26 U.S.C. § 1400Z–1 (INTERNAL REVENUE CODE)
§ 1400Z–1. Designation
(a) Qualified opportunity zone defined
For the purposes of this subchapter, the term “qualified opportunity zone” means a population census tract that is a low-income community that is designated as a qualified opportunity zone.
(b) Designation
(1) In general
For purposes of subsection (a), a population census tract that is a low-income community is designated as a qualified opportunity zone if—
(A) not later than the end of the determination period, the chief executive officer of the State in which the tract is located—
(i) nominates the tract for designation as a qualified opportunity zone, and
(ii) notifies the Secretary in writing of such nomination, and
(B) the Secretary certifies such nomination and designates such tract as a qualified opportunity zone before the end of the consideration period.
(2) Extension of periods
A chief executive officer of a State may request that the Secretary extend either the determination or consideration period, or both (determined without regard to this subparagraph),1 for an additional 30 days.
(3) Special rule for Puerto Rico
Each population census tract in Puerto Rico that is a low-income community shall be deemed to be certified and designated as a qualified opportunity zone, effective on the date of the enactment of Public Law 115–97.
(c) Other definitions
For purposes of this section—
(1) Low-income communities
The term “low-income community” means any population census tract if—
(A) such population census tract has a median family income that—
(i) in the case of a population census tract not located within a metropolitan area, does not exceed 70 percent of the statewide median family income, or
(ii) in the case of a population census tract located within a metropolitan area, does not exceed 70 percent of the metropolitan area median family income, or
(B) such population census tract—
(i) has a poverty rate of at least 20 percent, and
(ii) has a median family income that—
(I) in the case of a population census tract not located within a metropolitan area, does not exceed 125 percent of the statewide median family income, or
(II) in the case of a population census tract located within a metropolitan area, does not exceed 125 percent of the metropolitan area median family income.
(2) Definition of periods
(A) Consideration period
The term “consideration period” means the 30-day period beginning on the date on which the Secretary receives notice under subsection (b)(1)(A)(ii), as extended under subsection (b)(2).
(B) Determination period
The term “determination period” means the 90-day period beginning on the decennial determination date, as extended under subsection (b)(2).
(C) Decennial determination date
The term “decennial determination date” means—
(i) July 1, 2026, and
(ii) each July 1 of the year that is 10 years after the preceding decennial determination date under this subparagraph.
(3) State
For purposes of this section, the term “State” includes any possession of the United States.
(d) Number of designations
(1) In general
Except as provided by paragraph (2), the number of population census tracts in a State that may be designated as qualified opportunity zones under this section during any period may not exceed 25 percent of the number of low-income communities in the State.
(2) Exception
If the number of low-income communities in a State is less than 100, then a total of 25 of such tracts may be designated as qualified opportunity zones during any period.
(e) Period for which designation is in effect
(1) In general
A designation as a qualified opportunity zone shall remain in effect for the period beginning on the applicable start date and ending on the day before the date that is 10 years after the applicable start date.
(2) Applicable start date
For purposes of this section, the term “applicable start date” means, with respect to any qualified opportunity zone designated under this section, the January 1 following the date on which such qualified opportunity zone was certified and designated by the Secretary under subsection (b)(1)(B).
(Added Pub. L. 115–97, title I, § 13823(a), Dec. 22, 2017, 131 Stat. 2183; amended Pub. L. 115–123, div. D, title II, § 41115, Feb. 9, 2018, 132 Stat. 161; Pub. L. 119–21, title VII, § 70421(a)(1)–(4), (b)(1)–(3), July 4, 2025, 139 Stat. 223, 224.)
heading: Repeal of Subsection (b)(3)
text: Pub. L. 119–21, title VII, § 70421(a)(3), (5)(B), July 4, 2025, 139 Stat. 223, 224, provided that, effective on Dec. 31, 2026, subsection (b)(3) of this section is repealed.
heading: Editorial Notes
heading: References in Text
text: The date of the enactment of Public Law 115–97, referred to in subsec. (b)(3), is Dec. 22, 2017.
heading: Amendments
text: 2025—Subsec. (b)(3). Pub. L. 119–21, § 70421(a)(3), struck out par. (3). Text read as follows: “Each population census tract in Puerto Rico that is a low-income community shall be deemed to be certified and designated as a qualified opportunity zone, effective on the date of the enactment of Public Law 115–97.”
Subsec. (c). Pub. L. 119–21, § 70421(b)(1), substituted “For purposes of this section—” for “For purposes of this subsection—” in introductory provisions, added par. (1), and struck out former par. (1). Prior to amendment, text read as follows: “The term ‘low-income community’ has the same meaning as when used in section 45D(e).”
Subsec. (c)(2)(B). Pub. L. 119–21, § 70421(a)(1), substituted “beginning on the decennial determination date” for “beginning on the date of the enactment of the Tax Cuts and Jobs Act”.
Subsec. (c)(2)(C). Pub. L. 119–21, § 70421(a)(2), added subpar. (C).
Subsec. (d)(1). Pub. L. 119–21, § 70421(a)(4)(A), struck out “and subsection (b)(3)” after “by paragraph (2)” and inserted “during any period” after “the number of population census tracts in a State that may be designated as qualified opportunity zones under this section”.
Subsec. (d)(2). Pub. L. 119–21, § 70421(a)(4)(B), inserted “during any period” before period at end.
Subsec. (e). Pub. L. 119–21, § 70421(b)(3), amended subsec. (e) generally. Prior to amendment, text read as follows: “A designation as a qualified opportunity zone shall remain in effect for the period beginning on the date of the designation and ending at the close of the 10th calendar year beginning on or after such date of designation.”
Pub. L. 119–21, § 70421(b)(2), redesignated subsec. (f) as (e) and struck out former subsec. (e) which related to designation of tracts contiguous with low-income communities.
Subsec. (f). Pub. L. 119–21, § 70421(b)(2), redesignated subsec. (f) as (e).
2018—Subsec. (b)(3). Pub. L. 115–123, § 41115(a), added par. (3).
Subsec. (d)(1). Pub. L. 115–123, § 41115(b), inserted “and subsection (b)(3)” after “paragraph (2)”.
heading: Statutory Notes and Related Subsidiaries
heading: Effective Date of 2025 Amendment
text: Pub. L. 119–21, title VII, § 70421(a)(5), July 4, 2025, 139 Stat. 224, provided that:
“(A) In general.—
Except as provided in subparagraph (B), the amendments made by this subsection [amending this section] shall take effect on the date of the enactment of this Act [July 4, 2025].
“(B) Puerto rico.—
The amendment made by paragraph (3) [amending this section] shall take effect on December 31, 2026.”
Pub. L. 119–21, title VII, § 70421(b)(4), July 4, 2025, 139 Stat. 225, provided that: “The amendments made by this subsection [amending this section] shall apply to areas designated under section 1400Z-1 of the Internal Revenue Code of 1986 after the date of the enactment of this Act [July 4, 2025].”
heading: Effective Date
text: Section effective on Dec. 22, 2017, see section 13823(d) of Pub. L. 115–97, set out as an Effective Date of 2017 Amendment note under section 1016 of this title.