Kitchen Table Economics

What are Opportunity Zones?

The Tax Cuts and Jobs Act—passed in 2017—included a number of measures that provided financial relief to millions of Americans and small businesses, as well as administered an injection of adrenalin into the economy.

These measures included increasing the child tax credit, doubling the standard deduction, lowering individual tax rates across the board and making other changes that specifically apply to small businesses.

But one commonly overlooked change in the tax law was the expansion of “Opportunity Zones”—which essentially gives individuals and businesses preferential tax treatment for investing in communities going through economic distress.

More specifically, after investing in an Opportunity Zone for over a decade, investors gain the benefit of paying zero capital gains tax on that venture. Reportedly, taking advantage of the program can lead to a 30-40% increase in annualized business returns.

The U.S. economy is booming, but not all areas are experiencing the same level of economic gain. Not only do Opportunity Zones help even-out the playing field by directing financial investment to communities that need it most, but they also provide lucrative opportunities for many entrepreneurs. It’s a win-win policy.

To find an Opportunity Zone near you, check out these resources from the Treasury Department.