Arizona Opportunity Zones: What They Are and How You Can Benefit

Opportunity Zones are economically distressed, lower-income census tracts that have received an Opportunity Zone designation by the U.S. Department of Treasury, after having been nominated by governors across the country. The Opportunity Zone designation is meant to spur investment in these areas, as those who invest in Opportunity Zones receive tax breaks. Opportunity Zones were created as a one-time initiative in the 2017 Tax Cuts and Jobs Act to incentivize investment in underserved areas. The resulting first generation of Opportunity Zones (now called OZ 1.0) were designated in 2018, and those areas retain Opportunity Zone designation through 2028. In 2025, Congress passed the One Big Beautiful Bill Act (OBBA) that made the Opportunity Zone incentives a permanent part of the Internal Revenue Code, with new zones to be designated every 10 years. A second generation of Opportunity Zones (called OZ 2.0) will be nominated by governors in mid-2026, and after Treasury certifies the nominated tracts, OZ 2.0 designations are slated to take effect on January 1, 2027. This means there will be a two-year overlap in the lifespans of tract designations of the first and second generations of Opportunity Zones. As with the first generation of Opportunity Zones, governors may nominate up to one quarter of the eligible tracts in their states for second-generation Opportunity Zones designation. However, the economic criteria for eligibility are more tightly restricted for OZ 2.0, meaning fewer tracts will be eligible for second-generation Opportunity Zone status. The OBBA also sought to promote rural development by creating a new designation for rural Opportunity Zone tracts and increases one of the three income tax benefits for investors in those tracts, while also lowering the minimum investment required to improve rural properties with structures on them. https://www.azcommerce.com/arizona-op...