Opportunity Zones 2.0: Background and Key Changes

The Tax Cuts and Jobs Act of 2017 (TCJA) established the Opportunity Zone program (OZ 1.0) to spur investment in certain economically distressed communities by providing certain benefits for properly structured investments in Opportunity Zones, including the temporary deferral of capital gains, basis increases tied to holding periods, and the potential exclusion of post-investment appreciation after a sufficient holding period.

What is Opportunity Zone 2.0?

The One Big Beautiful Bill Act (OBBBA) of 2025 made the Opportunity Zone program permanent, while also revising eligibility standards for census tracts, modifying reporting requirements, and establishing a new round of Opportunity Zone designations beginning in 2027.

Key Eligibility Updates Under OZ 2.0

The OBBBA tightened the criteria necessary for a census tract to be a “Low Income Community,” or an area eligible for OZ designation. To qualify, a census tract must have:

1. a median family income (MFI) that does not exceed 70% of its geographic area’s MFI or 
2. a poverty rate of at least 20%, with an MFI that does not exceed 125% of its geographic area’s MFI.

In April 2026, the U.S. Department of the Treasury announced that 25,332 census tracts nationwide are eligible for this designation. State governors may nominate up to 25% of their state’s eligible census tracts for OZ 2.0 designation and are currently evaluating which eligible tracts to select.

Key Program Timeline

• January 1, 2027 – The OZ 2.0 designations will become effective
• December 31, 2036 – OZ 2.0 designations expire
• December 31, 2028 – OZ 1.0 designations expire
• 2027 – 2028 –  Two-year overlap period

Investors and developers should contact an Ice Miller attorney with respect to structuring strategies and Opportunity Zone compliance with respect to this period.

Indiana’s Opportunity Zone 2.0 Selection Process

The U.S. Department of the Treasury lists 501 eligible census tracts in Indiana. Indiana may nominate up to 126 of these tracts for OZ 2.0 designation, compared to the 156 tracts designated under OZ 1.0.

Governor Mike Braun has delegated the selection process to the Indiana Office of Commerce, working through:

• Indiana Economic Development Corporation (IEDC)
• Office of Entrepreneurship and Innovation
• Indiana Housing and Community Development Authority (IHCDA) 
• Office of Community and Rural Affairs (OCRA)   

State officials are currently seeking nominations from private stakeholders and prioritizing tracts with strong economic development potential, project readiness, and regional coordination.

How to Submit a Nomination for OZ 2.0 Consideration in Indiana

Stakeholders interested in obtaining an OZ 2.0 designation for a particular census tract should begin coordinating their nomination efforts as soon as possible. The Indiana Housing and Community Development Authority (IHCDA) is accepting nomination recommendations through 5:00 p.m. (EDT) on July 17, 2026, and state officials have indicated that they will prioritize nominations supported by evidence of planning, project readiness, and regional coordination.

Steps to Strengthen an OZ 2.0 Nomination

To strengthen a nomination, stakeholders may wish to:

• Confirm Eligibility – Verify that the census tract is among Indiana’s eligible OZ 2.0 tracts. View the Indiana OZ Eligibility Map.
• Build Local and Regional Support – Coordinate with local governments, economic development organizations, chambers of commerce, and other community stakeholders to build support for the nomination.
• Identify Development Opportunities – Highlight existing or prospective development projects that could attract private investment if the tract receives an OZ 2.0 designation.
• Demonstrate Readiness – Provide economic development plans, infrastructure initiatives, housing projects, or other factors demonstrating the tract’s readiness for investment.
• Submit Recommendations Before July 17 Deadline – Nominations must be submitted through the Indiana Opportunity Zone Nomination Portal before the July 17 deadline. Late or incomplete submissions may not be considered. 

More information can be found at the Opportunity Zone landing pages for the Indiana Economic Development Corporation (IEDC) and the U.S. Department of Housing and Urban Development (HUD).

How Ice Miller Can Help

Ice Miller’s Real Estate, Environmental & Energy Law team is closely monitoring the OZ 2.0 designation process and advising clients, developers, and investors on:

• Strategies for evaluating, supporting, and pursuing Opportunity Zone designations, as well as structuring Opportunity Zone investments as the regulatory landscape continues to evolve. 
• If you have a property, project, or investment strategy that may be affected by OZ 2.0, please contact your Ice Miller attorney to discuss next steps.

Special thanks to summer associate Kyle Carlson for his contributions to this article. Kyle is not yet admitted to practice in any jurisdiction.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.