Opportunity Zone 2.0: Nominated Tracts Submitted – Time to Review Your Portfolio

The nomination window has closed for the first round of Qualified Opportunity Zones (“QOZs”) under the permanent Opportunity Zone program enacted by the One Big Beautiful Bill Act (“OBBBA”) in July 2025. All 50 states, the District of Columbia and the five inhabited US territories have submitted their nominated census tracts to the US Department of the Treasury, which has begun the certification process. Treasury is expected to finish certifying by late December, and the new designations will take effect on January 1, 2027.

The new QOZs will remain in effect for 10 years, and new QOZs will be designated every 10 years after that. OBBBA also provides enhanced benefits for qualifying investments in rural QOZs. These include a 30% basis step-up (compared with 10% for other QOZ investments) for investments held for at least five years through a qualified rural opportunity fund, and a lower substantial improvement threshold for rural property.

The current QOZ designations generally will expire on December 31, 2028, unless the applicable census tracts are redesignated under the new regime. This transition may create compliance issues for existing Qualified Opportunity Funds (“QOFs”) and Qualified Opportunity Zone Businesses (“QOZBs”) with investments or projects in tracts that are not redesignated. IRS Notice 2026-40 (the “Notice”) provides transitional relief, including a working capital safe harbor that, if its requirements are satisfied, may allow tangible property acquired after December 31, 2026, for use in a previously designated QOZ to be treated as qualified opportunity zone business property. For additional information on the transitional guidance, see our prior client alert here.

Sponsors and investors should start comparing the nominated tracts against their: 

• Existing assets;
• Acquisition and development pipelines; and
• Planned QOF and QOZB investments.

This review can show which properties are moving into or out of a QOZ, which may affect transaction timing, investment strategy, and fund structure. Nominations aren’t final until Treasury certifies them, and some jurisdictions haven’t yet published their complete nomination lists. Sponsors should keep monitoring the certification process and confirm the final designations before relying on them.

Our team is available to consult with you if you would like assistance reviewing the nominated tracts against your current or prospective investments or evaluating and complying with the transitional requirements of the Notice.