Understanding Opportunity Zones 1.0 and 2.0: How Communities Can Prepare to Advocate for Nomination by July 1
The Opportunity Zone program was first established under the 2017 Tax Cuts and Jobs Act to encourage long‑term private investment in low‑income census tracts across the United States. Today, there are more than 8,700 designated Opportunity Zones across the country.
The original Opportunity Zone designations (Opportunity Zone 1.0 (2018-2026)) were one‑time only and scheduled to expire at the end of 2026, with all tax deferral benefits ending on December 31, 2026. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), which made Opportunity Zones a permanent part of the federal tax code and created a more rigorous, data‑driven version of the program known as Opportunity Zones 2.0 (OZ 2.0).
OZ 2.0 operates in 10‑year designation cycles (2027, 2037, 2047), allowing states to refresh, revise, or re‑nominate eligible tracts each cycle. Here, we explore what this might mean for communities and how they can advocate for nomination of census tracts.
Building a Strong Case for Nomination Before July 1, 2026
Cities, economic development councils, community organizations, and local investors can take proactive steps to strengthen their position ahead of the nomination window. Effective justification packages may include:
Data demonstrating community need: housing affordability, infrastructure gaps, workforce challenges, demographic trends, etc.
Evidence of readiness: local planning efforts, zoning alignment, current projects and investments, public‑private partnerships
Success stories from OZ 1.0: completed projects, case studies, investment momentum, community benefit
Points of clear differentiation: why this tract stands out among other eligible tracts in the state
As states can only nominate a fraction of eligible tracts, communities that prepare early, and present compelling, data‑driven justification, will be better positioned for selection.
July 1, 2026: The Start of a Competitive Nomination Process
Beginning July 1, 2026, governors must nominate eligible census tracts for OZ 2.0 designation. The US Treasury will certify and finalize the new OZ 2.0 map on January 1, 2027. Key features of the new process include the following.
States may nominate one-quarter of their eligible low‑income census tracts.
OZ 2.0 includes tighter eligibility rules and enhanced incentives for rural investment.
While approximately 25,000 census tracts meet eligibility criteria, only 25% of those are expected to be selected—making this a significantly more competitive process than OZ 1.0.
OZ 2.0 Eligibility Criteria
Eligibility is based on U.S. Census Bureau 2020–2024 ACS 5‑year estimates. A census tract must meet one of the following criteria:
Median family income (MFI) below 70 percent of the state (non-metro) or metro (metro areas) median (versus 80 percent in the original OZ provision).
Poverty rate of 20 percent or greater (unchanged), plus a newly-established MFI cap set at 125 percent of the applicable state or metro median.
For a list of OZ 2.0 eligible tracts and additional information, visit the US Department of the Treasury: OZ2-Eligible-LIC-Tracts-Data-Transparency-03232026.xlsx.
If you have questions about how you can support your community’s efforts to be nominated for inclusion in the Opportunity Zone 2.0, Foundations for Families is here to provide customized help. Please reach out to find out how we may be able to assist your community.
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