadicTax Research Team