Qualified Opportunity Zones

A Qualified Opportunity Zone (QOZ) is a federally designated, low-income census tract where private investment is encouraged through tax incentives to support economic development and community revitalization. Investors who reinvest eligible capital gains into Qualified Opportunity Funds can receive tax benefits, helping to drive long term investment. Localities may qualify to be designated as a QOZ if they are determined to be eligible by the U.S. Treasury, nominated by the Governor and that nomination is certified by the Secretary of the U.S. Treasury.

Qualified Opportunity Zones are a powerful tool for driving long-term private investment in communities across Pennsylvania. The Commonwealth is preparing for the QOZ 2.0 designation cycle.

Existing Qualified Opportunity Zones will continue to support investment through December 31, 2028 while Pennsylvania works with local governments and partners to identify the next generation of high-impact investment areas. For any QOZ questions, reach out to DCED at oppzones@pa.gov.

What’s Changing with Qualified Opportunity Zones

The Qualified Opportunity Zone program is entering a new phase that builds on the success of the original 2018 designations.

Key updates include:

• The Qualified Opportunity Zone incentive was made permanent as a federal economic development tool.
• States will have the ability to designate new zones on a recurring 10-year basis.
• A new designation cycle begins in 2026, with updated eligibility criteria.
• Additional rural enhancements including new class of Qualified Opportunity Funds, Qualified Rural Qualified Opportunity Funds (QROFs) offering triple the standard step-up in basis benefit and a lower substantial improvement threshold.

While originally designated Qualified Opportunity Zones will sunset in December 2028, investors may continue to hold qualifying investments beyond that date and remain eligible for long term program benefits, including the potential elimination of capital gains tax on investments held for at least 10 years, subject to federal requirements.   Under the next designation cycle, some tracts may be eligible for redesignation; however, prior designation does not automatically carry forward.

Eligible Qualified Opportunity Zones in Pennsylvania

The U.S. Treasury released the official list of low-income population census tracts eligible for designation as a QOZ, and associated guidance in early April 2026. Treasury identified 866 census tracts in Pennsylvania as eligible for consideration in this QOZ cycle. Federal rules allow only 25 percent of eligible tracts to be designated, resulting in 217 Pennsylvania census tracts that will receive QOZ status.

• IRS Guidance: Provides a framework for states to nominate census tracts for designation as Qualified Opportunity Zones (QOZs), effective January 1, 2027.

2026 PA Eligible Census Tracts

Upcoming Engagement Opportunities

1. Webinar Recording (May 19, 2026): Opportunity Zones in Pennsylvania: What You Need To Know (Webinar PowerPoint Presentation)
2. Now open: Submit your input on zone designation by early June 2026.

Submit Your Census Tracts

We are now accepting submissions for census tracts to be considered for Opportunity Zone designation through early June 2026. To be considered, all submissions must be completed in full and should be prepared to explain why the tract should be designated, the level of investment and economic activity in the area, and any existing or planned projects that could benefit from Opportunity Zone status.

Submit Census Tracts

Current Qualified Opportunity Zones in Pennsylvania

300 tracts are currently designated as Qualified Opportunity Zones across urban, suburban, and rural communities.

These zones remain active and continue to provide opportunities for investment through December 2028.

• List of tracts by county
• Interactive map of the designated tracts

PA’s Approach to Qualified Opportunity Zones 2.0

Pennsylvania will take a strategic, data-driven approach to the next designation cycle aligning Qualified Opportunity Zones with broader economic development priorities and ensuring that designated areas are positioned for investment.

The Commonwealth will prioritize:

• Housing and mixed-use development, including alignment with Pennsylvania’s Housing Action Plan
• Site-ready industrial and commercial locations that support business growth and job creation
• Downtowns and main street corridors that anchor local economies
• Rural and small community revitalization opportunities
• Innovation and growth sectors, including life sciences, advanced manufacturing, and technology

Qualified Opportunity Zones 2.0 Anticipated timeline:

• Spring 2026: Stakeholder engagement and outreach
• Summer 2026: Draft map development and analysis
• Early Fall 2026: State submission of recommended designations
• January 2027: New Qualified Opportunity Zones take effect

Please note: All dates are anticipated and subject to change.

Questions?

Inquiries about Qualified Opportunity Zones may be directed to the PA Department of Community & Economic Development at the following email address oppzones@pa.gov.