Opportunity zone

Opportunity zones are economically distressed census tracts designated by governors and certified by the Treasury under the Tax Cuts and Jobs Act of 2017. They offer tax incentives to encourage private investment in these areas through special funds called Qualified Opportunity Funds.

An investor who sells an asset at a gain can invest the gain in a fund and defer the capital gains tax on the original gain, and if the investment is held for at least ten years, the new appreciation is tax-free. Nearly 8,700 tracts were designated across the states and territories. The program was designed with bipartisan support; Senator Tim Scott and Senator Cory Booker were among its sponsors, and the 2025 tax law made it permanent with updates.

Supporters say that it channels private capital to underserved communities and avoids the cost of direct spending. Critics, including some researchers, argue that the program has done little to help residents, that much investment went to real estate in areas already gentrifying, that tract selection included places that were not poor and that it mostly benefits wealthy investors; studies on employment and poverty show modest or mixed effects. It is an example of a tax expenditure. See also corporate income tax.