Qualified Opportunity Zones Under The One Big Beautiful Bill

On July 4, 2025, President Trump signed the One Big Beautiful Bill into law. The legislation makes far-reaching changes to the federal tax code and other parts of the government. The bill cuts certain taxes, changes funding for a number of federal programs, raises the debt ceiling by $5 trillion, and extends many of the provisions originally introduced in the 2017 Tax Cuts and Jobs Act (TCJA).

Qualified Opportunity Zones

The Tax Cuts and Jobs Act of 2017 first introduced Qualified Opportunity Zones. These zones created a flurry of activity forming eligible investment vehicles for taxpayers to invest in the zones and receive tax benefits. However, the prior law required remaining gains to be recognized on December 31, 2026.

The One Big Beautiful Bill reinstates many of the initial benefits of the Qualified Opportunity Zones and makes them permanent. Investors can defer capital gains by investing cash equal to the capital gain in a qualified opportunity zone fund within 180 of the recognition of the capital gain. When such an investment is made, the taxpayer defers recognition of their capital gain for seven years or until a gain inclusion event occurs. Furthermore, a portion of the gain is permanently reduced based on how long the investment in the qualified opportunity fund was held. If the fund is held for six years, 6% of the deferred gain is permanently eliminated.

The One Big Beautiful Bill also creates a new category of Qualified Opportunity Zones with increased benefits. The amount of permanent gain reduction is tripled (up to 18%) for investments in qualified rural opportunity funds.

The bill tightens the requirements for areas to qualify as qualified opportunity zones. It also creates rolling ten-year periods for redesignating zones.

Investing in qualified opportunity funds provides taxpayers with opportunities for substantial tax savings. However, investors must always make sure that the investment is a good investment. Receiving the tax benefits may not offset the losses and lost opportunities from making a bad investment.

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With major changes to tax rules, both individuals and business owners are encouraged to revisit tax strategies. A proactive approach will be essential to capture benefits, manage risk, and stay compliant as the new provisions take effect. If you have questions about the information outlined above, or need assistance with another tax issue, WhippleWood CPAs can help. For additional information call 303-989-7600 or click here to contact us. We look forward to speaking with you soon.