Establishes procedures for state and territory CEOs to nominate census tracts as qualified opportunity zones effective January 1, 2027, under the amended opportunity zone program.
→ View in IRS Internal Revenue BulletinWhat It Does
This revenue procedure provides guidance for state, territory, and DC chief executive officers to nominate eligible low-income communities to be designated as qualified opportunity zones (QOZs) for a new 10-year designation period beginning January 1, 2027. The guidance reflects changes made by the One, Big, Beautiful Bill Act that narrowed the definition of low-income communities and eliminated the contiguous tract rule.
Who Is Affected
Chief Executive Officers of all 50 states, territories of the United States, and the District of Columbia who wish to nominate census tracts for QOZ designation; taxpayers and practitioners involved in opportunity zone investments and qualified opportunity funds.
Key Provisions
- Identifies 25,332 population census tracts eligible for nomination as 2027 QOZs, of which 8,334 are entirely rural areas, based on 2020-2024 American Community Survey data
- States may nominate up to 25% of their low-income communities (minimum 25 if state has fewer than 100 LICs)
- Nomination period runs 90 days beginning July 1, 2026, with possible 30-day extension to October 28, 2026
- Treasury has 30 days to certify nominations, with possible 30-day extension to December 28, 2026
- 2027 QOZ designation period runs January 1, 2027 through December 31, 2036
- Low-income community definition narrowed to census tracts with median family income ≤70% of area median OR poverty rate ≥20% and median family income ≤125% of area median
- Eliminates contiguous tract rule - only actual low-income communities may be nominated
- Puerto Rico special rule eliminated - Governor must now nominate tracts subject to 25% limitation
- Treasury will provide online nomination tool and individual guidance to state CEOs
- Qualified rural opportunity funds must hold 90% of assets in rural QOZ property
Practical Implications
Practitioners should advise state and local government clients about the nomination process and deadlines. Opportunity zone investors and fund managers should review the new eligible tract list and consider rural opportunity fund requirements for enhanced benefits. Update client guidance materials to reflect the narrowed LIC definition and elimination of contiguous tracts.
Supersedes / Modifies
Modifies Rev. Proc. 2018-16 (prior QOZ nomination procedures); references Notice 2018-48 and Notice 2019-42 (lists of current QOZs); references Notice 2025-50 for rural area definitions.
Related Code Sections
§§ 1400Z-1, 1400Z-2, 45D(e)