More Opportunity Zones Could Be Added Under House Proposal To Extend Program
A key congressional committee is calling for an expansion of the opportunity zone program that would extend its lifespan and allow real estate investors to receive its tax benefits in more areas.
The House Ways and Means Committee included a provision for the "renewal and enhancement" of the opportunity zone program as part of the 389-page tax package it released Monday evening ahead of a Tuesday markup meeting.
The opportunity zone program, a popular tax incentive established through the 2017 Tax Cuts and Job Act during President Donald Trump’s first term, was designed to steer investment into distressed communities. It has led developers to raise tens of billions of dollars to help finance projects across the country over the last several years.
The U.S. has 8,764 census tracts designated as opportunity zones, and investors can receive tax benefits by pooling capital gains into funds that either invest in businesses or real estate projects in these zones.
The program is scheduled to sunset in 2026, leading to growing speculation over the last several months about whether Congress and the Trump administration would extend it.
The House legislation now proposes an extension of the program through Dec. 31, 2033.
And it calls for a new round of qualified opportunity zone designations, meaning states would have the chance to put forward additional census tracts that previously weren't eligible for the tax incentive.
Rural areas would be prioritized in this new round of opportunity zone designations, the bill says. And the tax benefit would be greater for investments in rural zones.
The bill would also change the criteria for what census tracts qualify for the new round of opportunity zones. Previously, they had to have an area median income of 80% or below — or be directly adjacent to such a tract. But the new proposal lowers the income threshold to 70% AMI and removes the eligibility of adjacent tracts.
It would make changes to the rules around what type of money investors can pool into opportunity zone funds. Previously, they could only use money that represented capital gains from other investments, but the renewal would allow investors to allocate up to $10K per year of ordinary income.
The bill would also add new transparency and reporting rules to ensure that the program lives up to its promise.
"The additional incentives for investment in rural areas, which include a 30% basis increase, a lower substantial improvement threshold, and more, should serve to promote greater OZ investment in rural communities, and the reporting requirements should serve to enhance transparency," Kevin Wilson, a partner at Novogradac, said in a statement.
Novogradac, one of the top firms that tracks data on the program, said it is "excited" to see the "significant step" of the proposal's inclusion in the House bill.
John Lettieri, co-founder of the Economic Innovation Group, which published the 2015 white paper that proposed the idea for the program, said in a statement the firm is "grateful that the committee's bill reflects several of our recommendations." He posted a social media thread with a series of takeaways on the bill’s proposals.
The big takeaways for the Opportunity Zones:
— John Lettieri (@LettieriDC) May 12, 2025
- New round of designations, not permanence
- smaller overall tax benefit, including shorter deferral period and no 7-year step-up
- Heavy focus on rural, including set-asides and enhanced benefits
- Up to $10k of non-capital… https://t.co/BzOILDIHrC
Jimmy Atkinson, a real estate investor who founded OpportunityZones.com and hosts a podcast on the program, also posted a series of takeaways, along with his opinion on the proposal: "It leaves a lot to be desired."
Atkinson said the bill sets the start date for the new round of opportunity zones to Jan. 1, 2027, but he said it "effectively kills Opportunity Zones" from now until that date.
"This draft has created a disincentive for investing in OZs for the rest of 2025 and all of 2026. And it has created a disincentive for OZ development too," he said. "Without knowing what the 2027 map will look like, how are developers to move forward on planning projects?"
The opportunity zone piece of the bill is still subject to amendments from the House and Senate before the tax package is voted on.
The package, dubbed "The One, Big, Beautiful Bill" by Republicans, includes a wide range of other changes to the tax code. The Ways and Means Committee's press release on the bill highlights in a bullet point that extending the opportunity zone program could spur more than $100B in new investment over the next decade, but it doesn't comment further on the proposals for the program.
The lack of certainty around the program’s future has led fundraising to slow to well below its 2021 peak, but investors have still been putting money into funds, as many opportunity zone experts have expressed confidence it will be extended. Trump’s election in November led the professionals who specialize in the program to celebrate, as they anticipated a likely extension.
Trump tapped Scott Turner to lead the Department of Housing and Urban Development. Turner, previously a Texas state lawmaker, led the implementation of the opportunity zone program during Trump's first term as the executive director of the White House Opportunity and Revitalization Council.
“Under Scott’s leadership, opportunity zones received over $50 Billion Dollars in Private Investment,” Trump wrote in a statement on Nov. 22.
The exact form an extension would take has previously been unclear, and professionals speculated about several possible outcomes: a simple extension of the program, a reform and expansion of the program, or enshrining the program as a permanent part of the tax code.
They have also discussed a series of potential reforms, including adding more eligible zones and expanding the type of money that can be deployed into them beyond just capital gains from prior investments.
The total amount of money raised through the program since its inception surpassed $40B as of last quarter, according to a survey from Novogradac, though it said that figure doesn’t capture the entire market and actual investment is likely much higher.
Since its inception, the program has gained favor in the commercial real estate community, which has used the funds to fuel new construction across sectors. Some critics have argued the program doesn't uplift the communities it was designed to help and that investment has only funded projects with high rates of return.
There have been calls to dismantle opportunity zones, including in 2022, when New York state Sen. Michael Gianaris pushed a bill to end the use of the program's tax breaks across the state. Gianaris argued that the program "is being abused to grant tax breaks to already overdeveloped neighborhoods."
There has been at least one prior attempt to extend the program through the Opportunity Zones Transparency, Extension and Improvement Act, introduced in 2023. The bipartisan bill would have extended the deferral period through 2028.
Jon Banister contributed to this story.
UPDATE, MAY 13, 9:45 A.M. ET: This story has been updated with additional details and commentary on the proposal.
