Guidance issued this week by the IRS provides much-needed clarity for real estate developers, investors, and community leaders on which census tracts will qualify for the federal Opportunity Zone program.
That program was extended last year as part of President Donald Trump’s One Big Beautiful Bill, making permanent Opportunity Zone tax benefits for investments made on or after Jan. 1, 2027, into newly designated Qualified Opportunity Zones (QOZs).
To be eligible for a QOZ designation for 2027, a census tract must qualify as a low-income community. The IRS and Treasury Department identified 25,332 census tracts this week that meet this requirement. It’s important to note that of those, 8,334 tracts are comprised entirely of a rural area, according to the new guidance. Investors may receive a 30% basis step-up for investments in qualified rural opportunity funds.
Starting on July 1, 2026, governors in each state will have a 90-day window to nominate up to 25% of the state’s low-income communities for designation as new Qualified Opportunity Zones for 2027. The Secretary of the Treasury will then certify and designate the nominated census tracts as QOZs.
The new guidance lays out the nomination process and includes a detailed spreadsheet in the appendix listing each qualifying census tract across the country, organized by state and county.
For now, real estate developers, investors, and community leaders can expect additional tools to be rolled out by the two federal agencies, including a mapping tool showing the census tracts. There is also a unique chance for this group to influence the designation of low-income census tracts as Opportunity Zones in their state for the next 10 years. Engagement with state legislators and state commerce departments may help ensure that qualifying census tracts capable of supporting residential development are included in future designations.
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