Governors redraw the Opportunity Zone map next year, and the federal auditor puts it plainly: about a third of the current zones would not qualify to stay on it
The map gets redrawn next year, and roughly a third of the places on the current one would not make the new cut.
That is the estimate the Government Accountability Office published on Monday in a report this desk should have had two days ago. Approximately 31 percent of existing Opportunity Zones will not be eligible for redesignation, GAO writes, once the criteria Congress rewrote in 2025 are applied against Census survey estimates for 2020 to 2024. The pool those zones are picked from shrinks as well. There will be about a quarter fewer eligible tracts, on GAO's analysis of the list Treasury has published.
Governors nominate in 2026. Treasury designates with effect from 1 January 2027, and after that the exercise repeats every ten years.
What changed in the test
Four routes into eligibility existed under the 2017 law. Two of them are gone.
A tract could qualify on median family income at 80 percent of the greater of the statewide or metropolitan figure, on a poverty rate of at least 20 percent with no income condition attached, on New Markets Tax Credit eligibility under section 45D(e), or on being contiguous with a designated low-income community. Under the 2025 law, Public Law 119-21, the income threshold falls to 70 percent, the poverty route now also requires median family income no higher than 125 percent of the statewide or metropolitan figure, and the New Markets and contiguity routes are marked not applicable.
The effect shows up in GAO's own comparison table, and it points in the direction the drafters were aiming. Existing zones are 12 percent of all census tracts, with a household median income of $52,885 against $85,726 for all tracts. The tracts eligible for 2027 designation are 30 percent of all tracts, with a household median income of $51,246 and an average poverty rate of 24 percent against 22 percent in the current zones. Poorer, in other words, and there are more of them to choose from than will be chosen: GAO puts the share of eligible tracts that will actually be designated at about 25 percent.
What the first round did is still mostly unknown
Nearly 9,000 tracts were designated under the original incentive, and they are home to roughly 10 percent of the country's population. Qualified Opportunity Funds held more than $108 billion in total assets at the end of 2024, on IRS data.
What that money bought is the part nobody can answer.
GAO surveyed all 50 states, Washington, D.C., and the five territories, and got 54 responses out of 56. States were mostly unsure what the investment did to outcomes in their own jurisdictions. About 20 percent cited increased job creation and housing. Fund representatives and state officials told GAO the incentive has primarily funded real estate development, in urban tracts with existing infrastructure and community support.
The reason for the fog is structural. There is no public listing of Opportunity Zone investments, and under the original law there was no requirement that funds report their investments publicly, no requirement on Treasury to report on fund investments, and no requirement that a fund tell the state and local officials who nominated a tract whether the development going up in it is using Opportunity Zone capital at all.
That changes now. The 2025 law makes funds file annually on the value of their assets, the value of the investment, housing data where it applies, and full-time employment data. Treasury must report annually on the amount and characteristics of the investments, and from the sixth year on the effect of designation itself, measured against indicators including job creation and poverty reduction. GAO notes, without adornment, that Congress implemented its own earlier recommendations in doing so.
The rural premium
One number in the new design is larger than anything in the old one. Money going into a Qualified Rural Opportunity Fund on or after 1 January 2027 may be eligible for a 30 percent step-up in basis after five years, against 10 percent after five years for other funds.
Six of the 16 funds GAO interviewed said they were interested in rural investment on that basis. Whether the premium moves capital into places that have never seen any is the question the new reporting was written to answer, and the schedule Congress set answers it slowly. Treasury reports on the amount and characteristics of the investments from the start. It reports on the effect of designation only from the sixth year.
