Key Changes To The Opportunity Zone Program In The One Big Beautiful Bill Act

The Tax Cuts and Jobs Act of 2017 designates certain low-income community population census tracts as qualified opportunity zones and creates tax incentives for those with capital gains looking to roll over their investments on a tax-deferred basis. Under the program, taxpayers who reinvest their capital gains in qualified opportunity zones can (i) defer recognition of such capital gains until December 31, 2026, (ii) recognize up to a 15% step up in basis in such deferred capital gains after 7 years, and (iii) eliminate all gains in excess of the deferred capital gains amount if the investment is held for 10 years or more.

The Basics of the Opportunity Zone Program

Similar to a 1031 exchange, a taxpayer with capital gains has 180 days to reinvest those gains into a "qualified opportunity fund", which is a corporation or partnership organized for the purpose of investing in "qualified opportunity zone property". Qualified opportunity zone property includes