Federal Opportunity Zones

Opportunity Zones offer investors preferential tax treatment for capital gains invested in low-income communities. The program is designed to encourage long-term investment in economically distressed areas and promote economic growth. These investments provide support to projects focused on a wide array of issues including, downtown revitalization, housing improvements and expansion of industrial parks and innovation districts.

The original Opportunity Zones program began in 2017 and will last until December 31, 2026. A new cycle of initiatives, Opportunity Zones 2.0, is set to begin in 2026, with the official nomination window opening on July 1, 2026. This round will reduce the number of eligible tracts from 74 to an expected 52. While the Governor transmits nominations to the US Treasury, communities are able present themselves for nomination. Kansas Commerce Business Development Staff are available to help communities develop their proposals and the department is ultimately responsible to submitting tracts to the Governor for consideration.

For more information, please visit the Opportunity Zones 2.0 webpage.

The following incentives are offered to investors for putting their capital to work in these qualified opportunity zones.

• Temporary capital gain tax deferral
  • The period of capital gain tax deferral ends on 12/31/26 or an earlier sale
• A step-up in basis
  • Investment held for five years – basis increased by 10% of deferred gain (90% taxed)
  • Investment held for seven years – basis increased by another 5% of deferred gain (85% taxed)
• Forgiveness of additional gains
  • Investment held for 10 years – basis equal to fair market value; forgiveness of gains on appreciation of investment of sale or exchange of Opportunity Fund investment. This exclusion applies only to gains accrued after an investment in an Opportunity Fund.