Opportunity Zone investment

The tax benefit goes to the investor, not to your business. What your business gets is equity from a Qualified Opportunity Fund (QOF), an investment vehicle taxed as a partnership or corporation that certifies itself to the IRS each year and must hold at least 90% of its assets in Opportunity Zone property.

Where the zones are: Qualified Opportunity Zones are low-income census tracts nominated by each state, DC or territory and certified by the Treasury. The zones designated in 2018 last to the end of 2028. Under the 2025 budget law (Public Law 119-21), governors nominate new zones every ten years, starting with a 90-day window from July 1, 2026 (with one 30-day extension allowed), and the new zones take effect on January 1, 2027. The new law also changes which tracts count as low-income (a median family income of no more than 70% of the area's, or a poverty rate of at least 20% with income no more than 125% of the area's) and drops the rule that let some neighboring tracts qualify.

How a business qualifies: the fund can invest in your business by buying newly issued shares or a new partnership interest, solely for cash. Your business must be a "qualified opportunity zone business" for most of the time the fund holds its stake:

• substantially all of the tangible property it owns or leases must be used in a zone and bought after the zone's start date (or substantially improved, which means spending more than its value on it within 30 months; 50% for existing buildings in rural zones)
• at least half of its gross income must come from the active conduct of business in a zone (the IRS gives three ways to show this, based on where its staff work or where its key property and functions are)
• less than 5% of its property (by tax basis) can be financial assets such as stocks, debt or options, apart from reasonable working capital
• it cannot be a golf course, country club, massage parlor, hot tub or suntan facility, racetrack or other gambling facility, or a liquor store

What the investor gets, for money invested after December 31, 2026: tax on the earlier gain is put off for five years (or until the investment is sold), 10% of that gain is never taxed if the investment is held for five years (30% for funds that invest in rural zones), and if it is held for at least ten years, any growth in its value is tax-free (up to 30 years). For money invested before 2027, deferred gains fall due at the end of 2026.

Reporting: the 2025 law adds yearly information returns for funds, and statements from the businesses they invest in. The IRS proposed rules for them on September 11, 2026; they are not final.

Securities rules: selling shares to a fund is still a securities offering, usually under Regulation D.