CDFI (Community Development Financial Institutions) Fund Qualified Opportunity Zones

Description:

Once designated, Qualified Opportunity Zones (QOZ) can receive substantial tax breaks for long term investments to low-income neighborhoods. State executives can nominate up to 25% or twenty five total, whichever is larger, low-income community (LIC) census tracts for QOZ designation. The current QOZ designations in PolicyMap show those tracts nominated and designated as QOZs in June 2018. Additionally, the QOZ designations in PolicyMap reflect rural area status as defined in IRS Notice 2025-50, as of October 2025. In this notice, a “Rural Area” is defined as any area other than (i) a city or town that has a population of greater than 50,000 inhabitants, and (ii) any urbanized area contiguous and adjacent to a city or town with more than 50,000 inhabitants.

For the original 2018 QOZ designations, census tracts were considered LICs if the tract had either (1) a median family income at or below 80% of Area Median Income (AMI) or (2) a poverty rate of 20% or greater as determined by the 2011-2015 Census American Community Survey data. LIC eligibility also included select qualified high migration tracts, low-population tracts within Empowerment Zones, and territorial census tracts that met the LIC qualifications. Additionally, up to 5% of tracts that were nominated for the QOZ could be non-LICs as long as they were contiguous to a LIC and had a median family income that was not greater than 125 percent of the adjacent LIC. Eligible contiguous non-LIC tracts that were contiguous to a LIC in a different state were also eligible for nomination if the adjacent state nominated the LIC as a QOZ.

For the Opportunity Zone 2.0 designations which will take effect starting in January 2027, the definition of eligible LICs was changed. Eligible LICs are census tracts that have a poverty rate equal to or greater than 20%; or the tract’s median family income is equal to or less than 70% of the applicable area median family income. For tracts located in metropolitan areas, the median family income is benchmarked to the metro area whereas tracts located outside of metropolitan areas are benchmarked to the state median family income. Tracts where median family income is 125% or more of the applicable area median income are excluded from consideration as LICs. The provision for contiguous tracts was also removed. During the 2026 determination period, state executives may nominate up to 25% or 25 total LICs (whichever is larger) to be designated as QOZs. Those designations will go into effect in January 2027.