By David Petersen and guest blogger Greg Manning, Pioneer Project Partners
In our blog post on June 12, we discussed the provisions of the “big, beautiful bill” that would retool and extend the Opportunity Zones capital gains tax deferral program. These provisions survived the sausage-making process and were included in the final bill passed into law on July 3.
Under the new law, Opportunity Zones are now a permanent feature of the tax code; the old sunset dates are gone. Any new qualified investment in an Opportunity Zone after December 31, 2026 receives a five-year deferral of capital gains tax. For existing investors, their tax deferral still expires on December 31, 2026. Investors’ basis in qualified property steps up 10% after five years, or 30% for investments in some specialized rural properties.
Existing Opportunity Zones expire on December 31, 2026; state governors may renew existing zones or designate new zones every ten years, starting July 1, 2026. Additional incentives have been added to encourage investment in more rural and low-income projects. Eligibility guidelines have been tightened somewhat leading to an expectation that the overall number of Opportunity Zones will decrease by 22% in 2027. More details on the Opportunity Zone components of the new law can be found here.
