Feb. 18, 2026 — The One Big Beautiful Bill Act (OBBBA) permanently extends and significantly reforms the Opportunity Zone (OZ) program. For local governments, these changes offer a long-term tool to attract private capital for housing, infrastructure, and economic development, but with narrowed eligibility, heightened accountability requirements, and new strategic considerations.
The OZ program, originally set to expire in December 2026, is now a permanent part of the tax code. State governors may submit up to 25 percent of their state’s eligible census tracts for consideration, with final certification determined by the U.S. Treasury Department. In North Carolina, the Department of Commerce has begun its process to identify potential OZ locations to submit for certification. It will accept public input for 30 days, beginning in March through a portal on its website.
Newly approved zones will go into effect on January 1, 2027. From that point forward, OZs will be reviewed for certification every 10 years.
The new version of the OZ program, also called Opportunity Zones 2.0, has stricter qualification standards. For census tracts to be eligible as an OZ, the median family income in a selected census tract must not exceed 70 percent of the metropolitan area or statewide median family income. The previous threshold was 80 percent. The new OZ program also eliminates the eligibility of contiguous census tracts, meaning borderline communities may lose their designation.
Rural communities that previously struggled to attract OZ investment now have enhanced tax benefits that can compete with urban opportunities. Investments in Qualified Rural Opportunity Funds (QROFs) receive a 30 percent basis step-up, making rural zones significantly more attractive to investors compared to urban zones.
How to Prepare
Under the OBBBA, state governors retain significant authority over the OZ designation process, making it critical to understand the state-level framework. Governors typically coordinate through state economic development offices and commerce departments to evaluate tract nominations. Because these agencies establish the specific criteria and review applications, building relationships with state agency officials and policy staff is essential for gaining insight into state priorities and procedural timelines.
State application periods are typically limited, lasting only 30 to 90 days. Communities should act now to solidify their approach. Gather data to demonstrate census tract eligibility and seek letters of support from employers, developers, and community organizations. Inventory specific investment-ready projects to attract support from Qualified Opportunity Funds (QOFs) and demonstrate how these projects will provide real community benefits such as new jobs, housing units, and infrastructure improvements. Consider regional collaboration and engage with state legislators to strengthen your community’s request. Rural communities should also develop targeted marketing materials highlighting their enhanced incentives.
As communities prepare for this certification cycle, they should simultaneously set systems in place to track success and demonstrate efficacy to prepare the next certification cycle. Communities should anticipate rigorous oversight and partner with QOFs that demonstrate strong compliance systems and avoid reputational risks.
Summary
The OBBBA transforms Opportunity Zones from a temporary tax incentive into a permanent, economic development tool. Success will depend on proactive planning, state-level advocacy, compliance with new requirements, and ensuring that private investments genuinely prioritize community needs rather than speculative interests.
Please contact Shirley Speidell at Shirley@strategics.consulting with questions about how these changes impact your community.
