26 U.S.C. § 1400Z–1: Designation

Summary

A census tract becomes a qualified opportunity zone when a state's governor nominates a low-income tract and the Secretary certifies it within set time limits. The governor must send the nomination by the end of a 90-day determination period that starts on a decennial date. After the Secretary gets the nomination, the Secretary has a 30-day consideration period to decide. The governor can ask for one extra 30-day extension for either period. All low-income tracts in Puerto Rico are treated as certified and designated effective on the date Public Law 115–97 was enacted. A low-income community meets one of two tests: either its median family income is no more than 70 percent of the state or metro median (depending on location), or it has a poverty rate of at least 20 percent and a median family income no more than 125 percent of the state or metro median. “Consideration period,” “determination period,” and the decennial start date (July 1, 2026, and every 10 years after) are defined for timing. A State (including U.S. possessions) may designate up to 25 percent of its low-income tracts, or 25 tracts if it has fewer than 100. A designation starts on the January 1 after certification and lasts 10 years.

Title 26, §1400Z–1

Internal Revenue Code, Source: USLM XML via OLRC

(a)Qualified opportunity zone defined

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)Designation

(1)In general

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)Extension of periods

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), for an additional 30 days.

(3)Special rule for Puerto Rico

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)Other definitions

For purposes of this section

(1) Low-income communities

(2)Definition of periods

(A)Consideration period

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)Determination period

The term “determination period” means the 90-day period beginning on the decennial determination date, as extended under subsection (b)(2).

(C)Decennial determination date

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)State

For purposes of this section, the term “State” includes any possession of the United States.

(d)Number of designations

(1)In general

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)Exception

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)Period for which designation is in effect

(1)In general

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)Applicable start date

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).

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.

§1400Z–1 Designation

Summary

Title 26, §1400Z–1

Notes & Related Subsidiaries

Editorial Notes

References in Text

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Amendments

Amendments

Effective Date

Effective Date

Citations & Metadata