Opportunity Zones (Opportunity Zones)
US Treasury / Internal Revenue Service
Opportunity Zones let investors defer tax on capital gains by reinvesting them into a Qualified Opportunity Fund (QOF), which then invests in qualifying businesses, real estate, or infrastructure inside a federally designated Opportunity Zone. Originally created by the 2017 Tax Cuts and Jobs Act, the program was made permanent by the One Big Beautiful Bill Act.
Objectives
Direct private investment capital into economically distressed communities by making that investment more tax-advantaged than an equivalent investment elsewhere.
Who can apply?
- A startup benefits by being physically located and substantially operating within a designated Opportunity Zone census tract.
- Investors must reinvest realized capital gains into a Qualified Opportunity Fund within 180 days of the gain-generating sale.
- The QOF must meet ongoing asset and operating tests to remain a qualifying investment vehicle.
What do you get?
- Investors defer tax on the original reinvested capital gain.
- If the QOF investment is held at least 10 years, appreciation on that investment becomes entirely tax-free.
- Can make a startup materially more attractive to investors already sitting on unrealized gains, purely because of where the company is located.
How to apply
Not something a startup "applies" for directly — check whether your business location is inside a designated zone, and structure investment through a Qualified Opportunity Fund with tax counsel.