Federal Opportunity Zones in Texas
The Opportunity Zone program, established in 2017 and administered by the U.S. Department of Treasury, has been updated and made permanent through U.S. House Resolution 1—the One Big Beautiful Bill Act—passed by Congress in 2025. The renewed Opportunity Zone 2.0 program will take effect January 1, 2027, following the sunset of current designations at the end of 2026. The program offers incentives, in the form of capital gains tax abatement, for those who invest eligible capital into Qualified Opportunity Zone assets.
Opportunity Zone 2.0 Program
Under Opportunity Zone 2.0, state governors will be able to nominate 25% of their respective state’s eligible census tracts every ten years for U.S. Treasury certification as Opportunity Zone tracts.
- Nominations will begin July 1, 2026.
- Eligible tracts are expected to be released by the U.S. Treasury Spring 2026.
- Decennial redesignations: Opportunity Zone 2.0 designations are effective for 10 years beginning January 1, 2027.
Note: Tract designations under the initial Opportunity Zone program remain eligible through December 31, 2028, creating a two-year overlap.
Opportunity Zone 2.0 continues the program’s mission of encouraging long-term private investment in low-income communities by offering federal tax incentives to investors, while strengthening accountability and refining eligibility criteria. The updated framework emphasizes support for rural communities, tightens the income threshold for eligible tracts and removes the contiguous tract allowance. Additional benefits, including enhanced capital gains exclusions and modified investment requirements, are designed to increase the flow of private capital into underserved areas.
Program Highlights
- To be eligible, a tract must have a median family income (MFI) less than 70% of state/metro MFI; or poverty rate greater than or equal to 20% and MFI less than or equal to 125% of state/metro MFI.
- The Contiguous Tract Rule, which allowed designation of tracts next or adjacent to qualifying tract, has been eliminated.
- There is a standard five‑year deferral plus 10% basis step‑up for all investors.
- A 10‑year tax‑free appreciation remains; stepped-up Fair Market Value after 30 years (no “forced exit”).
- Rural enhancements: Qualified Renewal Opportunity Fund that maintains greater than or equal to 90% of capital in rural Opportunity Zones qualify for 30% step‑up after five years; substantial improvement threshold in rural Opportunity Zones has been reduced to 50% (vs. 100%).
Note: Rural area means 1) any area other than a city or town with a population greater than 50,000, and 2) any urbanized area contiguous and adjacent to a city or town with a population greater than 50,000.
To assist communities in preparing for the nomination process, the Office of the Governor has created a mapping tool to highlight census tracts which may qualify based on current estimates from the American Community Survey (2019 – 2023). Please note this map is for informational purposes only, as the official list of eligible tracts has not yet been released by the U.S. Treasury.
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Map: Potential eligible tracts that may qualify for Texas Opportunity Zones 2.0 |
Further details and guidance will be provided in the coming months; please check back for updates as they become available. Communities, stakeholders and members of the public are invited to share questions, comments or relevant information with our Opportunity Zone Team at OppZone2.0@gov.texas.gov.
Opportunity Zone 1.0 Program
In March 2018, Governor Greg Abbott submitted the state’s Opportunity Zone 1.0 designations to the U.S. Treasury to encourage long-term investment in eligible Texas communities. Governor Abbott nominated 628 census tracts in 145 Texas counties as potential Opportunity Zones across the state's total 5,265 census tracts. To determine Opportunity Zones within Texas’ eligible tracts, a multi-step process was used to identify eligible areas in particular need due to chronic unemployment, lower population density and significant economic disruptors, such as natural disasters.
View a comprehensive map of Texas’ current designated Opportunity Zones, or download the full PDF listing of designations.
Additional Resources
U.S. Department of Housing and Urban Development’s Opportunity Zone Website