Five key takeaways on the Opportunity Zones extender in the One Big Beautiful Bill Act 

The One Big Beautiful Bill Act (OBBBA) (P.L. 119-21) made the Opportunity Zone (OZ) program permanent. The OBBBA also made several changes to the OZ program. Most of the changes won’t impact taxpayers in the near future. However, the following should be considered in the coming months:

1. New zones – effective Jan. 1, 2027

By July 1, 2026, each state will create new OZs. The new zones will be effective on Jan. 1, 2027. Both the definition of a “low-income community” and the census data used to create new zones will differ from the Tax Cut and Jobs Act (TCJA), therefore, it’s unlikely that current OZs will keep their OZ status under the extender. Note that the OBBBA also repealed the provision that allowed states to designate contiguous tracts with a higher median income.

Planning consideration: Clients who wish to invest in an existing OZ should be mindful of the changing zones. The grandfathering rules for initially designated OZs are not entirely clear. Timing is critical so consult with your tax advisor.

2. “Dead Zone” for investment

The extender provisions apply only to eligible gains invested after Dec. 31, 2026. Eligible gains invested after Dec. 31, 2026, are granted a five-year deferral and a 10% (or 30%, per below) basis step-up. Eligible gains invested on or before Dec. 31, 2026, are deferred only to Dec. 31, 2026, and receive no basis step-up.

Planning consideration: Clients should consider structuring property sales in a manner that allows for eligible gain investments in 2027 or later. Some professionals are referring to the next 18 months as an OZ investment Dead Zone. Owners in pass-through entities can sell capital assets as early as Jan. 1, 2026, to take advantage of a 180-day investment window that begins as late as the un-extended due date of the pass-through entity’s tax return, i.e., March 15, 2027, for calendar year pass-through entities. Clients can also consider whether installment sales may generate eligible gains in 2027 and after.

3. Previously deferred gains remain taxable on Dec. 31, 2026

The OBBBA does not change the taxability of gains deferred under the TCJA’s OZ program. In other words, previously deferred eligible gains will become taxable on Dec. 31, 2026. OZ investors should consider how these gains will impact their 2026 tax liability.