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 low-income communities.
In 2025, federal legislation made the program permanent and established a new round of designations every 10 years, with the next round taking effect January 1, 2027. Under updated federal eligibility criteria, the Commonwealth could nominate up to 104 of 414 eligible census tracts. On October 2, 2026, the Healey-Driscoll Administration nominated 104 census tracts across 46 municipalities. The U.S. Department of the Treasury is expected to certify the designations over the next several weeks.
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 the Treasury. Investors who direct capital gains into a Qualified Opportunity Fund (QOF) that invests in a designated zone may receive 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 tax treatment under the updated program.
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, originally set to sunset, is now permanent. New designation rounds will occur every 10 years, beginning January 1, 2027.
- New eligibility criteria: The OBBBA tightened the income thresholds for eligibility. To be eligible for nomination in 2026, a census tract must have:
- A median family income at or below 70% (previously 80%) of the area median family income, or
- A poverty rate of at least 20% and a median family income at or below 125% of the area median family income.
Contiguous tracts, which were previously allowed, are no longer eligible.
As a result of these stricter criteria, Massachusetts could nominate 104 census tracts in 2026 from a pool of 414 eligible census tracts, down from 138 designated in 2018.
Other changes include:
- Enhanced benefits for rural areas: Qualified Rural Opportunity Funds investing in rural Opportunity Zones benefit from:
- A 50% substantial improvement threshold (vs. 100% elsewhere)
- A 30% step-up in basis after five years (vs. 10% for other investments)
- New reporting standards: Beginning with tax years after December 31, 2026, Qualified Opportunity Funds must report annually on property type, residential units, total asset value, employment, and the 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 worked with municipalities across the Commonwealth to identify the census tracts best positioned to use Opportunity Zone investment to support new housing, businesses, and innovation.
Informed by engagement with municipalities and other stakeholders, the Executive Office of Economic Development (EOED) and the Executive Office of Housing and Livable Communities (EOHLC) evaluated proposed tracts based on project readiness, local support, and alignment with Administration priorities such as housing production, transit-oriented development, downtown revitalization, and job creation. On October 2, 2026, the Administration nominated 104 census tracts across 46 municipalities to the U.S. Department of the Treasury, which is expected to certify designations later this fall.
Explore the OZ 2.0 Selections for Massachusetts
The 104 zones will catalyze investment in 46 municipalities across Massachusetts. Explore which neighborhoods were designated in your community and region.
Searchable table of 2026 Opportunity Zone nominations
The Administration prioritized tracts that are positioned to translate an Opportunity Zone designation into new investment, including places with projects in the pipeline, demonstrated developer interest, supportive local zoning and other enabling conditions, and opportunities to leverage existing or planned public investment.
The slate builds on the state's strengths and priorities, including innovation districts in Amherst, Boston, Cambridge, Lowell, and Worcester that leverage the state's world-class universities and research institutions to grow and retain early-stage companies, and working waterfronts from New Bedford to Gloucester that are positioned for growth in maritime industries, ocean technology, and marine science. The nominations will also drive the production and preservation of a diverse housing stock by unlocking public housing revitalization in Boston; helping more than a dozen MBTA Communities districts, from Fall River to Framingham to Haverhill, realize their potential; and supporting mixed-use smart growth in the smaller hubs that anchor the Commonwealth's rural regions in Central and Western Massachusetts, including Athol, Gardner, Greenfield, Montague, North Adams, and Southbridge.
Next Steps
Once certified by the U.S. Department of the Treasury, these designations will take effect on January 1, 2027, and remain in place through December 31, 2036. Please check back here for updates once certifications are official.