Opportunity Zones (OZs) are federally designated tracts meant to spur investment in undercapitalized communities. The program encourages long-term (five-, seven- and 10-year) private investment in housing and businesses in historically underserved, low-income communities, giving investors tax benefits for investing in real estate projects and operating businesses. A revised program is being rolled out, designating new opportunity zones. Communities will apply for OZ designation and will do so again once every ten years.
OZs have shown they spark private investment across an array of low-income communities – more than any previous policy over a such a short period of time.
What’s new with Opportunity Zones 2.0?
The program also will have other permanent changes to the policy’s geographic targeting criteria, incentive structure and reporting requirements. The new program tightens eligibility requirements, reducing the expected qualified OZ tracts by roughly 20%. Washington currently has 139 OZs across 36 counties and that number will narrow to 98 OZs designated across the state. Of that, at least 25% of OZs in the new program must be located in rural communities. Other changes include the following:
- Defines low-income communities as census tracts that have either
- A median family income below 70% of the state (for non-metro areas) or metro (for metro areas) median
- Or a poverty rate of 20% or greater plus a median family income below 125% of the state or metro median
- Eliminates the “contiguous tracts” exception from the first round of the program
- It narrows future OZs to more distressed communities, to direct capital into truly underserved areas
- Enhances the incentive for investment in rural OZs
- Defines a “rural area” as any area with fewer than 50,000 people, excluding tracts adjacent to a city or town with a population of greater than 50,000
- Requires that at least 25% of Washington’s designated OZs must be rural areas
- Provides a 30% step-up benefit for investments in a rural OZ
- Reduces the “substantial improvement” threshold for qualifying projects in rural OZs from 100% to 50%
Washington Opportunity Zones 2.0 interactive map and dashboard
This is a US Census map showing spatial data of the rural and non-rural opportunity zone eligible census tracts in Washington state by county and on tribal lands.
How does this affect Washington communities?
This could be an opportunity to spark private investment into your community.
- At the end of January, the U.S. Census Bureau will issue guidance for designating eligible opportunity zones
- Communities with existing OZs may be eligible to apply for OZ 2.0 and newly identified eligible census tracts will also be eligible to apply
- Informational briefings will be held in February
- Applications will be submitted through Commerce
Commerce recognizes the importance of meaningful engagement with the 29 federally-recognized tribes in Washington throughout the Opportunity Zones 2.0 designation process. Consistent with Governor Ferguson’s Executive Order 25-10, the Centennial Accord, and RCW 43.376, Commerce will hold formal tribal consultation as part of developing our OZ 2.0 designation recommendations. This consultation will be separate from and in addition to general public engagement opportunities.
The enhanced benefits for rural areas under the OZ 2.0 program may present significant opportunities for tribal economic development. Tribal governments interested in early engagement on the OZ designation process may contact the Office of Tribal Relations and/or the Community Engagement and Outreach team. There are several Tribal engagement sessions planned. These include:
Program criteria/application review and tribal input session
- Tribal specific: Monday, February 23, 2026, 11:00 a.m. to noon. No registration required and the meeting will not be recorded. Attend the February 23 informational webinar.
Opportunity Zones application question/answer sessions
- Tribal specific: Tuesday, March 10, 2026, 9:00 to 10:00 a.m. No registration required and the meeting will not be recorded. Attend the March 10 informational webinar.
- Thursday, April 2, 2026, 11:00 a.m. to noon. Please note: This is a general Q&A session. Registration is required, and the meeting will be recorded. Register for April 2 informational webinar.
The exact timing of Washington’s OZ selection process depends on the U.S. Treasury’s release of the official list of eligible low-income tracts. Below you will find a tentative timeline for Washington state’s activities related to the selection process:
- January-February 2026: Commerce will attend community meetings and host educational webinars to inform communities to encourage local feedback on zone designation.
- February 2026: When the U.S. Treasury releases the official list of eligible low-income tracts, Commerce will provide map of the eligible tracts and other relevant criteria, as well as a method for the public to submit their feedback on zone designation.
- March 10, 2026: Request for application period opens. This is when Commerce accepts Opportunity Zone (OZ) redesignation applications.
- April 10, 2026: Application portal closes.
- May-June 2026: Finalize Commerce recommendations to Governor Bob Ferguson.
- July 1, 2026: Washington nominations for new OZs due to U.S. Treasury.
- January 1, 2027: New OZs made official.
Upcoming engagement opportunities
To help with educating communities and current OZ partners, Commerce is hosting a multi-month process to support Governor Ferguson in nominating up to 25% of Washington’s eligible low-income census tracts to be opportunity zones. We are working with local governments, economic development entities (associate development organizations/ADOs), and other community leaders and interested parties to ensure the State’s nominations match local priorities.
Members of the Commerce Opportunity Zone program are available to attend your community meeting and provide updates as well as answer your questions. Email us at Community.Engagement@Commerce.wa.gov for more information and request our participation in your upcoming meeting.
Informational webinar series offered by Commerce, providing an overview of the Washington Opportunity Zone 2.0 (OZ 2.0) selection process, as well as a review and input session.
General criteria/application review and input sessions
- Monday, February 23, 9:00 – 10:00 a.m. Register for February 23, 9:00 a.m. webinar
- Tribal specific: Monday, February 23, 2026, 11:00 a.m. to 12:00 p.m. No registration required and the meeting will not be recorded. Attend the February 23, 11:00 a.m. webinar
- Monday, February 23, 12:30 – 1:30 p.m. Register for the February 23, 12:30 p.m. webinar
- Tuesday, February 24, 10:00 – 11:00 a.m. Register for February 24 webinar
Opportunity Zones application question/answer sessions
- Tribal specific: Tuesday, March 10, 2026, 9:00 to 10:00 a.m. No registration required and the meeting will not be recorded. Attend the March 10, 9:00 a.m. webinar
- Tuesday, March 10, 2026, 3:00 to 4:00 p.m. Register for March 10, 3:00 p.m. webinar
- Thursday, March 19, 2026, 3:00 to 4:00 p.m. Register for the March 19 webinar
- Thursday, April 2, 2026, 11:00 a.m. to 12:00 p.m. Register for the April 2 webinar
Resources
We welcome your questions about the Opportunity Zone program. As we work through your questions and provide answers, we will develop a “Frequently Asked Questions” document for easy reference. We encourage you to email us at Community.Engagement@commerce.wa.gov.
Learn more about the changes and impacts of H.R. 1 from the Economic Innovation Group’s in-depth review by reading Opportunity Zones 2.0: Where Things Stand After the One Big Beautiful Bill Act (on EIG.org).
Opportunity zones (OZs) were established with the 2017 Tax Cuts and Jobs Act (TCJA) and are a federal tax incentive program providing capital gains tax benefits to investors in designated census tracts. Investors defer/reduce capital gains taxes by investing in Qualified Opportunity Funds (QOFs). Washington currently has 139 designated OZs across 36 counties, and with the new program that will narrow to 98 OZs designated across the state. Of those, at least 25% of OZs in the new program must be located in rural communities.
Federal bill H.R. 1 was signed into Public Law 119-21 in July 2025, making OZs permanent, with designation cycles now set in place every ten years. Also known as the One Big Beautiful Bill Act (OBBBA) and the “2025 Budget Reconciliation Act,” Governors must designate OZs to U.S. Treasury in a 90-day window that opens July 1, 2026. Commerce is leading a project to develop recommendations for Governor Ferguson by June 30, 2026.
It’s estimated that investments across this first round of designations are a staggering $90-100 billion across 5,600 low-income neighborhoods in the U.S. The original legislation was designed for the program to sunset in December 2028. The new program launches in January of 2027. The programs will overlap for two years, from January 2027 to December 2028.
Commerce continues to be available to answer questions and provide information to support Washington communities, project sponsors and investors to help take best advantage of this program, now and in the future.