Guidance on Opportunity Zone Investments in Rural Areas (OBBB)

Guidance on Opportunity Zone Investments in Rural Areas (OBBB)

• Treasury and IRS issued Notice 2025-50 clarifying Opportunity Zone (QOZ) rules for rural areas under the One, Big, Beautiful Bill (OBBB).
• New rural definition: any area not a city/town over 50,000 population and not an adjacent urbanized area to such a city/town; applies across states, DC, and U.S. territories.
• Substantial improvement threshold reduced: for property in QOZs comprised entirely of rural areas, required additions to basis drop from 100% to 50% (effective July 4, 2025).
• Scope: Applies to tangible property in qualifying rural QOZs on/after July 4, 2025 that is being or has been substantially improved.
• Context: Of 8,764 QOZs nationwide, 3,309 are entirely rural. Further guidance is planned on the next round of OBBB-authorized zones (nominations/designations).