“To amend the Internal Revenue Code of 1986 to renew and enhance opportunity zones, and for other purposes.”
No CRS summary available for this bill.
This section renews and enhances the Opportunity Zone program by (1) modifying the low-income community definition to apply a 70% median family income threshold (from 80%) and excluding census tracts with median family income of at least 125% of statewide or metropolitan area median family income; (2) establishing a second round of qualified opportunity zone (QOZ) designations, nominated by state chief executives and made by the Secretary of the Treasury, for up to 25% of each state's low-income communities from January 1, 2027, through December 31, 2033 (initial round ends December 31, 2026), with at least the lesser of 33% (or the U.S. rural population percentage) or all rural low-income communities required to be rural, precluding contiguous tracts; (3) extending the capital gains investment election deadline in qualified opportunity funds (QOFs) to December 31, 2033 (from December 31, 2026), with inclusion of deferred gains on December 31, 2026, for pre-2027 investments or December 31, 2033, for later investments; and (4) revising basis increases for post-2026 QOF investments to 10% of deferred gain after five years (replacing prior increases of 10% after five years and 5% after seven years), increased to 30% for qualified rural opportunity funds (i.e., QOFs holding at least 90% of assets in rural QOZ property), and allowing elective deferral of up to $10,000 of ordinary income. (As background, the Opportunity Zone program provides tax deferral on capital gains invested in QOFs, basis step-ups for long-term holdings, and permanent exclusion of QOF appreciation after 10 years to spur private investment in economically distressed census tracts.)