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 in low-income neighborhoods. State executives can nominate up to 25% of their low-income community (LIC) census tracts, or 25 tracts if that is larger, for QOZ designation. PolicyMap shows two rounds of QOZ designations. The 2018 designations show tracts nominated and designated as QOZs as of December 14, 2018, at 2010 census tract boundaries, with rural area status as defined in IRS Notice 2025-50, as of October 2025. The 2027 designations show tracts designated in the second round of designations as published by the U.S. Department of the Treasury in October 2026, at 2022 census tract boundaries, with rural area status from Treasury. 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 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 2027 QOZ designations, which take effect 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% and a median family income that does not exceed 125% of the applicable area median family income, or a median family income equal to or less than 70% of the applicable area median family income, as determined by the 2020-2024 Census American Community Survey data. For tracts located in a Core-Based Statistical Area (CBSA), median family income is benchmarked to the CBSA; tracts outside a CBSA are benchmarked to the state median family income. The provision for contiguous tracts was removed.