Opportunity Zones are a federal tool designed to drive private investment into communities that need it most. These are specifically designated census tracts, which are geographic regions defined by the U.S. Census Bureau, where investors can receive significant tax benefits for putting private dollars to projects that create jobs, housing and business growth.
For local leaders, Opportunity Zones offer a chance to channel market-driven funding into long-term, place-based development that fits local needs.
How Opportunity Zones became law
The Opportunity Zone program became law as part of the Tax Cuts and Jobs Act of 2017. The idea, though, originated through a bipartisan proposal championed by Sen. Tim Scott (R-South Carolina) and Sen. Cory Booker (D-New Jersey).
After the passage of the 2017 tax law, governors in every state were given the power to nominate certain low-income census tracts as Opportunity Zones. The U.S. Department of the Treasury reviewed and approved those nominations, ultimately designating more than 8,700 zones across the country. For local governments, that designation provided communities with a federally recognized framework to attract long-term investment.
How the program works
At its core, the Opportunity Zone program is built on a series of tax incentives. Investors who sell an asset — for example, stock or real estate — and reinvest those gains into a Qualified Opportunity Fund can receive three key benefits:
- Deferral – Investors can postpone paying capital gains taxes on their original investment for up to nine years.
- Reduction – If investors keep the investment for at least five years, the taxable portion of that original gain is reduced.
- Exclusion – If investors hold the new investment for 10 years or longer, any gains earned inside the Opportunity Zone are completely tax-free.
Recent changes to Opportunity Zone legislation
The passage of H.R.1, also known as the One Big Beautiful Bill Act, in 2025 brought substantive changes to the Opportunity Zone Program. Among the most significant shifts is that the program is now a permanent part of the tax code. The initial Opportunity Zones had previously been set to expire in 2026.
The law also established a new decennial designation system. Every 10 years, beginning in 2026, states may nominate new census tracts for Opportunity Zone status. Each qualifying tract, when certified by the U.S. Secretary of the Treasury, will carry that status for a 10-year period.
Stronger incentives have also been placed on rural investment, offering enhanced tax benefits. In the standard Opportunity Zone program, after five years, investors receive a 10% reduction in the amount of gain they have to pay taxes on. In a Rural Opportunity Zone, that reduction becomes 30%, providing three times the normal tax break.
The substantial improvement requirement, which is 100% in Opportunity Zones, is now reduced to 50% in rural zones, making renovation, rehabilitation and adaptive reuse projects in rural areas more financially feasible.
Opportunity Zones in South Carolina
South Carolina has more than 135 designated Opportunity Zones, stretching from rural counties to urban neighborhoods. The SC Opportunity Zones website gives the location of all of the zones in the state, along with further resources on how to take advantage of the program and details about successful projects.
Leaders across the state have leveraged Opportunity Zones to attract industrial development, expand workforce housing and revitalize downtown districts. While federal legislation created the initial framework, it’s local leadership that determines whether these investments become catalysts for lasting, equitable growth.