What Are Opportunity Zones?
Opportunity Zones are federally designated census tracts in economically distressed communities where investors can receive powerful capital gains tax benefits by investing through a Qualified Opportunity Fund. There are 8,764 designated zones across all 50 states, Washington D.C., and U.S. territories.
What They Are
Opportunity Zones (OZs) are specific geographic areas, defined by census tract boundaries , that have been nominated by state governors and certified by the U.S. Treasury Department as eligible for special tax incentives. These zones were created to encourage long-term private investment in low-income and economically distressed communities.
To qualify, a census tract must meet certain economic criteria, including having a poverty rate of at least 20% or median family income no greater than 80% of the area median (tightened to 70% under OZ 2.0 for new designations starting in 2027).
Why They Were Created
The OZ program was designed to address persistent economic inequality in underserved communities. Despite a strong national economy, thousands of census tracts across the country had seen decades of disinvestment, population loss, and economic decline. The program aims to unlock an estimated $6 trillion in unrealized capital gains sitting in stocks, real estate, and businesses, and channel it into communities that need it most.
Who Designates Them
State governors nominate eligible census tracts (up to 25% of qualifying tracts in their state), and the U.S. Department of the Treasury certifies the final designations. Under OZ 2.0, this process will repeat every 10 years starting in 2027.
How Many Exist
There are currently 8,764 designated Opportunity Zones across all 50 states, Washington D.C., and five U.S. territories. You can explore all of them on our interactive map.
OZ 1.0 vs OZ 2.0
The original program (OZ 1.0) was created by the Tax Cuts and Jobs Act of 2017 with a 10-year window. The One Big Beautiful Bill Act of 2025 (OZ 2.0) made the program permanent, added enhanced benefits for rural zones, and created a rolling redesignation process. Learn more about what changed with OZ 2.0.
Key Terms Glossary
- Qualified Opportunity Fund (QOF)
- A certified investment vehicle (corporation or partnership) that holds at least 90% of its assets in qualified OZ property.
- Qualified Opportunity Zone Business (QOZB)
- An eligible business operating substantially within an OZ that meets income, asset, and activity requirements.
- GEOID / Census Tract
- The unique identifier for each Opportunity Zone, based on U.S. Census Bureau tract numbers.
- Substantial Improvement
- The requirement that property acquired in an OZ must be improved by an amount equal to the original purchase price within 30 months (50% for rural zones under OZ 2.0).
- 180-Day Rule
- Capital gains must be reinvested into a QOF within 180 days of realizing the gain to qualify for tax deferral.
- Basis Step-Up
- An increase in the cost basis of an investment, reducing capital gains tax when the investment is eventually sold.
Frequently Asked Questions
Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or investment advice. Opportunity Zone rules are complex and the program underwent significant changes in 2025. Always consult a qualified tax attorney or CPA before making investment decisions.
You Might Also Like
Fundamentals
History & Legislation (TCJA 2017)
The Tax Cuts and Jobs Act of 2017 and how it created the Opportunity Zone program.
Read moreFundamentals
How the Tax Incentive Works
The 3 key tax benefits: deferral, basis step-up, and tax-free appreciation.
Read moreFundamentals
What Is a Qualified Opportunity Fund (QOF)?
Learn about the investment vehicle required to access OZ tax benefits.
Read more