Opportunity Zones: A Renewed Gateway to Tax Savings and Community Investment

Originally created under the 2017 Tax Cuts and Jobs Act, Opportunity Zones (OZs) were designed to attract private capital to underserved communities by offering investors meaningful tax incentives. While the program sparked over $100 billion in investment, largely in real estate, the results were uneven, and participation slowed in recent years.

That’s changing. The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, revamps and revitalizes the OZ program with new rules, enhanced incentives, and increased accountability. If you’ve realized capital gains recently or are planning a development project, now is the time to evaluate how Opportunity Zones could fit into your long-term tax strategy.

At Strategic Tax Planning, we help clients structure and execute Opportunity Zone strategies that align with both compliance and growth goals. With the window narrowing on current zones and new ones on the horizon, acting now could preserve significant tax savings.

What Are Opportunity Zones?

Opportunity Zones are federally designated census tracts targeted for investment. Investors who roll eligible capital gains into a Qualified Opportunity Fund (QOF) can receive three main tax benefits:

• Deferral of capital gains tax until the earlier of sale or a set date
• Reduction in tax on the original gain depending on holding period
• Exclusion of gains from the OZ investment itself if held at least 10 years

These incentives apply to investments in real estate or operating businesses located in OZs and are designed to reward long-term participation.

What Changed Under the New Law?

The OBBBA introduces several important updates:

• Current OZs sunset after 2026; new zones take effect in 2027
• Zone eligibility tightened, reducing total OZs by an estimated 20%
• Adjacent tracts and most Puerto Rico zones removed from eligibility
• New incentives for rural investment, with up to a 30% reduction in capital gains tax for investors in qualifying rural OZs

Investments made in the new zones after January 1, 2027, will be the only ones eligible going forward. This makes the next 18 months a critical period for evaluating options under the current rules.

Improved Oversight and Reporting

Unlike the original legislation, the new law requires the U.S. Treasury to publish annual reports on the amount and impact of OZ investments, starting in 2026. This includes data on job creation, housing development, and capital allocation by census tract, with broader economic impact reports beginning in 2031.

This transparency is expected to restore confidence and help investors ensure their projects create real community value.

Who Should Consider an OZ Strategy?

If you’ve sold a business, property, or investment and realized a capital gain, reinvesting in an OZ through a QOF could provide substantial tax benefits. The capital must typically be reinvested within 180 days, and investments must meet strict eligibility and holding requirements.

Business owners, developers, and investors in both real estate and operating companies may all benefit, but success depends on correct structuring and careful compliance.

Why Planning Matters Now

With the current OZs set to expire and new zones not yet defined, there may be a “dead zone” in 2026 where uncertainty discourages activity. Acting before the end of 2025 ensures access to known zones and benefit structures.

At Strategic Tax Planning, we work with clients to identify eligible investments, form QOFs, and coordinate the tax, legal, and operational elements required for success. Whether as part of an exit strategy, a long-term development plan, or a tax-efficient investment vehicle, Opportunity Zones remain one of the most compelling tools in the code, when executed properly.

Let’s Talk Strategy

If you're considering a capital investment or have recently realized gains, we can help you evaluate whether an Opportunity Zone strategy is the right fit.

Email: info@strategictaxplanning.net
Phone: (202) 455‑6010

Take advantage of this revitalized incentive while the current window is still open.