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2026 Massachusetts Opportunity Zone Program

The Opportunity Zone Program is a federal capital gains tax incentive that encourages private investment in economically distressed communities. Massachusetts is preparing to designate a new map of Opportunity Zones in 2026 under updated federal rules.
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Overview

Opportunity Zones are federally designated census tracts where investors can receive tax benefits by investing capital gains through Qualified Opportunity Funds (QOFs). The program was originally created by the Tax Cuts and Jobs Act of 2017 to spur private investment in lower-income communities. 

In 2025, federal legislation made the program permanent and established a new designation cycle. Governors may nominate a new map of eligible census tracts beginning July 1, 2026, with new designations taking effect January 1, 2027 and lasting 10 years. Nominations are due to the U.S. Treasury by September 28, 2026.    

Massachusetts designated 138 Opportunity Zones across 79 municipalities in 2018. Under updated federal eligibility criteria, the Commonwealth will be able to designate 103 zones from a pool of 410 eligible census tracts in 2026. 

How the Opportunity Zone Program Works

An Opportunity Zone is a low-income census tract nominated by the Governor and certified by the U.S. Department of Treasury. Investors who direct capital gains into a Qualified Opportunity Fund (QOF) that invests in a designated zone may receive significant federal tax benefits on those gains. The size and structure of those benefits depend on the type of investment and how long it is held. Investors and fund managers should consult a qualified tax advisor or visit IRS.gov for detailed guidance on OZ 2.0 tax treatment. 

Opportunity Zones in Massachusetts

Massachusetts Overview (2018 Designations) 

  • In 2018, the Baker-Polito Administration designated 138 Opportunity Zones across 79 municipalities.  Once designated, the state had no formal role in the process.  

What’s Changing in 2026 (OZ 2.0)

The 2025 One Big Beautiful Bill Act (OBBBA) made significant changes to the Opportunity Zone program, including: 

  • Program Made Permanent: The Opportunity Zone program, which was originally set to sunset, has been made permanent. New designation rounds will occur every 10 years beginning in 2027. 
  • New Eligibility Criteria:The OBBA established new, tightened criteria for program eligibility. To be eligible for 2026 nomination, a census tract must now meet updated income thresholds: 
    • Tract median family income below 70% of the MSA Median Family Income (AMI) OR poverty rate above 20% AND median family income below 125% AMI — previous thresholds were median family income below 80% of MSA median family income OR poverty rate above 20% (no median income restrictions) 
    • Contiguous tract designations (previously allowed) are no longer permitted 
    • States may appeal individual tract eligibility determinations to Treasury 
    • As a result of these stricter criteria, Massachusetts will be able to designate approximately 103 Opportunity Zones in 2026, down from 138 in 2018, from a pool of approximately 410 eligible census tracts. 
  • Enhanced Benefits for Rural Areas:
    • Rural OZ tracts require a 50% Substantial Improvement Threshold (vs. 100% for non-rural tracts) 
    • 30% step-up in basis after 10 years for rural tracts (vs. 10% for non-rural) 
    • Rural tracts use statewide AMI rather than MSA AMI for eligibility purposes 
  • New Reporting Standards:
    • The OBBBA established new annual reporting requirements for Qualified Opportunity Funds, including data on property type, residential units, total asset value, employment, and specific census tracts where investments are made. 

Please visit HUD’s summary comparison to learn more about the changes.  

Massachusetts 2026 Designation Process and Timeline

The Healey-Driscoll Administration is preparing for the 2026 Opportunity Zone designation process. The Governor will nominate a new map of eligible census tracts for U.S. Treasury review and approval later this year. 

You may access a map of the eligible tracts in Massachusetts.  

This map also includes the 2018 designations, as explained by the map layers.

Governors may begin submitting Opportunity Zone nominations to the U.S. Treasury on July 1, 2026. The nomination window will be open for a period of 90 days (i.e. through end of September). The Administration is targeting an early September submission to allow time for a strong process. The designations are the Governor’s responsibility under the program. 

Subject to Treasury approval, the new map will take effect on January 1, 2027. These designations will be in effect for a period of 10 years. 

For next steps:  

  • The Healey-Driscoll Administration will be engaging with municipalities that have eligible census tracts to identify the strongest candidates for designation.  
  • Investors, developers, community organizations, and members of the public are welcome to share input on how Massachusetts should approach OZ designation by completing this Community Feedback Form.

Developers and investors with interest in a specific community are also encouraged to engage directly with municipal leadership. 

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Massachusetts Resources 

Federal Resources 

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