IRS Clarifies Changes to Qualified Opportunity Zone Rules

Taxpayers who invest in Qualified Opportunity Zones (QOZs) receive certain tax benefits for their investments as an incentive to improve economic growth and job creation in these underserved communities. The One Big Beautiful Bill Act (OBBBA) made some changes to the QOZ rules, which the IRS has now clarified. There are unique rules for new Rural Opportunity Zones. Under the new law, a rural area means any area other than a city or town with a population greater than 50,000, and any urbanized area contiguous and adjacent to a city or town with a population greater than 50,000. And as of July 4, 2025, eligibility to be a qualified opportunity zone business property (QOZBP) in a rural QOZ has been modified. The property must be original use or substantially improved, and the substantial improvement threshold for required additions to the basis for property located in Rural QOZs is reduced from 100% percent to 50%. #IdeaoftheDay