Title 26 — Internal Revenue CodeRelease 119-73
§1400Z–1 Designation
Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter Z— - Opportunity Zones › § 1400Z–1
Summary
Creates “qualified opportunity zones” by naming certain low-income census tracts that a state leader picks and the Secretary approves. The state’s chief executive must nominate a tract by the end of the 90-day determination period and tell the Secretary in writing. The Secretary must certify and designate the tract within the 30-day consideration period. The state leader can ask for a 30-day extension of either period. Every low-income tract in Puerto Rico is treated as certified and designated effective on the date Public Law 115–97 became law. A “low-income community” meets one of two tests: its median family income is 70% or less of the state or metro median, or it has at least a 20% poverty rate and its median family income is 125% or less of the state or metro median. The consideration period is 30 days from when the Secretary gets the nomination. The determination period is 90 days starting on July 1, 2026, and every 10 years after that. A state (including U.S. possessions) may designate no more than 25% of its low-income tracts, unless it has fewer than 100 such tracts, in which case up to 25 tracts may be designated. Each designation lasts from the January 1 after certification until the day before the 10-year anniversary of that start date.
Full Legal Text
Title 26, §1400Z–1
Internal Revenue Code — Source: USLM XML via OLRC
(a)For the purposes of this subchapter, the term “qualified opportunity zone” means a population census tract that is a low-income community that is designated as a qualified opportunity zone.
(b)(1)For purposes of subsection (a), a population census tract that is a low-income community is designated as a qualified opportunity zone if—
(A)not later than the end of the determination period, the chief executive officer of the State in which the tract is located—
(i)nominates the tract for designation as a qualified opportunity zone, and
(ii)notifies the Secretary in writing of such nomination, and
(B)the Secretary certifies such nomination and designates such tract as a qualified opportunity zone before the end of the consideration period.
(2)A chief executive officer of a State may request that the Secretary extend either the determination or consideration period, or both (determined without regard to this subparagraph),11 So in original. Probably should be “paragraph),”. for an additional 30 days.
(3)Each population census tract in Puerto Rico that is a low-income community shall be deemed to be certified and designated as a qualified opportunity zone, effective on the date of the enactment of Public Law 115–97.
(c)For purposes of this section—
(1)The term “low-income community” means any population census tract if—
(A)such population census tract has a median family income that—
(i)in the case of a population census tract not located within a metropolitan area, does not exceed 70 percent of the statewide median family income, or
(ii)in the case of a population census tract located within a metropolitan area, does not exceed 70 percent of the metropolitan area median family income, or
(B)such population census tract—
(i)has a poverty rate of at least 20 percent, and
(ii)has a median family income that—
(I)in the case of a population census tract not located within a metropolitan area, does not exceed 125 percent of the statewide median family income, or
(II)in the case of a population census tract located within a metropolitan area, does not exceed 125 percent of the metropolitan area median family income.
(2)(A)The term “consideration period” means the 30-day period beginning on the date on which the Secretary receives notice under subsection (b)(1)(A)(ii), as extended under subsection (b)(2).
(B)The term “determination period” means the 90-day period beginning on the decennial determination date, as extended under subsection (b)(2).
(C)The term “decennial determination date” means—
(i)July 1, 2026, and
(ii)each July 1 of the year that is 10 years after the preceding decennial determination date under this subparagraph.
(3)For purposes of this section, the term “State” includes any possession of the United States.
(d)(1)Except as provided by paragraph (2), the number of population census tracts in a State that may be designated as qualified opportunity zones under this section during any period may not exceed 25 percent of the number of low-income communities in the State.
(2)If the number of low-income communities in a State is less than 100, then a total of 25 of such tracts may be designated as qualified opportunity zones during any period.
(e)(1)A designation as a qualified opportunity zone shall remain in effect for the period beginning on the applicable start date and ending on the day before the date that is 10 years after the applicable start date.
(2)For purposes of this section, the term “applicable start date” means, with respect to any qualified opportunity zone designated under this section, the January 1 following the date on which such qualified opportunity zone was certified and designated by the Secretary under subsection (b)(1)(B).
Legislative History
Notes & Related Subsidiaries
Repeal of Subsection (b)(3)Pub. L. 119–21, title VII, § 70421(a)(3), (5)(B), July 4, 2025, 139 Stat. 223, 224, provided that, effective on Dec. 31, 2026, subsection (b)(3) of this section is repealed.
Editorial Notes
References in Text
The date of the enactment of Public Law 115–97, referred to in subsec. (b)(3), is Dec. 22, 2017.
Amendments
2025—Subsec. (b)(3). Pub. L. 119–21, § 70421(a)(3), struck out par. (3). Text read as follows: “Each population census tract in Puerto Rico that is a low-income community shall be deemed to be certified and designated as a qualified opportunity zone, effective on the date of the enactment of Public Law 115–97.” Subsec. (c). Pub. L. 119–21, § 70421(b)(1), substituted “For purposes of this section—” for “For purposes of this subsection—” in introductory provisions, added par. (1), and struck out former par. (1). Prior to amendment, text read as follows: “The term ‘low-income community’ has the same meaning as when used in section 45D(e).” Subsec. (c)(2)(B). Pub. L. 119–21, § 70421(a)(1), substituted “beginning on the decennial determination date” for “beginning on the date of the enactment of the Tax Cuts and Jobs Act”. Subsec. (c)(2)(C). Pub. L. 119–21, § 70421(a)(2), added subpar. (C). Subsec. (d)(1). Pub. L. 119–21, § 70421(a)(4)(A), struck out “and subsection (b)(3)” after “by paragraph (2)” and inserted “during any period” after “the number of population census tracts in a State that may be designated as qualified opportunity zones under this section”. Subsec. (d)(2). Pub. L. 119–21, § 70421(a)(4)(B), inserted “during any period” before period at end. Subsec. (e). Pub. L. 119–21, § 70421(b)(3), amended subsec. (e) generally. Prior to amendment, text read as follows: “A designation as a qualified opportunity zone shall remain in effect for the period beginning on the date of the designation and ending at the close of the 10th calendar year beginning on or after such date of designation.” Pub. L. 119–21, § 70421(b)(2), redesignated subsec. (f) as (e) and struck out former subsec. (e) which related to designation of tracts contiguous with low-income communities. Subsec. (f). Pub. L. 119–21, § 70421(b)(2), redesignated subsec. (f) as (e). 2018—Subsec. (b)(3). Pub. L. 115–123, § 41115(a), added par. (3). Subsec. (d)(1). Pub. L. 115–123, § 41115(b), inserted “and subsection (b)(3)” after “paragraph (2)”.
Statutory Notes and Related Subsidiaries
Effective Date
of 2025 Amendment Pub. L. 119–21, title VII, § 70421(a)(5), July 4, 2025, 139 Stat. 224, provided that: “(A) In general.—Except as provided in subparagraph (B), the
Amendments
made by this subsection [amending this section] shall take effect on the date of the enactment of this Act [
July 4, 2025]. “(B) Puerto rico.—The amendment made by paragraph (3) [amending this section] shall take effect on
December 31, 2026.” Pub. L. 119–21, title VII, § 70421(b)(4),
July 4, 2025, 139 Stat. 225, provided that: “The
Amendments
made by this subsection [amending this section] shall apply to areas designated under section 1400Z-1 of the Internal Revenue Code of 1986 after the date of the enactment of this Act [July 4, 2025].”
Effective Date
Section effective on Dec. 22, 2017, see section 13823(d) of Pub. L. 115–97, set out as an
Effective Date
of 2017 Amendment note under section 1016 of this title.
Reference
Citations & Metadata
Citation
26 U.S.C. § 1400Z–1
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73