Opportunity Zone Legislation Updates | Insights and Resources

At Urban Catalyst, we’re keeping a close eye on the evolving landscape around Opportunity Zone legislation, particularly the potential extension of the program currently set to sunset at the end of 2026. As one of the most impactful federal initiatives aimed at driving long-term investment into underserved communities, any updates to this program could have significant implications for investors, developers, and the broader economic ecosystem.

To help our network stay informed and ahead of the curve, we’ve curated a selection of insightful articles, blogs and podcasts from respected industry experts. These resources explore the proposed legislative changes, the likelihood of an extension, and what the Opportunity Zone program might look like moving forward.

Opportunity Zone Legislation Update (June 2025):

SENATE UNVEILS ITS DRAFT VERSION OF THE 2025 TAX BILL

Download the Bill here

On June 16, 2025, the Senate released its draft of the 2025 tax bill, incorporating significant proposed changes to the Opportunity Zone (OZ) program (pgs. 199-229) initially introduced by the House.

Key Highlights:

OZ permanence, with decennial OZ cycles. New zones every 10 years, each with a fixed 10-year life and gain recognition date. The first redetermination date is set for July 1, 2026, with subsequent reviews every 10 years.
Revised basis step-up schedule. An annual basis step-up accrual model (1% + 1% + 1% + 2% + 2% + 3%) replaces the old 5- and 7-year cliffs.
Rural OZ boost. A 3× basis multiplier and relaxed improvement test for rural-focused QOFs. Max basis step-up of 30% for Rural QOF investors.
Tighter eligibility rules for zone designation. New low-income community definition (≤ 70% MFI) and elimination of the “contiguous tract” rule could sharply reduce qualifying areas.

Opportunity Zone Legislation Update (May 2025):

THE HOUSE PASSES THE "ONE BIG BEAUTIFUL BILL"

On May 22, 2025, the House passed the Trump Tax Legislation, which includes significant updates to the Opportunity Zone (OZ) program as part of the broader 2025 tax bill.

Key Highlights:

Current OZ designations end December 31, 2026.
A new round of OZs will launch in 2027, with at least 33% located in rural areas.
Post-2026 investments may qualify for:
- 10% basis step-up after 5 years
- 30% step-up for rural-focused OZ funds
The 10-year federal tax-free exit on any fund profits remains intact.
New reporting requirements aim to bring greater transparency to OZ investments.