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What changed in rural Opportunity Zone rules?
What changed in rural Opportunity Zone rules?
The IRS has expanded tax incentives for investments in rural Qualified Opportunity Zones (QOZs) under the One, Big, Beautiful Bill. Effective July 4, 2025, the substantial improvement threshold for rural QOZ property is reduced from 100 percent to 50 percent.
Rural areas now include locations with populations under 50,000 and adjacent non-urbanized zones. Of the 8,764 U.S. QOZs, 3,309 are classified as rural. These changes aim to boost economic growth and job creation in underserved regions by making it easier for taxpayers to qualify for QOZ benefits. Updated definitions apply across all States, D.C., and U.S. territories.
IRS Tax Tip 2026-04: Enhanced tax incentives for Qualified Opportunity Zone investments in rural areas
Internal Revenue Service: Tax tip: Qualified Opportunity Zone
Enhanced tax incentives for Qualified Opportunity Zone investments in rural areas
Recent changes to Qualified Opportunity Zones enhance tax incentives for taxpayers who invest in rural areas. Investments in QOZs ultimately help improve economic growth and job creation in these communities. Under the One, Big, Beautiful Bill, there are two important changes.
What’s new for Qualified Opportunity Zones
- A rural area is now defined as 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. This definition applies to States, the District of Columbia and U.S. territories.
- The substantial improvement threshold for improvements to property located in a QOZ that is comprised entirely of a rural area, has been modified. As of July 4, 2025, the substantial improvement threshold for required additions to the basis for property located in these QOZs was reduced from 100 percent to 50 percent.
There are currently 8,764 QOZs in the U.S., many of which have experienced a lack of investment for decades. Notice 2025-50 identified 3,309 of those QOZs as a rural area.
Link to source (IRS Notice): Notice 2025-50
New incentives.
Lower barriers.
More opportunity.
Let’s explore how these changes can work for you—and for the communities that need investment most.
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