Opportunity Zones in California
Program Overview
The Opportunity Zone (OZ) Program was established under the Tax Cuts and Jobs Act of 2017 to encourage the reinvestment of capital gains into economically distressed communities. The program offers preferential federal tax treatment for capital gains invested in qualified projects located within designated low-income census tracts.
Eligible investments may include new real estate construction, rehabilitation of vacant or underutilized properties, equity investments in operating businesses, and infrastructure or energy-related projects, among others. The Opportunity Zone incentive is designed to reward long-term, patient capital that generates sustained economic growth, job creation, and community revitalization in historically underserved areas.
Renewal of the Program: Opportunity Zones 2.0
The Opportunity Zone Program was originally scheduled to sunset on December 31, 2026. With the passage of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, the program is now a permanent part of the federal tax code.
As part of this legislation, a new round of Opportunity Zone census tract designations—referred to as “Opportunity Zones 2.0”—will be introduced.
What to know:
- July 1, 2026: Governors may begin nominating a new map of eligible census tracts
- January 1, 2027: The U.S. Department of the Treasury will certify nominations, and the new map takes effect
- Duration: Designations will remain in place for 10 years
- Future updates: Opportunity Zones will be refreshed every 10 years going forward
New Targeting Criteria
As with the original Opportunity Zone statute, governors may designate up to 25 percent of their state’s eligible census tracts. However, the OBBBA establishes more stringent eligibility requirements for future designations.
To qualify, a census tract must satisfy one of the following tests:
- Median family income (MFI) below 70 percent of the metropolitan average or the statewide average (for non-metro areas) (versus 80 percent in the original OZ provision).
- Poverty rate of 20 percent or greater (unchanged), plus a newly established MFI cap set at 125 percent of the applicable state or metro median. The MFI cap closes a statistical loophole that allowed a small number of high-income census tracts to qualify for OZ status.
To view potentially eligible census tracts, please visit the Novogradac Opportunity Zones 2.0 Mapping Tool
Note: This map is based on 2019–2023 American Community Survey (ACS) data. Official eligibility is expected to rely on 2020–2024 ACS estimates, which are anticipated to be released in late January 2026.
Priorities for Nomination in California
In evaluating potential census tracts for nomination, California will prioritize tracts that align with statewide and regional economic development objectives, including:
- Census tracts identified in local or regional economic development strategies or planning documents that demonstrate strong economic growth potential.
- Tracts with development potential aligned with the Strategic Sectors identified in the Statewide Economic Blueprint.
- Tracts located within existing Tax Increment Financing (TIF) districts or similar place-based financing areas.
- Tracts identified in local or regional housing plans.
Information Webinars
GO-Biz will host a series of public informational webinars to educate stakeholders on the state’s priorities and selection process. Below are dates for the webinars:
Webinar #1: February 10th: 10:30 am – 12:00 pm
Webinar #2: February 26th: 10:30 am – 12:00 pm
Contact
For questions regarding California’s Opportunity Zones 2.0 selection process, please submit an inquiry through the GO-Biz Help Center
List of Valuable Resources:
