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What’s Changing: Qualified Opportunity Zones under the One, Big, Beautiful Bill
New rules for QOZ designations, investments & rural areas—permanent extension under recent federal tax reform.
By NomadicTax Research Team • 5-8 min read • August 16, 2026
## Overview: Opportunity Zones Go Permanent
The **One, Big, Beautiful Bill Act** (OBBBA), enacted July 4, 2025, makes Qualified Opportunity Zones (QOZs) a **permanent federal incentive**, replacing prior sunset dates. Under OBBBA, states will nominate new census tracts every 10 years starting in 2027. ([irs.gov](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?utm_source=openai))
## Nomination Process & Rural Area Incentives
- **Revenue Procedure 2026-14** outlines how state Chief Executive Officers nominate eligible census tracts effective **January 1, 2027**. Deadline windows begin July 1, 2026. ([irs.gov](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?utm_source=openai))
- Census tracts **comprised entirely of a rural area** get *more favorable “substantial improvement” tests*. Instead of adding basis exceeding 100% of the property's adjusted basis, rural tracts only require **exceeding 50%**. ([irs.gov](https://www.irs.gov/forms-pubs/updates-to-the-instructions-for-form-8996-rev-12-2024-due-to-notice-2025-50?utm_source=openai))
## Transitional Guidance & Anticipated Regulations
- **Notice 2026-40** provides transitional guidance for investments under §§ 1400Z-1 and 1400Z-2 post-OBBBA amendments. It clarifies how prior rules (pre-OBBBA) will apply to certain investments for stock acquired on or before December 31, 2026. ([irs.gov](https://www.irs.gov/irb/2026-28_irb?utm_source=openai))
- Proposed regulations yet to be finalized include definitions like “applicable start date” for QOZ businesses, shape of holding period requirements, and whether certain past practices will be grandfathered. ([irs.gov](https://www.irs.gov/irb/2026-28_irb?utm_source=openai))
## How to Assess Opportunity Zone Investments Now
- If you're investing in QOZ property **acquired by Dec. 31, 2026**, you may rely on the earlier definitions (e.g., the 2017 original-issue test) under transitional guidance. ([irs.gov](https://www.irs.gov/irb/2026-28_irb?utm_source=openai))
- For property in **rural QOZs**, expect the lower 50% improvement threshold to ease compliance costs. Great news for projects in underserved areas. ([irs.gov](https://www.irs.gov/forms-pubs/updates-to-the-instructions-for-form-8996-rev-12-2024-due-to-notice-2025-50?utm_source=openai))
- States: prepare to act during the nomination window starting July 1, 2026. Those who delay may miss block quotas (no more than 25% of LIC tracts per state may be designated under the OBBBA cycle). ([irs.gov](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?utm_source=openai))
## Example Scenario
A developer plans to build affordable housing in a tract that’s entirely rural. Suppose they acquire land on Oct 15, 2026, and start construction immediately with improve-ments. Under the new rural test, they need to invest *only* over 50% of the land’s adjusted basis to meet the substantial improvement requirement (rather than fully doubling it). They may also benefit from tax deferral and basis step-ups if investors hold QOF interest long enough.
**Bottom line:** Opportunity Zones are reshaping incentives under OBBBA. Active investors and state officials should understand the permanent extension, new rural area rules, and transitional guidance to plan strategically.