Office of Tax Analysis 

Working Paper 123

July 2023 

Use of the Opportunity Zone Tax Incentive: 

What the Data Tell Us

David Coyne

Craig Johnson

The OTA Working Papers Series presents original research by the staff of the Office of Tax 

Analysis. These papers are intended to generate discussion and critical comment while 

informing and improving the quality of the analysis conducted by the Office. The papers are 

works in progress and subject to revision. Views and opinions expressed are those of the 

authors and do not necessarily represent official Treasury positions or policy. Comments are 

welcome, as are suggestions for improvements, and should be directed to the authors. OTA

Working Papers may be quoted without additional permission.
Use of the Opportunity Zone Tax Incentive: What the Tax Data Tell Us

David Coyne and Craig Johnson1

Office of Tax Analysis

U.S. Department of the Treasury 

July 26, 2023 (update)

Abstract

The Tax Cuts and Jobs Act (TCJA) of 2017 created the opportunity zone (OZ) tax 

incentive as a means of spurring economic growth and job creation in low-income

communities. The OZ tax incentive provides capital gains tax relief for taxpayers who

make a qualified investment in a Qualified Opportunity Fund (QOF), which in turn

invests substantially all its assets in an OZ. The Treasury Department designated 8,764

census tracts as OZs in 2018 that had been nominated by each state, possession, and

the District of Columbia. To be eligible for nomination, a census tract needed to either

be a low-income community or contiguous to a low-income community. This paper uses

information reported on Form 8996 for tax years 2018 through 2020 and Form 8997 for 

tax years 2019 and 2020 to provide an early look at the effect of the OZ tax incentive on

investment in designated areas. We analyze the distribution of investments across OZs

and identify which type of OZs have so far attracted investment through QOFs. We also

study the characteristics of taxpayers (individuals, corporations, and pass-through

entities such as partnerships) that invest in QOFs.

This research was conducted while the authors were employees at the U.S. Department of the Treasury. 

The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors 

and do not necessarily reflect the views or the official positions of the U.S. Department of the Treasury.

All taxpayer data used in the research described in this paper was kept in a secured Treasury or IRS 

repository, and all results have been reviewed to ensure that no confidential information is disclosed.

1 David.Coyne@treasury.gov; Craig.Johnson@treasury.gov
1. Introduction

The Tax Cuts and Jobs Act (TCJA) of 2017 created the opportunity zone (OZ) tax incentive as a means of 

spurring private investment and economic activity in low-income communities. The OZ tax incentive 

provides capital gains tax relief for taxpayers who make a qualified investment in a Qualified 

Opportunity Fund (QOF), which is an investment vehicle organized for the purpose of investing in 

qualified opportunity zone property. We use information from federal tax returns, in particular Internal 

Revenue Service (IRS) Forms 8996 and 8997, to analyze the distribution of investments across OZs, the 

type of OZs that have so far attracted investment through QOFs, and the characteristics of taxpayers 

that invest in QOFs.

The OZ tax incentive is the latest of several federal place-based tax incentives enacted over the past 30 

years. The list of these incentives includes empowerment zones (EZ), enterprise communities, renewal 

communities (RC), the DC Enterprise Zone, new markets tax credits (NMTCs), accelerated depreciation 

for equipment placed in service on Indian reservations, and the Indian Employment Credit. In addition, 

tax incentives have been provided to a particular geographic area after a disaster, such as the New York 

Liberty Zone and the Gulf Opportunity Zone. Each of these provisions were enacted on a temporary 

basis and several of them have completely expired, such as enterprise communities, RCs, and the DC 

Enterprise Zone, while others have been extended on a temporary basis. 

It is well known that economic outcomes are unevenly spread across geographies in the United States. 

Recent work by Chetty and co-authors have found that place matters not just for current outcomes, but 

for intergenerational mobility as well (see Chetty and Hendren (2018) and Chetty, et al. (2020)). 

Proponents of place-based tax policies often make equity and efficiency arguments for introduction or 

continuation of the policy. For example, some suggest that the presence of agglomeration economies, 

knowledge spillovers, spatial mismatch, and network effects imply that a place-based policy may 

promote efficiency by compensating for an externality. Whether place-based tax policies have been 

effective in addressing these concerns has been difficult to determine.

The empirical literature is mixed overall regarding the effectiveness of place-based tax policies at

increasing the well-being of targeted residents. Generally, studies find that economic activity in the 

targeted region increases while the incentive is in place, but it is less clear whether low-income 

residents in the targeted areas benefit overall. For state enterprise zones, some studies find no 

employment effects, while others find some positive impact (Neumark and Simpson, 2015). At the 

federal level, Busso et al. (2013) examined the original 6 urban EZs and found that wages and 

employment increased significantly within the zones, but it is difficult to know how much of the increase 

was due to the tax incentives and how much was due to additional grant money provided to those areas

at the same time. Reynolds and Rohlin (2015) also found evidence of increased wages for EZ residents, 

but their results indicated the increase was mostly attributable to higher income individuals. Freedman 

(2012) studied the effects of the NMTC on investment and labor market outcomes within low-income 

communities. He found that investment in those communities increased relative to similar communities

not eligible for the NMTC, and that there were modest reductions in poverty and unemployment rates

in those low-income communities. However, his results also suggest that part of the reduction in 

poverty and unemployment may result from compositional changes. Freedman (2015) found that much 
of the increase in employment resulting from NMTC investment goes to individuals residing outside of 

the low-income community. 

This brief literature review of prior policies reveals some of the difficulties in measuring the 

effectiveness of place-based tax policies. An increase in measured economic activity within a targeted 

area does not necessarily mean that the low-income residents of the area benefit from the incentive. 

Employment or wage gains could accrue to higher-income individuals residing in or outside of the zone. 

Median income could increase because of higher-income individuals moving into the zone and lowerincome zone residents could be displaced due to increased housing costs within the zone. 

It is too soon to reach conclusions regarding the effectiveness of the OZ tax incentive. There are several 

papers that provide a preliminary inspection of the effects of the OZ tax incentive on labor market 

outcomes. Atkins et al. (2021) use job posting data from Burning Glass Technologies in zip codes with 

and without OZs and find little evidence of increased job posting in zip codes with OZs, although there is 

more of an increase after the COVID-19 recession impacts the economy. Arefeva at al. (2021) use 

establishment level data from Your-economy Time Series to estimate that both employment and 

establishments increased 3 to 4.5 percent in OZs located in metropolitan areas, with no effect for OZs 

located in nonmetropolitan areas. Freedman et al. (2021) use restricted access Census data for 2013-19

that allows them to focus on residents of OZs. They find that census tracts designated as OZs were 

already trending towards more employment growth and poverty reduction compared to tracts that 

were eligible and not designated. They find that after they control for preexisting trends, there is little 

change in the employment rate of zone residents, a small increase in average annual earnings, and no 

positive impact on poverty rates. 

In addition, other papers have explored whether there is evidence of increased investment or changes in 

property prices in OZs. Eldar and Garber (2022) focus on whether the OZ tax incentive led to an increase 

in venture capital investment in startup companies. They use data from VentureXpert and examine the 

first five quarters after OZs were first designated in April 2018. They find no evidence that OZ 

designation affected startup investment. Feldman and Corinth (2022) use data from Real Capital 

Analytics and use a regression discontinuity design, unlike the majority of the other papers which 

typically use a difference-in-difference estimation strategy. They find no statistically significant effect of

OZ designation on commercial investment through the end of 2020, whether measured in number of 

investments or dollar amounts. Similarly, using Mastercard data, they find no statistically significant 

impact on new business creation, new business loan growth, and consumer spending measures. Sage et 

al. (2021) use Real Clear Analytics data on commercial real estate and find little evidence of general 

price differences between OZs and economically similar but non-eligible census tracts. However, they 

do find evidence of increased prices for vacant land and older properties within OZs that would be a 

good target for redevelopment. The authors conclude that this evidence suggests that these parcels 

have priced in the potential tax benefit, but there is not yet evidence for expectation of future economic 

growth across the zones that benefits other parcels. Alm et al. (2021) also find little evidence of a 

commercial real estate price increase in Florida OZs, but their estimates suggest owner-occupied 

housing prices may have increased. Similarly, Chen et al. (2022) use FHFA housing price data through 

2020 to estimate an annual increase in owner-occupied housing prices between 0 and 0.5 percentage 

2
points for census tracts designated as OZs. Their estimates are precise enough to rule out annual price 

increases of more than 1.5 percent at the tract level. 

Our paper adds to this early literature by presenting details on how the OZ tax incentive was used in 

2018 through 2020. The paper most similar to ours is Kennedy and Wheeler (2022). They use a partial 

set of electronically filed tax returns to identify the location of investment flowing through QOFs. 

However, we include a fuller set of tax returns, including paper returns.

2. Description of OZ tax incentive and comparison with other federal placed-based tax incentives

Description of other federal place-based tax incentives

The OZ tax incentive differs from prior federal place-based tax incentives in geographic scope, the types 

of incentives provided, and the degree to which federal rules determine the taxpayer and activity 

eligible for the incentive. The most prominent of the current federal place-based tax incentives other 

than the OZ tax incentive are EZs and the NMTC.

Three rounds of EZs were authorized through legislation in 1993, 1997, and 2000, totaling 40 EZs. State 

and local governments nominated distressed geographic areas that were selected as EZs on the strength 

of the area’s strategic plan for economic and social revitalization. Tax benefits for EZs included an 

employment tax credit, expanded tax-exempt bond authority, increased section 179 expensing, and the 

deferral of capital gains on sales and reinvestment in empowerment zone assets.

2

 Empowerment zone 

designations have been extended several times and are currently scheduled to expire at the end of 

2025, but only the employment credit and tax-exempt bond authority are still in effect. Similar tax 

benefits were provided to the DC Enterprise Zone and RCs, except a temporary exclusion for capital 

gains was provided to certain qualifying assets. 

The NMTC was enacted in 2000 to encourage capital investment in businesses located in low-income 

communities. Private investors in community development entities (CDEs) receive a tax credit paid out 

over 7 years equal to 39 percent of their equity investment in the CDE. The CDEs are required to invest 

substantially all of the proceeds of the qualified equity investments in low-income communities. 

Generally, a census tract is a low-income community (LIC) if it has a poverty rate of at least 20 percent or 

the median family income of the tract is not greater that 80 percent of the applicable area median 

family income (either of the state or of the metropolitan area).

3

 The Community Development Financial 

Institutions (CDFI) Fund allocates credit authority to CDEs based on an annual competitive application 

process. The annual amount of credit eligible investment the CDFI may allocate is capped at $5 billion 

per year through 2025. 

2 In addition, there was an increase in the exclusion of the gain on the sale of qualified small business stock held 

more than 5 years from 50 to 60 percent, but the general exclusion increased to 75 percent in 2009 and 100 

percent in 2010 and the EZ increase of the exclusion was no longer applicable. The capital gains incentives were 

not originally part of the tax benefits for the first two rounds of EZs.

3 There are special rules provided for targeted populations, areas not within census tracts, census tracts with low 

populations, and census tracts in high migration rural counties.

3
Description of the OZ tax incentive

In 2018, the Department of the Treasury designated 8,764 census tracts as qualified OZs that had been 

nominated by each state, possession, and the District of Columbia.4

 To be eligible to be nominated, a 

census tract must either be a LIC, or in certain cases, be contiguous to a LIC. The definition of a LIC

follows that used for the NMTC.

5

 A census tract that (i) is contiguous to a LIC that is designated as an OZ 

and (ii) has a median family income that does not exceed 125 percent of the median family income of 

the neighboring LIC that is designated as an OZ, may also be designated as an OZ (hereinafter termed 

“contiguous tracts”). States could nominate up to 25 percent of the total number of LIC tracts within 

the state to be an OZ, but the number of contiguous tracts designated as OZs could not exceed five 

percent of the total designated tracts in the state. A minimum of 25 OZs could be designated for each 

state.

In total, nearly 57 percent of all census tracts were eligible to be designated and almost 12 percent of all 

census tracts were designated as OZs, including tracts in possessions. For simplicity, in this paper we will 

not include census tracts located in one of the possessions in our analysis or discussion, as the eligibility 

rules were different for Puerto Rico, and the other possessions are not included in the American 

Community Survey (ACS) conducted by the Census Bureau.

6

 For census tracts in a state (including the 

District of Columbia), over 56 percent of the tracts were eligible and almost 11 percent were designated 

as OZs. 

Table 1 provides summary statistics for non-eligible, eligible but not designated, and designated census 

tracts. In general, OZs have higher poverty and unemployment, lower income, a larger minority 

population, less educated households, lower rates of homeownership, higher vacancy rates, and lower 

house prices than eligible but non-designated tracts, and eligible tracts were similarly different from 

ineligible tracts. However, the difference between designated and eligible but non-designated tracts is 

less pronounced when the comparison is limited to LICs. This is because eligible contiguous tracts tend 

to be higher income and make up about 30 percent of eligible non-designated tracts but only just over 2 

percent of designated tracts. For example, the median household income is $46,426 in eligible but nondesignated tracts and is $36,538 in designated tracts. However, the median household income is 

$41,614 in eligible non-designated LICs and is $57,515 in eligible non-designated contiguous tracts. 

Table 2 shows the categorization of tracts across the states. Since the share of LICs varies across states, 

the share of the census tracts designated as OZs also varies across states, from a high of almost 19 

percent in Wyoming to a low of about 7 percent in Hawaii, as shown in Table 3. The share is relatively 

higher in Wyoming and other low-population states that could designate more than 25 percent of the 

number of LICs due to the 25-tract minimum. States also used different strategies with regard to 

4 For simplicity we use OZ to refer to census tracts that have been designated as qualified opportunity zones. 5 The 2011-2015 ACS was generally used to determine poverty rates and median incomes, but there were some 

cases where the 2012-2016 ACS was used. 6 All low-income communities in Puerto Rico were specified by statute to be designated as OZs. For the other 

possessions, the 25-tract minimum also allowed a larger percentage of eligible tracts to be nominated than for a 

state. For all the possessions, 938 out of 1077 census tracts (87 percent) were designated as OZs.

4
designating contiguous tracts, with 14 states choosing to designate the maximum possible number of 

contiguous tracts and 13 states designating zero contiguous tracts.

Taxpayers who make timely qualifying investments in QOFs may use three potential tax benefits. First, 

taxpayers may defer the recognition of eligible gain until disposal of the ownership interest in the QOF, 

or until the end of 2026, whichever comes first. Second, if the investment in the QOF is held for at least 

5 years prior to the required inclusion date, then 10 percent of the deferred gain may be excluded from 

income (the excluded amount increases to 15 percent if the investment is held for 7 years). Third, if the 

QOF investment is held for at least 10 years, then gain from that investment is excluded from income.7

 

The following example illustrates these benefits. Suppose Taxpayer A realizes $1.5 million in eligible 

gain in April 2021 and elects to defer $1 million of the gain by investing in QOF B in September 2021. 

Taxpayer A holds the investment in the QOF for 15 years. Taxpayer A defers the recognition of the $1 

million in gain until 2026, when the taxpayer includes $900,000 in taxable income due to the 10 percent 

exclusion for holding the investment more than 5 years. When Taxpayer A sells the QOF investment in 

2036 for $3 million the tax basis is $1 million notwithstanding the OZ tax incentive, but Taxpayer A can

exclude the $2 million in capital gain from income since the holding period was more than 10 years. 

The value of the deferral and potential partial exclusion of the deferred gain is mostly known to the 

investor at the time of making the investment, except for the uncertainty regarding the tax rate that 

would apply on the date of inclusion. The value of the 10-year exclusion is highly dependent on the 

expected rate of return, but usually would be the most significant tax benefit affecting taxpayer 

behavior. Using the numbers from the example above and assuming a 5 percent discount rate and a 

capital gains tax rate of 20 percent, the net present value of the tax benefits from the QOF investment 

compared to a similar fully taxed investment is around $250,000. Just over three-quarters of the tax 

reduction is due to the 10-year exclusion. This share depends on the discount rate, the rate of return on 

the investment, and the holding period. For example, if the rate of return increases from 7.6 to 20 

percent, then the share of tax benefits from the 10-year exclusion rises to more than 95 percent. 

For investments in QOFs made after 2021, there is no partial exclusion available for the deferred gain 

and the benefit of deferral is limited by the shorter time period before the required inclusion. For these 

investments, it is even more the case that the primary benefit to the investor is the 10-year exclusion. 

The incentive structure for OZ investments is not primarily to make a negative-return investment 

profitable, but rather to make a good return greater. Taxpayers have a strong incentive to make 

investments that will appreciate greatly in market value. This differs from the incentive structure of 

most previous federal place-based tax incentives, where the incentive usually reduces the initial cost of 

employment or investment. 

Taxpayers making qualified investments in QOFs may be individuals, partnerships, trusts, estates, or 

corporations, as long as the taxpayer realizes eligible gain and makes an investment in the QOF within 

the required 180-day period from the date the gain would be recognized for federal income tax 

7 The statute allows the tax basis to be set at the fair market value when a qualifying QOF interest is disposed after 

being held for at least 10 years. In addition, the regulations allow for gain on assets sold by the QOF or qualified 

opportunity zone business (QOZB) to be excluded from income in certain situations. 

5
purposes if it were not deferred.

8

 Corporations and partnerships self-certify as a QOF by filing Form 

8996 annually. By statute at least 90 percent of a QOF’s assets must be qualified opportunity zone 

property (tested every 6 months), or the QOF is subject to a penalty.9

 Qualified opportunity zone (QOZ) 

property is an ownership interest in a qualified opportunity zone business (QOZB) which may be a 

corporation or a partnership, or the QOF may own QOZ business property directly. 

In order to be a QOZB, substantially all (defined by regulation as 70 percent) of the owned and leased 

tangible property of the business must be QOZ business property. In addition, it must satisfy certain 

other conditions: (1) at least 50 percent of its gross income is from the active conduct of a trade or 

business within an OZ;10 (2) the business uses a substantial amount of its intangible property in the 

active conduct of such business; (3) less than 5 percent of the average of the aggregate unadjusted 

bases of the business is attributable to nonqualified financial property;11 and (4) the business is not one 

of the prohibited “sin” businesses.12 These rules prohibit or make it difficult for certain types of 

businesses from being eligible for the OZ tax incentive, such as a financial institution, and are intended 

to encourage the location of tangible capital within an OZ.

QOZ business property is tangible property that a QOF (or QOZB throughout this paragraph) acquires 

after 2017 and uses in a trade or business and satisfies both of the following tests: (1) the use of the 

property in an OZ originates with the QOF, or the QOF substantially improves the property, and (2) 

during substantially all (90 percent) of the QOF’s holding period for such property, substantially all (70 

percent) of the use of such property was in an OZ. To substantially improve a property, the QOF must 

make improvements that more than doubles the basis of the property within 30 months of acquisition 

of the property. 

Proposed regulations were issued in two rounds, the first was published in October 2018 and the second 

May 2019. Final regulations were released in December 2019 and published in January 2020. The final 

regulations specify that taxpayers are eligible for the 10-year gain exclusion as long as the disposition of 

the QOF investment does not occur after 2047. 

8 The recognition date will generally be the day the property generating the gain is sold, the last day of the taxable 

year, or the date the return for the taxable year is due, depending on the type of property and taxpayer. 9 The penalty is equal to the amount of the shortfall from the 90 percent requirement multiplied by underpayment 

rate for the number of months the shortfall existed. A QOF may choose to exclude cash contributions received in 

the 6-month period before a QOF property testing date that is held in cash or cash equivalents from the 90-

percent test. 10 The regulations provide several safe harbors for satisfying this condition. This condition is met if at least 50 

percent of the labor services performed for the business are in an OZ whether based on hours or the amounts paid 

for the service, or if the tangible property of the business located in an OZ and the management or operational 

functions performed in an OZ are each necessary for the generation of at least 50 percent of the gross income of 

the business. 

11 Recognizing that many businesses would have times of holding large amounts of cash before purchasing or 

developing property, the definition of nonqualified financial property excludes reasonable amounts of working 

capital. The regulations provide rules for a working capital safe harbor. 12 The list of prohibited businesses comes from section 144(c)(6)(B). A QOZB may not be a private or commercial 

golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for 

gambling, or liquor store. 

6
Comparison with other federal place-based tax incentives

The OZ tax incentive is most similar to the NMTC. Both only provide direct incentives for capital, not 

labor. The determination of an eligible area for OZ designation was primarily based on the NMTC 

definition of a LIC. However, the OZ tax incentive follows the EZ model somewhat in that states play a 

role in designating zones. The NMTC and the OZ tax incentive differ regarding the level of government 

involvement in the investment decision. The CDFI Fund makes an annual allocation of investment 

authority to CDEs, and while the CDFI Fund does not dictate how the CDE then invests in low-income 

communities, it has influence, especially for those CDEs wishing to apply for future allocations. In 

contrast, QOFs are free to invest when and how they choose in OZs, and only need to make sure the 

investments follow the guidelines of the statute and regulations to not face a penalty. The OZ incentive 

also provides an incentive only to those taxpayers who have capital gains that they can realize, which is 

more restrictive that needing to have positive taxable income that can offset non-refundable credits. 

These incentives are also similar in that many census tracts are eligible for all three incentives. Over 97 

percent of OZs are also eligible for the NMTC-funded investment and using the 2011-2015 ACS, almost 

25 percent of NMTC low-income communities are also an OZ. Around 5 percent of OZs are also in an EZ 

and almost 43 percent of EZ census tracts are also an OZ. Figure 1 shows a map of Detroit to illustrate 

how an EZ, LICs, and OZs overlay in a particular community. One thing to note in this figure is that the 

OZ tracts are more spread out than EZs, as the EZ statute required zone boundaries to be continuous or, 

in certain circumstances, to consist of no more than three noncontiguous parcels. 

3. Data

The primary sources for the data presented in this paper are IRS Forms 8996 and 8997. Form 8996 is 

filed by QOFs and includes information about QOF investments, including amounts and where those 

investments are deployed. Form 8997 is filed by investors in QOFs and indicates how much deferred 

capital gains an individual or business has invested in QOFs, as well as identifying those QOFs. Most of 

our attention is on Form 8996 as that provides information on the amounts and location of QOF 

investment. In addition, we use information from other parts of the tax return to inform our analysis, 

such as self-reported industry codes.

Taxpayers are required to file Form 8996 annually to self-certify as a QOF. QOFs report total assets and 

total qualified opportunity zone property held on the last day of the first 6-month period of the tax year 

and on the last day of the tax year on Part II of the form. If the ratio of total qualified opportunity zone 

property to total assets averaged over those two reporting dates is below 0.9, then the QOF must 

calculate and pay a penalty. The total assets and QOZ property investment by QOFs reported in this 

paper are from the Part II end of year amounts.

Beginning with the 2019 tax year, a QOF was required to report additional information regarding the 

location of its investment on Form 8996. For QOZ business property held directly by the QOF, the 

census tract location and the valuation of owned versus leased property is reported on Part V of the 

form. On Part VI, the QOF reports the valuation of ownership interests in QOZBs and the Employer 

Identification Number (EIN) of the QOZB. For QOZBs that operate in multiple census tracts, the value of 

7
the ownership share is apportioned ratably across census tracts according to the share of tangible 

property held by the QOZB in each census tract, with all non-qualifying property aggregated into the 

non-qualified tract category, regardless of location. In addition, the QOF reports the amount of tangible 

property held by the QOZB in each census tract and distinguishes between owned and leased property. 

There could be various reasons why the valuation of the ownership interest could vary from the value of 

the tangible property held by the QOZB, such as the QOF only being a partial owner of the QOZB. These 

valuations are reported for the last day of the first 6-month period of the QOF’s tax year and on the last

day of tax year. In this paper, we only report the end of year numbers.

For tax year 2018, Form 8996 was not available in a format that allowed electronically filed returns to be 

available as machine readable data. Instead for both paper and electronically filed returns, Form 8996 

needed to be manually scanned by IRS workers. Images of these returns were made available to staff 

from the Office of Tax Analysis (OTA), who manually transcribed data from the relevant fields. 

For tax year 2019 the IRS was able to process the data from electronically filed Form 8996 returns as 

normal. However, for paper returns, a similar manual process as for the 2018 returns was used. The 

processing of the 2018 returns and the 2019 paper returns have been significantly slowed by the 

pandemic related to COVID-19, as filing deadlines were extended and some IRS work locations were 

shut down for months at a time. The implication is that the full population of 2018 and 2019 paper 

Form 8996 returns were not available for this analysis. However, the number of unprocessed returns 

not included in this analysis is very small, representing less than 2 percent of the 2018 returns and less 

than 6 percent of the 2019 returns. 

For tax year 2020, electronically filed returns with Form 8996 are included in our analysis, however, the 

2020 paper returns have yet to be transcribed. Given that QOFs report asset values, the 2019 paper 

returns are included in the 2020 reported totals, unless that taxpayer filed an electronic return in 2020. 

This approach will overstate the 2020 asset values for some QOFs and understate it for others, but it 

helps make the totals between 2019 and 2020 more comparable.

Form 8997 was first available for tax year 2019 and is filed annually by investors in QOFs. Taxpayers 

report QOF investment holdings at the beginning of the tax year, end of the tax year, capital gains 

deferred by investing in a QOF in the current tax year, and QOF investments disposed during the current 

tax year. The QOF EIN is required, which provides one way to link investors with the QOFs and 

ultimately to the location of the investment. Our paper includes information from Form 8997s included 

with 2019 and 2020 electronically filed returns.

4. Analysis

Form 8996 QOF returns

The 2018 tax year Form 8996 returns indicate that QOFs reported holding approximately $4 billion in 

both QOZ property and totals assets, as shown in Table 4. Table 5 shows that partnerships were the 

most common entity structure for QOFs, accounting for approximately 93 percent of the approximately

8
1,300 returns.13 Corporations accounted for the remaining 7 percent, which was fairly evenly split 

between regular C-corporations and pass-through S-corporations. QOFs organized as C-corporations 

tended to be larger, with average assets of about $8 million, compared to $3 million for partnerships 

and $1 million for S-corporations. 

These patterns of returns by entity type continue for the 2019 tax year (Table 5), though the number of 

QOFs and asset holdings increased considerably (Table 4). For 2019, the partnership share of the 

approximately 5,800 returns increased to around 95 percent. Partnership QOFs accounted for about 87

percent of both the approximately $28 billion in QOZ property and the $30 billion in total assets held by 

QOFs in 2019. QOFs that are C-corporations were still the largest, having increased to around $33

million on average while a partnership QOF held assets of around $5 million on average. 

For the 2020 tax year the number Form 8996 returns increased to approximately 7,800 and the amount 

of QOZ property was approximately $44 billion and totals assets held by QOFs was about $48 billion

(Table 4). The patterns of holdings across taxpayer type remained fairly stable, with partnerships 

accounting for 94 percent of returns while the share of QOF assets held by partnerships increased to 89

percent (Table 5). The average QOF asset holdings also remained relatively stable, with average 

holdings increasing slightly to $37 million, $6 million, and $1 million for corporations, partnerships, and 

S-corporations, respectively.

Taking the difference between QOF asset holdings between the years provides an estimate of the 

annual flow of investment into QOFs. This investment flow was around $4 billion in 2018, $26 billion in 

2019, and $18 billion in 2020. The surge in investment in 2019 was expected, given that zone 

designations were not finalized until the middle of 2018, regulations were finalized at the end of 2019, 

and 2019 was the last year that investors could qualify for the 15 percent basis adjustment for deferred 

gains held in a QOF for at least 7 years. Contributions to QOFs likely increased again in 2021, given the 

expiration of the 10 percent basis adjustment for deferred gains, with investment flows in future years

not likely to be as large. Of course, many other factors could affect the flow of funds into QOFs, 

including the effect of the COVID pandemic on the macroeconomy and real estate development 

prospects, the trend in capital gains, and the forecast for future tax rates. 

Consistent with expectations, real estate is the largest sector for entities organized as a QOF, accounting 

for approximately 60 percent of the QOZ property held by QOFs in 2019 (Table 6). Given the structure 

of the OZ tax-incentive, real estate investment is relatively easy to guarantee compliance with the 

statutory and regulatory rules and also is an asset with a good probability of nominal appreciation 

where the capital gains break would be beneficial. Other prominent sectors include finance and 

insurance (22 percent) and holding companies (4 percent). A similar breakdown holds in 2020.

13 The number of QOFs reported in this paper only includes taxpayers that filed Form 8996 with a positive 

indication that the taxpayer intended to certify as a QOF. This indication could consist of reporting positive asset 

values or by checking “Yes” on Line 2 of Part I of the form, which asks the following question, “Is the taxpayer 

organized for the purpose of investing in qualified opportunity zone property (other than another qualified 

opportunity fund)?” There were hundreds of returns from both 2018 and 2019 with a Form 8996 attached, but 

none of the form lines were filled in. These returns are not included in our counts of QOFs. 

9
The industry breakdown for QOZBs is similar with real estate being the largest sector by far at 67

percent, followed by finance and insurance (5 percent), and professional, scientific and technical 

services (4 percent), as shown in Table 7 for 2019. For 2020, real estate is still the largest sector at 68 

percent followed by finance and insurance (5 percent) and construction (4 percent).

Table 8 shows how much of QOF investment is directed towards particular types of OZs. In 2019 (2020), 

Urban OZs received 96 (95) percent of investment, contiguous tracts received 6 (5) percent of 

investment, and OZs that are within EZs received 6 (6) percent of investment. In comparison, these 

types of tracts compose 86, 2, and 5 percent of OZs, respectively. This illustrates that contiguous tracts 

are viewed as a relatively attractive location for QOF investment, with an investment share considerably 

larger than the share of OZ tracts. 

Across the nation, approximately 26 percent of OZs have received qualified investment through 2019, 

which increased to 48 percent by the end of 2020. Among those OZs that have received investment, 

about 54 percent received investment from a single QOF, while the remaining 46 percent received 

investment from multiple QOFs as of 2020. About 9 percent had received investment from more than 5 

QOFs, and 3 percent had received investment from 10 or more QOFs.14 Each state has received 

qualified investment as seen in the second column of Table 9. The states with the largest share of OZs

receiving qualified investment through 2020 include DC, Oregon, Colorado, Utah, and Arizona. The 

states with the lowest share of OZs receiving qualified investment through 2020 include Kansas, New 

Mexico, Alabama, Iowa, and Illinois. The states with the largest average QOZ property investment per 

OZ through 2020 include Utah, DC, Colorado, Oregon, and Wyoming. The states with the smallest 

average QOZ property investment through 2020 include Oklahoma, Delaware, Illinois, Iowa, and West 

Virginia. At least initially, western states and the District of Columbia have received a disproportionately 

large share of QOZ property investment. Table 9 also shows the amount of QOZ property located in 

each state where the location information was reported on Form 8996.15 The national total of just over 

$38 billion in 2020 is smaller than the $44 billion reported in Table 4 due to amounts not being included 

in the total for Table 9 if the location information was not provided.

Table 10 provides the averages across several different socioeconomic characteristics for OZs that have 

already received QOZ property investment and OZs that have not for both 2019 and 2020. The 

information on socioeconomic characteristics come from the 2013-2017 ACS. These different categories 

of OZs do not differ substantially on racial characteristics, though the percentage of the population that 

is white and black are both slightly smaller in OZs that have received investment. For 2019, the share of 

the adult population with at least a bachelor’s degree is 23 percent in OZs with QOZ property 

investment compared to 16 percent in OZs without investment. Median household income ($37 

thousand versus $36 thousand) and home values ($194 thousand versus $145 thousand) are higher in 

OZs that received QOZ property investment relative to OZs that did not, and the unemployment rate is 

lower (10 percent versus 11 percent). The differences for 2020 show a similar pattern, though generally 

the difference is smaller as a larger portion of tracts received QOZ investment in 2020 relative to 2019. 

14 For the purposes of this part of the analysis, multiple QOFs that were part of the same consolidated group and 

invest in the same OZ were counted as a single QOF. 15 For some returns, the location information from Form 8996 Part V or Part VI was missing or incomplete. These 

returns were not included in the totals for Table 9 or other tables where location information is used.

10
Somewhat surprisingly, the poverty rate does not differ on average between OZs with and without QOZ 

property investment, however, the change in the poverty rate between 2012 and 2017 is different, 

having fallen by about a percentage point more in OZs that received QOZ property investment relative 

to those that did not. Table 11 provides the change from 2012-2017 in the same socioeconomic 

characteristics listed in Table 10 based on values reported in the 2008-2012 and 2013-2017 ACS. OZs

that have received QOZ property investment experienced stronger increases in educational attainment, 

income and housing values, and larger decrease in the unemployment from 2012-2017 relative to OZs

that did not receive investment.

When weighted by the amount of QOZ investment received, the differences between OZs that received 

qualified investment and those that have not is much starker. For example, Table 12 shows that median 

income in the weighted average OZ receiving QOZ property investment was $43,000, compared to 

$36,000 in tracts not receiving investment. Similarly, the median house value was $242,000 compared 

to $136,000. Both the unemployment rate, 9 percent versus 12 percent, and the poverty rate, 27 versus 

29 percent, where lower on average in tracts receiving qualified investment. The share of the 

population with at least a bachelor’s degree was nearly double (29 versus 15 percent). On average, OZs

receiving qualified investment tend to have a lower homeownership rate (32 versus 48 percent). 

Another way to examine investment patterns is by comparing the percentile ranking of the average OZ 

receiving QOZ property investment (weighted by QOZ property investment share) to the percentile 

ranking of the average OZ without any QOZ property investment, where the ranking is out of all census 

tracts. Table 13 shows that the weighted average OZ with QOZ property investment ranks above the 

median for the share of population with at least a bachelor’s degree (59th percentile) and median house 

value (67th percentile) compared to the 27th and 36th percentile, respectively, for OZs without qualified 

investment. Similarly, the ranking for median household income is higher (30th versus 18th percentile), 

while the homeownership rate is lower (12th versus 25th). 

These results so far suggest that OZs that have received qualified investment have generally been 

economically better off than OZs that have not yet received investment, with notably higher educational 

attainment, median household income and housing values. This is further confirmed by looking at the 

distribution of QOZ property investment deciles of OZs ranked according to different economic 

characteristics. Figure 2 shows that when OZs are ranked according to median household income, the 

top three deciles of OZs account for more than 45 percent of total QOZ property investment, almost 

double the amount received in the lowest three deciles. The measures of median household income 

and poverty are based on the 2013-2017 ACS and the investment amounts are from the 2020 Form 8996 

returns. For poverty rates (Figure 3), there is not as much of a systematic relationship, as the top three 

deciles (lowest poverty rates) account for just over one-third of total QOZ investment and the bottom 

three deciles account for about one-fourth of the total QOZ investment. 

However, just one variable may be a poor indicator of the overall level of economic well-being in a 

community. Poverty rates in a census tract can be skewed by the presence of relatively well-off

individuals who have temporarily low incomes, such as college students or retirees. Median income and 

poverty rates do not control for the cost of living, which can vary across regions. Other researchers have 

11
constructed an economic distress index that incorporates several different economic indicators. In this

paper, we use the distress index created by Gelfond and Looney (2018) that combines the poverty rate 

(adjusted for the share of zone residents attending college), child poverty rate, educational attainment, 

home prices, and household income. The ranking is done for each state separately, which should 

control somewhat for differences in the cost of living. Figure 4 shows the percent share of QOZ 

investment in OZs ranked according to the Gelfond-Looney economic distress index where the tracts 

with the most economic distress are in decile 1. This index shows the amount of QOZ property 

investment increases as the measured level of economic distress decreases, with the top three deciles 

accounting for about half of all QOZ investment, nearly three times the amount of investment in the 

lowest three deciles.

We conduct a similar analysis of the distribution of QOZ property investment at the state level. Table 14 

shows the percent share of QOZ property as of tax year 2020 located in state OZ quintiles, where OZs 

within the state are ranked by median household income. In the event of an insufficient number of 

QOFs investing within a particular quintile to preserve anonymity, then the QOZ property amounts in 

that quintile were merged with an adjacent quintile. At the national level, the highest median 

household income OZ quintile received 34 percent of the total QOZ property investment, a 

disproportionately large share. Consistent with the national story, there were several states where the 

highest median income OZ quintile received a disproportionate amount of QOZ property investment. In 

fact, the highest income quintile accounted for at least half of the QOZ property investment in the state 

for Alabama, Connecticut, Louisiana, Missouri, and Utah. However, for Oregon, South Carolina, and 

Washington the share of QOZ property investment in the lowest median income quintile in the state 

was at least 40 percent, double the proportionate share. This indicates that there is heterogeneity 

across states regarding the location of QOZ property investment when measured along median 

household income.

Next, we examine how investment in tracts varies according to the size of the investment. Figure 5 

shows how many OZs had received QOZ property investment through 2020, by size of the total amount 

of QOZ property located in the OZ. There were a little over 4,000 OZs that had not received any QOZ 

property investment through 2020. There were over 500 OZs that received a positive investment that 

totaled less than $250,000. In contrast, there were also over 500 OZs that had received QOZ property 

investment between $10 million and $50 million. There were less than 200 OZs that had received QOZ 

property investment in excess of $50 million. 

Table 15 provides another way to look at the distribution of investments within OZs. In this table, we 

only include OZs that received positive QOZ property investment through 2020. We then divide these 

OZs into quintiles ranked according to the amount of QOZ property located in that OZ. We then report

the average amount of QOZ property in an OZ within each quintile and the average socioeconomic 

characteristics for the group of OZs within each quintile. The average QOZ property investment for the 

top quintile is just over $42 million per OZ. From this distribution, we can calculate that approximately 

84 percent of total QOZ property investment is concentrated in the top 20 percent of OZs that received 

any QOZ property investment through 2020. Moreover, given that only about half of OZs had received 

QOZ property investment through 2020, we can also determine that approximately 84 percent of QOZ 

property investment was located in just 10 percent of all OZs. 

12
Furthermore, Table 15 indicates that the size of OZ investment is positively correlated with the median 

household income, median house value, and percent of the population with at least a bachelor’s degree, 

which is consistent with our other results. The size of investment is negatively correlated with the 

unemployment rate in the OZ, but the poverty rate again is not a strong indicator of QOZ property 

investment location. The homeownership rate is also negatively correlated with the amount of QOZ 

property investment within an OZ, with an especially large decline when moving from the fourth to the 

fifth (top) quintile. 

Form 8997 QOF Investor Returns

The total amount of deferred gains reported on electronically filed Form 8997 returns is around $27

billion at the end of tax year 2019 and increases to $39 billion in 2020, as shown in Table 16. There are 

several reasons why the total amount of deferred gains reported by investors in QOFs on Form 8997

may not equal the amount of total assets reported by QOFs on Form 8996. First, there could be missing 

data, either due to taxpayer error, IRS processing error, or in the case of this paper, missing returns. 

Second, the amount from Form 8997 may be greater than what is reported on Form 8996 because the 

QOF may not yet be required to report the contribution if it has been less than 6-months since the 

contribution was received. Third, the amount of total assets reported by QOFs on Form 8996 can 

include non-qualified amounts, and so may be greater than the total deferred gains reported on Form 

8997. Fourth, there can also be timing issues caused by some taxpayers with a tax year differing from 

the calendar year. 

Individuals account for approximately 85 percent of Form 8997 returns and about two-thirds of the 

deferred gains, though the share is a little lower in 2020. These results indicate that there is a 

considerable difference between the investors in the NMTCs, where over 90 percent of the investment

is attributable to corporations, primarily financial institutions, and the investors in QOFs which are 

primarily individuals. 

At the 2-digit NAICS sector level, business entities within the Management of Companies (Holding 

companies) sector account for the largest portion of business entity QOF investment at 33 percent, 

followed by Finance and Insurance at 25 percent and Real Estate at 23 percent in 2019, while no other 

sector had more than 10 percent (Table 17). In 2020, the four sectors with the largest investment in 

QOFs were Management of Companies (32), Finance and Insurance (24), Real Estate (16), and 

Information (15). 

Individual investors in QOFs are generally high-income households, as expected, given the distribution of 

capital gains realizations. The median individual investor in a QOF in 2020 had adjusted gross income 

(AGI) of little under $730,000. The median amount of deferred gain invested in a QOF at the end of 

2020 was nearly $250,000 and the average amount invested was over $1 million. Business entities 

made larger investments in QOFs, with an average investment of approximately $4 million.

13
5. Conclusion

The information presented in this paper provides an early look into the use of the OZ tax incentive. Our 

data show that through 2020, investment in OZs was geographically broad, covering each state. Overall, 

about 48 percent of OZs have received qualified investment through a QOF through tax year 2020. 

These shares varied greatly across states, with several states with shares above 70 percent, while a 

couple of states had a share below 30 percent. 

OZs that received QOZ property investment were also different than OZs that did not, by some 

measures. In particular, OZs that had a higher median household income, higher measures of 

educational attainment, higher house prices, and lower unemployment were more likely to receive 

investment. Moreover, trends prior to OZ designation were an important indicator of which tracts 

received investment. Tracts that experienced growth in median household income, population, and 

housing values and reduction in the poverty rate and unemployment rate were more likely to receive 

qualified investment. 

This paper provides an initial examination of the characteristics of investment in OZs based on the first 

two years when the tax return data on the geographic location of investment is available. Future work 

will determine if early trends continue and more importantly, will do the harder work of evaluating 

whether QOZ property investment leads to benefits for residents of OZs. 

14
References

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16
Table 1. Socioeconomic Characteristics of Opportunity Zones (OZs) and other Census Tracts*

Characteristic All Tracts

Ineligible 

Tracts

Eligible Non-Designated Tracts Designated OZs

LIC Contiguous Total LIC Contiguous Total

Number of tracts 73,056 31,838 23,324 10,068 33,392 7,657 169 7,826

Percent Urban 80.5 82.9 83.3 62.2 76.9 86.4 58 85.8

Percent of population:

 White 72.6 81.4 62.4 80.6 67.9 56.9 77.9 57.4

 Black 13.8 6.3 21.4 8.9 17.7 27.5 12.4 27.1

 American Indian/Alaska Native 0.9 0.5 1.2 0.8 1.1 1.7 1.2 1.6

 Asian 4.9 6.2 4.2 3.5 4.0 3.2 3.0 3.2

 Other Race 7.8 5.5 10.7 6.2 9.3 10.8 5.5 10.7

 Hispanic 16.3 10.4 23.7 12.4 20.3 22.8 10.0 22.5

 Foreign Born 16.4 14.2 20.6 11.8 18.0 18.7 9.2 18.5

 With no college education 41.4 30.0 51.7 42.8 49.0 54.4 42.9 54.2

 With at least a Bachelor's Degree 29.6 41.2 19.6 26.2 21.6 17.3 27.1 17.5

 Homeowner 63.2 74.7 51.0 70.3 56.8 44.4 65.9 44.8

Average Median Age 39.3 41.9 36.2 41.1 37.7 35.5 41.5 35.6

Average Median Household Income $61,698 $84,434 $41,614 $57,515 $46,426 $36,103 $56,173 $36,538

Average Poverty Rate 15.7 7.4 24.0 12.0 20.4 29.2 13.2 28.9

Average Labor Force Participation Rate 62.8 65.5 60.6 62.4 61.2 58.4 61.2 58.5

Average Unemployment Rate 7.1 4.9 9.1 6.0 8.2 11.1 6.5 11.0

Average Rent as Share of Household 

Income 30.7 28.5 33.4 28.8 32.0 34.0 29.0 33.9

Average Housing Vacancy Rate 11.9 9.1 14.0 13.2 13.7 15.4 15.2 15.4

Average Median House Value $245,869 $337,483 $172,551 $196,528 $179,901 $154,928 $214,935 $156,263

* Source: 2013-2017 American Community Survey. Does not include census tracts located in a possession.

17
Table 2. Opportunity Zone (OZ) Eligibility and Designation Status of Census Tracts by State

State

Total Census 

Tracts

Total Eligible 

Tracts

Eligible LIC* 

Tracts

Eligible 

Contiguous 

Tracts

Total 

Designated 

OZs

Designated 

LIC OZs

Contiguous 

Designated 

OZs

Alabama 1,181 835 630 205 158 153 5

Alaska 167 68 57 11 25 25 0

Arizona 1,526 870 673 197 168 160 8

Arkansas 686 520 340 180 85 83 2

California 8,057 4,343 3,520 823 879 871 8

Colorado 1,249 657 504 153 126 119 7

Connecticut 833 344 286 58 72 71 1

Delaware 218 118 80 38 25 24 1

Dist. of Columbia 179 116 97 19 25 25 0

Florida 4,245 2,356 1,706 650 427 427 0

Georgia 1,969 1,339 1,039 300 260 260 0

Hawaii 351 132 99 33 25 23 2

Idaho 298 192 109 83 28 26 2

Illinois 3,123 1,659 1,306 353 327 327 0

Indiana 1,511 817 621 196 156 153 3

Iowa 825 410 247 163 62 61 1

Kansas 770 420 295 125 74 70 4

Kentucky 1,115 768 573 195 144 139 5

Louisiana 1,148 785 597 188 150 145 5

Maine 358 214 128 86 32 30 2

Maryland 1,406 743 593 150 149 145 4

Massachusetts 1,478 677 555 122 138 137 1

Michigan 2,813 1,528 1,152 376 288 283 5

Minnesota 1,338 744 509 235 128 127 1

Mississippi 664 535 401 134 100 95 5

Missouri 1,393 883 641 242 161 153 8

Montana 271 162 90 72 25 25 0

Nebraska 532 273 178 95 44 43 1

Nevada 687 331 243 88 61 60 1

New Hampshire 295 151 105 46 27 27 0

New Jersey 2,010 835 679 156 169 169 0

New Mexico 499 338 249 89 63 59 4

New York 4,918 2,641 2,055 586 514 497 17

North Carolina 2,195 1,414 1,007 407 252 241 11

North Dakota 205 84 52 32 25 25 0

Ohio 2,952 1,647 1,282 365 320 317 3

Oklahoma 1,046 651 467 184 117 114 3

Oregon 834 513 344 169 86 81 5

Pennsylvania 3,218 1,640 1,197 443 300 289 11

Rhode Island 244 97 79 18 25 25 0

South Carolina 1,103 741 538 203 135 128 7

South Dakota 222 112 69 43 25 23 2

Tennessee 1,497 986 709 277 176 170 6

Texas 5,265 3,131 2,510 621 628 628 0

Utah 588 283 181 102 46 46 0

Vermont 184 89 49 40 25 23 2

Virginia 1,907 1,071 853 218 212 207 5

Washington 1,458 780 555 225 139 132 7

West Virginia 484 385 220 165 55 52 3

Wisconsin 1,409 734 479 255 120 120 0

Wyoming 132 56 33 23 25 24 1

Total 73,056 41,218 30,981 10,237 7,826 7,657 169

*LIC represents a low-income community tract, Source: CDFI Fund, U.S. Department of the Treasury

18
Table 3. Percent Share of Census Tracts Eligible by Type and Opportunity Zone (OZ) Designation Status by State, States 

Ranked According to Share of Total Tracts Low-Income Communities (LIC)

State

Share of total 

tracts that are 

eligible as a 

LIC

Share of total 

tracts that are 

eligible as a 

contiguous 

tract

Share of total 

tracts that are 

designated 

OZs

Share of OZs 

that are a 

contiguous 

tract

Share of total 

tracts that are 

urban

Share of 

designated 

tracts that are 

urban

Mississippi 60 20 15 5 54 68

DC 54 11 14 0 100 100

Alabama 53 17 13 3 59 74

Georgia 53 15 13 0 74 82

Louisiana 52 16 13 3 78 87

Kentucky 51 17 13 3 56 50

New Mexico 50 18 13 6 75 73

Arkansas 50 26 12 2 57 80

South Carolina 49 18 12 5 67 68

Texas 48 12 12 0 84 76

Tennessee 47 19 12 3 66 71

Missouri 46 17 12 5 71 85

North Carolina 46 19 11 4 68 69

West Virginia 45 34 11 5 50 71

Virginia 45 11 11 2 76 78

Oklahoma 45 18 11 3 68 79

Arizona 44 13 11 5 90 84

California 44 10 11 1 94 96

Ohio 43 12 11 1 82 94

Maryland 42 11 11 3 88 96

Illinois 42 11 10 0 88 94

New York 42 12 10 3 88 98

Oregon 41 20 10 6 81 92

Indiana 41 13 10 2 74 94

Michigan 41 13 10 2 76 90

Colorado 40 12 10 6 84 77

Florida 40 15 10 0 91 91

Kansas 38 16 10 5 72 81

Washington 38 15 10 5 83 76

Minnesota 38 18 10 1 72 81

Massachusetts 38 8 9 1 93 98

Pennsylvania 37 14 9 4 81 98

Delaware 37 17 11 4 85 96

Idaho 37 28 9 7 64 64

Maine 36 24 9 6 38 59

New Hampshire 36 16 9 0 61 67

Nevada 35 13 9 2 93 93

Connecticut 34 7 9 1 90 100

Alaska 34 7 15 0 59 40

Wisconsin 34 18 9 0 72 94

New Jersey 34 8 8 0 96 100

Nebraska 33 18 8 2 69 93

Montana 33 27 9 0 47 56

Rhode Island 32 7 10 0 93 100

South Dakota 31 19 11 8 48 76

Utah 31 17 8 0 89 85

Iowa 30 20 8 2 61 86

Hawaii 28 9 7 8 93 92

Vermont 27 22 14 8 33 80

North Dakota 25 16 12 0 45 60

Wyoming 25 17 19 4 66 84

Total 42 14 11 2 81 86

19
Table 4. Form 8996, Qualified Opportunity Fund (QOF), selected items for tax years 

2018-2020*

2018 2019 2020

Number of QOFs 1,300 5,800 7,800

Qualified Opportunity Zone Property ($ billions) 4 28 44

Total Assets ($ billions) 4 30 48

*Counts and amounts are rounded totals for tax returns available as 11/1/2022. Paper 

returns that have not yet been transcribed are not included in these totals.

Table 5. Form 8996, Share of Qualified Opportunity Fund (QOF) Returns and Assets by 

Entity Type, Tax Years 2018-2020 (Percent)

Return type Share of QOFs

Share of Qualified 

Opportunity Zone 

Property

Share of 

Total 

Assets

2018

Form 1065 Partnerships 93 90 90

Form 1120 Corporations* 3 8 9

Form 1120S S-Corporations 4 2 2

2019

Form 1065 Partnerships 95 87 87

Form 1120 Corporations* 2 12 12

Form 1120S S-Corporations 4 1 1

2020

Form 1065 Partnerships 94 89 89

Form 1120 Corporations* 2 10 10

Form 1120S S-Corporations 4 1 1

*This includes all 1120 form types including 1120-F and 1120-REIT, except 1120S

20
Table 6. Qualified Opportunity Fund (QOF), Major Sector 

Share of Qualified Opportunity Zone Property, Tax Years 

2019 and 2020

Sector

Share 

(percent)

2019

Real estate, rental, and leasing 60

Finance and insurance 22

Management of companies (holding 

companies) 4

All Other 14

2020

Real estate, rental, and leasing 57

Finance and insurance 23

Management of companies (holding 

companies) 6

All Other 14

Table 7. Qualified Opportunity Zone Business (QOZB), 

Major Sector Share of Qualified Opportunity Zone 

Property, Tax Years 2019 and 2020

Sector

Share 

(percent)

2019

Real estate, rental, and leasing 67

Finance and insurance 5

Professional, Scientific, and Technical Services 4

All Other 24

2020

Real estate, rental, and leasing 68

Finance and insurance 5

Construction 4

All Other 23

Table 8. Percent Share of Opportunity Zones (OZs) and Qualified Opportunity Zone 

Property, by Type of Tract, Tax Years 2019-2020*

Share of 

OZs

Share of Qualified 

Opportunity Zone 

Property, 2019

Share of Qualified 

Opportunity Zone 

Property, 2020

Urban 86 96 95

Contiguous 2 6 5

Located in Empowerment Zone 5 6 6

*Columns will not sum to 100 percent as the categories are not mutually exclusive.

21
Table 9. Qualified Opportunity Zone (QOZ) Property, Percent Share of Opportunity Zones (OZs) with QOZ Property, QOZ 

Property Per OZ, and QOZ Property Per OZ with QOZ Property, by State in 2020

State

QOZ Property in 

2020 ($M)

Percent Share of 

OZs with QOZ 

Property in 2020

QOZ Property Per OZ in 

2020 ($M)

QOZ Property Per OZ 

with QOZ Property in 

2020 ($M)

Alabama 1,110 30 7.0 23.1

Alaska* * 56 * *

Arizona 1,740 72 10.4 14.4

Arkansas 320 49 3.8 7.6

California 4,800 52 5.5 10.5

Colorado 1,450 75 11.5 15.3

Connecticut 340 50 4.7 9.4

Delaware 30 40 1.2 3.0

District of Columbia 440 80 17.6 22.0

Florida 2,020 49 4.7 9.7

Georgia 910 53 3.5 6.6

Hawaii 110 60 4.4 7.3

Idaho 100 54 3.6 6.7

Illinois 320 20 1.0 4.9

Indiana 610 51 3.9 7.7

Iowa 30 27 0.5 1.8

Kansas 270 36 3.6 10.0

Kentucky 280 44 1.9 4.4

Louisiana 220 39 1.5 3.7

Maine 160 47 5.0 10.7

Maryland 870 49 5.8 11.9

Massachusetts 440 49 3.2 6.6

Michigan 1,140 42 4.0 9.4

Minnesota 590 48 4.6 9.5

Mississippi 190 64 1.9 3.0

Missouri 650 44 4.0 9.2

Montana 120 68 4.8 7.1

Nebraska 330 55 7.5 13.7

Nevada 550 61 9.0 14.9

New Hampshire 40 59 1.5 2.5

New Jersey 1,070 51 6.3 12.3

New Mexico 100 33 1.6 4.8

New York 3,930 47 7.6 16.1

North Carolina 1,020 53 4.0 7.7

North Dakota 60 48 2.4 5.0

Ohio 1,070 48 3.3 7.0

Oklahoma 170 38 1.5 3.8

Oregon 990 76 11.5 15.2

Pennsylvania 810 44 2.7 6.1

Rhode Island 110 64 4.4 6.9

South Carolina 910 63 6.7 10.7

South Dakota 60 68 2.4 3.5

Tennessee 1,050 56 6.0 10.7

Texas 2,580 41 4.1 9.9

Utah 1,540 74 33.5 45.3

Vermont 140 60 5.6 9.3

Virginia 680 45 3.2 7.2

Washington 1,090 66 7.8 11.8

West Virginia 20 40 0.4 0.9

Wisconsin 280 46 2.3 5.1

Wyoming 290 60 11.6 19.3

Total 38,150 48 4.9 10.1

Notes: Amounts are rounded to the nearest $10 million for statewide totals, and nearest $0.1 million for per-OZ totals. 

Amounts in the table reflect only QOZ Property investment for which location information was reported on Form 8996. The 

sum of states’ investment reported in the 'Total' row does not equal the national total investment reported elsewhere in this 

paper ($44 billion) due to incomplete reporting of investment location. 

*Amounts are not reported due to insufficient observations.

22
Table 10. Socioeconomic Characteristics of Opportunity Zones (OZs) Receiving Qualified 

Opportunity Zone (QOZ) Property Investment and OZs with No QOZ Property Investment, Means of 

Select Characteristics from 2013-2017 American Community Survey

OZs with QOZ Property 

Investment

OZs with No QOZ Property 

Investment

2019 2020 2019 2020

Percent of population:

 White 56 57 58 58

 Black 27 26 27 28

 Hispanic 23 23 22 22

 With at least a Bachelor's Degree 23 20 16 15

 Homeowner 38 42 47 48

Average Median Household Income $37,274 $37,257 $36,283 $35,859

Average Poverty Rate 29 29 29 29

Average Unemployment Rate 10 10 11 12

Average Median House Value $192,161 $177,741 $144,078 $136,264

Table 11. Socioeconomic Characteristics of Opportunity Zones (OZs) Receiving Qualified 

Opportunity Zone (QOZ) Property Investment and OZs with No QOZ Property Investment, 

Comparison of Trends for Select Characteristics between 2008-2012 American Community Survey

(ACS) and 2013-2017 ACS

OZs with QOZ Property 

Investment

OZs with No QOZ Property 

Investment

2019 2020 2019 2020

Percent of population:

 White (pp) -0.2 -0.2 -0.2 -0.2

 Black (pp) -1.0 -0.7 -0.4 -0.4

 Hispanic (pp) 0.9 0.9 1.0 1.0

 With at least a Bachelor's Degree 

(pp) 2.8 2.3 1.5 1.4

 Homeowner (pp) -1.7 -1.7 -1.9 -1.9

Average Median Household Income 

(%) 13.7 12.6 10 9.1

Average Poverty Rate (pp) -1.3 -0.8 0 0

Average Unemployment Rate (pp) -4.3 -4.0 -3.2 -3.1

Average Median House Value (%) 10.6 9.6 5.2 3.7

23
Table 12. Socioeconomic Characteristics of Opportunity Zones (OZs) Receiving Qualified 

Opportunity Zone (QOZ) Property Investment through 2020 (Weighted by QOZ Property 

Investment Share) and OZs with No QOZ Property Investment, Means of Select 

Characteristics from 2013-2017 American Community Survey

OZs with QOZ Property 

Investment

OZs with No QOZ Property 

Investment

Percent of population:

 White 57 58

 Black 23 28

 Hispanic 25 22

 With at least a Bachelor's Degree 29 15

 Homeowner 32 48

Average Median Household Income $42,948 $35,859

Average Poverty Rate 27 29

Average Unemployment Rate 9 12

Average Median House Value $242,361 $136,264

Table 13. National Percentile Rank of Average Opportunity Zone (OZ) Tract Receiving

Qualified Opportunity Zone (QOZ) Property Investment through 2020 (Weighted by QOZ 

Property Investment) and Average OZ Tract with No QOZ Property Investment for Selected 

Socioeconomic Characteristics from 2013-2017 American Community Survey

OZs with QOZ Property 

Investment (percentile 

rank)

OZs with No QOZ Property 

Investment (percentile 

rank)

Percent of population:

 White 23 23

 Black 82 85

 Hispanic 79 76

 With at least a Bachelor's Degree 59 27

 Homeowner 12 25

Median Household Income 30 18

Poverty Rate 85 87

Unemployment Rate 77 86

Median House Value 67 36

24
Table 14. Percent Share of Qualified Opportunity Zone (QOZ) Property Located in State Opportunity Zone (OZ) 

Quintiles through 2020, Ranked by Median Household Income

Median Household Income Quintile

State 1 2 3 4 5

Alabama 17 2 9 12 60

Alaska* 100

Arizona 20 8 21 7 44

Arkansas* 35 26 39

California 20 16 14 24 26

Colorado 11 35 25 5 22

Connecticut* 12 29 7 53

Delaware* 100

District of Columbia* 60 40

Florida 28 18 16 12 26

Georgia 34 24 15 13 14

Hawaii* 26 74

Idaho* 30 70

Illinois 31 15 33 4 18

Indiana 12 16 7 15 49

Iowa* 58 42

Kansas* 20 68 2 10

Kentucky 34 4 32 16 14

Louisiana* 14 30 55

Maine* 59 41

Maryland* 22 14 27 37

Massachusetts 24 17 12 14 33

Michigan 15 10 12 38 25

Minnesota 39 15 12 8 26

Mississippi* 16 37 46

Missouri 7 14 10 18 51

Montana* 52 48

Nebraska* 12 41 46

Nevada 32 34 15 11 9

New Hampshire* 100

New Jersey 20 7 23 27 24

New Mexico* 34 66

New York 7 14 9 22 49

North Carolina 27 15 15 4 39

North Dakota* 100

Ohio 18 11 11 15 46

Oklahoma* 12 27 28 34

Oregon 46 9 16 25 4

Pennsylvania 15 12 12 16 45

Rhode Island* 30 70

South Carolina* 68 11 12 10

South Dakota* 100

Tennessee 21 12 36 22 9

Texas 9 15 7 24 46

Utah 15 5 22 8 50

Vermont* 100

Virginia 6 43 19 16 16

Washington 40 15 8 17 20

West Virginia* 100

Wisconsin 29 4 39 10 18

Wyoming* 100

National 17 15 15 19 34

Notes: Median household income for each OZ determined from 2013-2017 American Community Survey. Location of 

QOZ Property calculated by authors from IRS Form 8996.

*Quintiles merged to provide sufficient observations

25
Table 15. Socioeconomic Characteristics of Opportunity Zones (OZs) Receiving Qualified 

Opportunity Zone (QOZ) Property Investment and Average QOZ Property Investment through 2020 

by National OZ Quintile Ranked by Level of QOZ Property Investment*, Means of Select 

Characteristics from 2013-2017 American Community Survey

National QOZ Property Investment Quintile

1 2 3 4 5

Percent of population:

 White 56 55 58 60 56

 Black 29 29 26 23 24

 Hispanic 21 24 23 23 26

 With at least a Bachelor’s 

Degree 17 17 19 20 26

 Homeowner 45 44 43 42 33

Median Household Income 

($) 35,942 36,778 36,767 37,131 39,667

Poverty Rate 30 28 28 29 29

Unemployment Rate 11 11 10 10 9

Median House Value ($) 150,797 158,851 168,369 180,695 231,472

Average QOZ Property ($) 185,000 610,000 1,887,000 5,448,000 42,161,000

*Only OZs with positive QOZ Property investment through 2020 included in the quintile ranking.

Table 16. Form 8997 Electronically Filed Returns, Qualified Investment in Qualified Opportunity 

Funds, by Investor Type, Tax Years 2019-2020

2019 2020

Return type

Number of returns 

(thousands)

Deferred Gains 

($ billions)

Number of returns 

(thousands)

Deferred Gains 

($ billions)

Individuals 16 18 21 24

Entity* 3 9 4 15

Total 19 27 25 39

*Includes corporations, partnerships, estates and trusts

26
Table 17. Business Entities that File Form 8997

Electronically, Major Sector Share of Deferred 

Qualified Gain, Tax Years 2019 and 2020

Sector Share (percent)

2019

Management of companies (holding 

companies) 33

Finance and Insurance 25

Real Estate and Rental and Leasing 23

All other industries 19

2020

Management of companies (holding 

companies) 32

Finance and Insurance 24

Real Estate and Rental and Leasing 16

Information 15

All other industries 13

27
Figure 1. Census Tracts in Detroit, Michigan by Empowerment Zone, Low-income Community (LIC), 

and Opportunity Zone Status

Notes: Median household income for each OZ determined from 2013-2017 ACS. Location of Qualified Opportunity 

Zone Property calculated by authors from IRS Form 8996.

0

5

10

15

20

25

1 2 3 4 5 6 7 8 9 10

Percent of QOZ Property 

Decile

Figure 2. Percent Share of Qualified Opportunity Zone (QOZ) 

Property Located in National Opportunity Zone Decile Ranked by 

Median Household Income, 2020

28
Notes: Poverty rates for each OZ determined from 2013-2017 ACS. Location of Qualified Opportunity Zone 

Property calculated by authors from IRS Form 8996.

Notes: Census tract distress index developed by Gelfond and Looney (2018). Location of Qualified Opportunity 

Zone Property calculated by authors from IRS Form 8996.

0

2

4

6

8

10

12

14

1 2 3 4 5 6 7 8 9 10

Percent of QOZ Property

Decile

Figure 3. Percent Share of Qualified Opportunity Zone (QOZ) 

Property Located in National Opportunity Zone Decile Ranked 

(Reversed) by Poverty Rate, 2020

0

5

10

15

20

25

30

1 2 3 4 5 6 7 8 9 10

Percent of QOZ Property

Decile

Figure 4. Percent Share of Qualified Opportunity Zone (QOZ) 

Property Located in National Opportunity Zone Decile Ranked by 

Distress Index, 2020

29
0

500

1000

1500

2000

2500

3000

3500

4000

4500

$0 $1-250k $250k-500k $500k-1m $1m-2.5m $2.5m-5m $5m-10m $10m-50m >$50m

Number of OZs

QOZ Property

Figure 5. Distribution of Opportunity Zones (OZs) by Amount of 

Qualified Opportunity Zone Property (QOZ) Investment, 2020

30