On January 29, 2026, the U.S. Census Bureau released the American Community Survey (ACS) 5-Year Estimates for 2020–2024, a dataset that will determine eligibility for the upcoming round of Opportunity Zone (OZ) designations. This information enables state and local officials to identify qualifying low-income census tracts and begin the formal selection process for zones that will take effect on January 1, 2027. n nThe updated criteria under the One Big Beautiful Bill Act have made qualification more stringent. To qualify based on income, a tract’s median family income (MFI) must now be below 70 percent of the regional benchmark—down from the previous 80 percent threshold. This tightening means fewer areas will meet the standard, increasing the strategic importance of each nomination. n nBased on preliminary analysis by the Economic Innovation Group (EIG), approximately 6,544 census tracts across all states and territories are expected to qualify, a 25 percent reduction from the 8,764 designated in 2018. Excluding Puerto Rico’s expired disaster-related provisions, the 50 states and D.C. would see a 20 percent decline—from 7,826 to 6,293 eligible tracts. n nStates with larger populations and higher levels of economic distress are projected to have the most nominations. California and Texas are expected to lead with over 600 eligible tracts each, followed by New York (426), Florida (340), and Ohio (258). Meanwhile, three states—Louisiana, Mississippi, and New Mexico—are anticipated to see an increase in eligible zones compared to 2018, reflecting worsening economic conditions. n nSeven low-population states—Alaska, Delaware, Hawaii, Montana, North Dakota, South Dakota, and Rhode Island—along with the District of Columbia, are expected to maintain their OZ counts due to a statutory minimum of 25 tracts. However, Vermont and Wyoming may fall short of this floor under the new rules, requiring intervention from the U.S. Treasury to resolve the discrepancy. n nMinnesota faces the largest proportional drop, with a projected 43 percent reduction in eligible tracts, largely due to rural income disparities relative to state averages. Overall, 40 states are preparing to nominate fewer zones than before. n nEIG has integrated the new data into its OZs 2.0 Eligibility Mapping tool and published a downloadable list of qualifying tracts to assist policymakers. The organization continues to support state and local leaders with resources to guide equitable and strategic zone selection. n— news from Economic Innovation Group
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By Kenan Fikri and Jiaxin He n nOn January 29, 2026, the U.S. Census Bureau released American Community Survey (ACS) 5-Year Estimates for 2020–2024, which federal officials have signaled will determine census tract eligibility for the next round of Opportunity Zones (OZ) designations. n nWith this data in hand, state and local officials can see which of their census tracts meet the low-income community criteria and are therefore eligible for OZ status. Officials can also now calculate how many total tracts they will be able to nominate. The knowledge will allow them to begin the zone selection process. in earnest. n nEIG has uploaded the new data into our OZs 2.0 Eligibility Mapping tool here. n nFewer Zones, Higher Stakes n nThe One Big Beautiful Bill Act made Opportunity Zones a permanent incentive in the U.S. tax code and calls on governors to select a new round of OZ census tracts to go into effect on January 1, 2027, and last a decade. n nAt the same time, the bill tightened the eligibility requirements, limiting the median family income (MFI) that any census tract could register if it qualified on the poverty rate, and narrowing the criteria for any tract qualifying on income. Previously, any census tract could be eligible if it had an MFI less than 80 percent of the relevant area benchmark (the metropolitan area for metro tracts, or the state for rural non-metro tracts). Now, tracts must register an MFI less than 70 percent of the benchmark. n nThose tighter criteria mean that most states will have fewer OZ census tracts going forward, raising the stakes for each nomination. n nProvisionally and pending any additional refined guidance from the Treasury in the coming weeks, we expect 6,544 census tracts across all states and territories to be designated as OZs this cycle, down 25 percent from the 8,764 tracts designated in 2018. Part of that steep reduction comes from the sunsetting of special disaster provisions for Puerto Rico. Across the 50 states and the District of Columbia, the total number of OZ tracts is expected to fall by 20 percent, from 7,826 to 6,293. n nThe number of likely designations varies according to a state’s population and economic distress. The most OZs will be found in states with lots of low-income communities — a function of both population size and well-being. California and Texas will lead, with over 600 OZ nominations to make, followed by New York (426), Florida (340), and Ohio (258). n nBy statute, states are supposed to be guaranteed at least 25 OZ census tracts, but lawmakers did not envision that two states — Vermont and Wyoming — would have fewer than 25 census tracts that meet the new, stricter requirements. The U.S. Treasury will have to weigh in with final determinations on how or whether these two states might be able to make up the shortfall. n nThree states — Louisiana, Mississippi, and New Mexico — can expect to nominate more OZs in 2026 than they did in 2018. This reflects the growing economic distress experienced by communities in these states. n nSeven small population states — Alaska, Delaware, Hawaii, Montana, North Dakota, South Dakota, and Rhode Island — plus the District of Columbia are subject to the 25-tract minimum and can expect to see no change in their OZ count. n nThat leaves 40 states preparing to nominate fewer OZ census tracts for the decade ahead than they have currently. Some of these states were hit disproportionately hard by the tightened MFI criteria. Take Minnesota, for example, where poverty is not especially deep but incomes can still lag well behind the state benchmark in rural areas. Its OZ count will fall by 43 percent, more than any other state’s. n nEIG is committed to providing state and local leaders with the insights and information they need to make informed decisions during their zone selection process. To stay up to date, sign up for our OZ email newsletter and bookmark this webpage. n nIn addition to EIG’s interactive map, a full list of census tracts that meet the eligibility criteria based on 2020-2024 ACS data is available for download here. n nNotes