# Opportunity Zones 2.0: every change from the One Big Beautiful Bill Act, and the 2027 map

Source: https://fundtaxes.com/blog/opportunity-zones-2-0
Published: 2026-10-10 · Updated: 2026-10-10 · Publisher: FundTaxes

> **Opportunity Zones 2.0 is the permanent version of the Opportunity Zone program enacted in the One Big Beautiful Bill Act on July 4, 2025.** A new map of zones takes effect January 1, 2027 and runs through 2036. Gains invested from 2027 are deferred for five years, get a 10% basis step-up (30% in rural funds), and keep the 10-year tax-free growth.

## Key takeaways

- Zones are now redrawn every 10 years. The first OZ 2.0 map runs from January 1, 2027 through December 31, 2036.
- Eligibility is tighter: a tract’s median family income must be at or below 70% of the area median (80% before), tracts above 125% are out, and the contiguous-tract rule is gone.
- Investors get a rolling 5-year deferral, a 10% step-up after 5 years (30% in a qualified rural opportunity fund) and tax-free growth after 10 years, with basis reset to fair market value at 30 years.
- Funds and businesses face new annual information reporting, with penalties of $500 a day up to $10,000 per return ($50,000 for funds over $10 million).
- Original zones keep their designation through 2028, but property bought in them after 2026 generally no longer counts unless a transition rule in Notice 2026-40 applies.

## The OZ 2.0 timeline

1. **July 4, 2025.** The One Big Beautiful Bill Act makes the program permanent and sets up 10-year designation cycles.
2. **April 2026.** Revenue Procedure 2026-14 tells governors how to nominate tracts.
3. **June 2026.** Notice 2026-40 gives transition rules between the old and new programs.
4. **July 1 to September 28, 2026.** Governors nominate up to 25% of their state’s eligible census tracts.
5. **Late 2026.** Treasury certifies the nominations, expected before year end.
6. **January 1, 2027.** The new zones take effect for 10 years, through December 31, 2036.

Until Treasury publishes the certified list, no one can say for sure which tracts are in. Check the [FundTaxes zone map](https://fundtaxes.com/opportunity-zone-map) for the current (2018) designations, and HUD or your state’s economic development office for nominations.

## How the new map is drawn

A census tract can be nominated if it is a low-income community under the tighter OZ 2.0 test:

- median family income at or below **70%** of the statewide or metropolitan median (down from 80%), or a poverty rate of at least 20%;
- in every case, median family income no higher than **125%** of that median;
- no more designations of non-low-income tracts just because they border a qualifying one.

Analysts expect the eligible pool to be roughly a quarter smaller than in 2018. Governors pick up to 25% of eligible tracts, and existing zones do not count against that limit.

## What changes for investors

|  | OZ 1.0 | OZ 2.0 |
| --- | --- | --- |
| Gains invested | Through December 31, 2026 | On or after January 1, 2027 |
| Deferral ends | December 31, 2026 (or earlier sale) | 5 years after the investment (or earlier sale) |
| Basis step-up | 10% at 5 years, 15% at 7 | 10% at 5 years; 30% for a qualified rural opportunity fund |
| 10-year exclusion | Yes | Yes; basis set to fair market value at the 30-year mark |
| Rural substantial improvement | 100% of basis | 50% of basis in rural zones |

The rolling deferral is the structural change. Under OZ 1.0 everyone’s deferral ended on the same date, so later investors got less and less. Under OZ 2.0 every investment gets the same five-year runway.

> Interactive worksheet: enter the gain, the date you invest in a QOF and whether it is a rural fund to see which rules apply, when the deferral ends, the step-up and the 10-year and 30-year dates. Use it at https://fundtaxes.com/blog/opportunity-zones-2-0

## Qualified rural opportunity funds

OZ 2.0 adds a second kind of fund. A **qualified rural opportunity fund (QROF)** holds at least 90% of its assets in zone property located in rural zones. A rural area is anywhere outside a city or town of more than 50,000 people and the urbanized area next to it.

QROF investors get a 30% basis step-up after five years instead of 10%. Property in rural zones also needs only 50% added basis to count as substantially improved, which makes renovation projects in small towns far easier to qualify. The reduced improvement test applies from enactment, July 4, 2025.

## New reporting, and penalties for missing it

The law adds detailed annual information returns for QOFs and the businesses they own, covering assets, investments, employees and location. A fund that fails to file a complete and correct return faces a penalty of $500 per day, up to $10,000 per return, or up to $50,000 for a fund with more than $10 million in assets. Intentional disregard raises the cap. These penalties sit on top of the existing 90% test penalty.

## The transition: original zones after 2026

Zones designated in 2018 do not vanish on January 1, 2027. Their designation runs through December 31, 2028 (2027 in Puerto Rico). Notice 2026-40, though, says property bought in those zones after December 31, 2026 generally is not qualified opportunity zone business property. There are two exceptions:

- **Working-capital plans adopted by December 31, 2026.** The business must have received at least 10% and spent at least 5% of the planned working capital by that date.
- **Ordinary-course replacements** needed to keep operating. Expansion and new lines of business do not count.

Property that already qualifies can keep treating the old zone as a zone for the use and QOZB tests through December 31, 2047. If you run a QOZB in an original zone, adopt or update the [working-capital plan](https://fundtaxes.com/signup) before year end.

## What to do before the switch

1. List every gain realized since July 2026 and its 180-day deadline. If the window reaches 2027, compare investing now with investing in January.
2. Budget for the [December 31, 2026 inclusion](https://fundtaxes.com/blog/opportunity-zone-2026-inclusion-form-8997) on your existing OZ 1.0 investments.
3. For businesses in original zones, adopt working-capital plans and sign binding contracts for planned purchases before 2027.
4. Watch for Treasury’s certified tract list, then check your project sites.

## Frequently asked questions

### When does Opportunity Zones 2.0 start?

The new zones take effect January 1, 2027 and run through December 31, 2036. The OZ 2.0 investor rules (5-year rolling deferral, 10% or 30% step-up) apply to investments made on or after January 1, 2027.

### Is the Opportunity Zone 2.0 map final?

Not yet. Governors nominated tracts between July 1 and September 28, 2026, and Treasury is expected to certify them late in 2026. Until then, treat any OZ 2.0 map as a list of nominated or eligible tracts.

### Are the original opportunity zones still valid?

Yes, through December 31, 2028 (December 31, 2027 in Puerto Rico). But property bought in an original zone after 2026 generally does not qualify unless a Notice 2026-40 transition rule applies.

### What is a qualified rural opportunity fund?

A QOF that holds at least 90% of its assets in property in rural zones, meaning outside cities or towns of more than 50,000 people and their adjacent urbanized areas. Its investors get a 30% basis step-up after five years.

### Does OZ 2.0 keep the 10-year exclusion?

Yes. Hold the QOF investment at least 10 years and its appreciation is excluded from federal tax. New for OZ 2.0, the basis is reset to fair market value at 30 years, so growth after that is taxable.

### Can I still invest under the old rules in 2026?

Yes, but a gain invested in 2026 is taxed on December 31, 2026 with no step-up. If your 180-day window runs into 2027, investing in 2027 under OZ 2.0 is usually better.

## Sources

- [RSM: OBBBA tax provisions, opportunity zones](https://rsmus.com/insights/services/business-tax/obbba-tax-opportunity-zones.html)
- [AFS: IRS releases Notice 2026-40, transitional guidance on qualified opportunity zones](https://www.afslaw.com/perspectives/alerts/irs-releases-notice-2026-40-transitional-guidance-qualified-opportunity-zones)
- [Kiplinger: How governors pick Opportunity Zone 2.0 designations](https://www.kiplinger.com/taxes/tax-planning/how-governors-pick-opportunity-zone-2-designations)
- [HUD: Opportunity Zones](https://www.hud.gov/opportunity-zones)
- [Novogradac: Opportunity Zones 2.0 mapping tool](https://www.novoco.com/resource-centers/opportunity-zones-resource-center/novogradac-opportunity-zones-20-mapping-tool)
- [26 U.S.C. §1400Z-2, special rules for capital gains invested in opportunity zones (Cornell LII)](https://www.law.cornell.edu/uscode/text/26/1400Z-2)

_FundTaxes guides are general information, not tax or legal advice._