In summer 2025, Opportunity Zones, were established as a permanent federal program. Opportunity Zones (OZs) are low-income census tracts, which investors can make qualifying investments into new projects and enterprises in exchange for federal capital gains tax reductions. Since they were first established as a pilot program in 2017, OZs have encouraged investors to invest in new housing and other real estate projects across the country, including in Ohio.

Opportunity Zones 2.0

🏡 In summer 2025, the One Big Beautiful Bill Act (OBBBA) made programmatic adjustments to and made permanent the federal Opportunity Zones tax credit program. The revamp is being called “Opportunity Zones 2.0".”

💰 Narrowed Definition of Low-Income: threshold for eligibility is reduced from 80% of areawide median family income to 70% and the ability to nominate contiguous tracts is repealed.

🌾 New focus on rural communities: there are larger tax incentives for investments made in Qualified Rural Census Tracts and a 50% reduction in substantial improvement threshold for properties acquired and improved in rural areas.

Updates to Eligible Census Tracts

🗺️ Here is a map of tracts that are expected to be eligible in Ohio. The map may change slightly in Spring 2026, after new census data are released. Check back in Spring 2026.

📉 Ohio may have ~20% fewer designated OZs due to tightened eligibility.

Our community has an Opportunity Zone, but hasn’t seen investment. Why care now?

🤝🏻 The permanence of the program and enhanced benefits (in a smaller number Zones) means that investors in rural areas and legacy cities in Ohio will see attractive capital gains. This could be attractive to local investors who know the real estate market and know how much opportunity is locked up in Ohio’s neighborhoods.

Tax Benefits for Investing in a Qualified Opportunity Zone

📅 Capital gains tax deferred for 5 years.

📈 Investors that hold their investment for at least five years receive a 10% step-up basis. Investors that invest in Qualified Rural Opportunity Zones receive a 30% step-up basis.

⌛ If an investment is held for 10 years, the investor receives a tax-free appreciation cap (for up to 30 years).

Ohio Designation Process

🧭 Per federal legislation, governors designate the tracts that the federal government will recognize. Governors will begin making the nominations to the federal government on July 1, 2026. In Spring 2026, the Ohio Department of Development is expected to open a portal to receive nominations. This is how the state of Ohio collected nominations in 2018.

What can Communities do now to get ready?

☑️ Decide what tracts your community wants to nominate and why.

☑️ Talk about these tracts and your reasoning with other local partners, and with your regional metropolitan or regional planning organizations and JobsOhio affiliates. MPOs/RCPs and the JobsOhio affiliates may be unofficially consulted by the Governor’s Office.

☑️ Identify and promote real estate projects in priority tracts by sharing this vision with the community, including local elected officials and wealthy individuals who can invest in projects.

☑️ Talk with wealthy individuals in your community about the potential OZs 2.0 hold for your community and how their investment in projects located in your community’s OZs will revitalize and strengthen your community.

Economic Innovation Group: Guidance for Governor’s and Mayors: A Playbook for High-Impact Designations

The Economic Innovation Group (EIG) has prepared a guide that aims to give state and local officials the clarity and confidence they need to make informed selections for the next round of Opportunity Zone (OZ) census tracts.

OZs 2.0 Guidance for Governors and Mayors: A Playbook for High-Impact Designation is organized around eight principles that define successful OZ designation strategies, including:

1. Get a head start

2. Set a statewide economic vision

3. Designate a lead coordinating entity within state government

4. Engage local partners strategically

5. Balance economic need and investment potential

6. Combine both quantitative and qualitative insights

7. Embrace purposeful transparency

8. Align OZ nominations with supportive policy tools

EIG also offers a three-part test for vetting individual census tracts:

1. The community test - is the area genuinely in need?

2. The market test - will designation stoke investor interest?

3. The policy test - are locals doing their bit to support investment, too?