Opportunity Zones 2.0 Arrive: What the New Designations Mean for Virginia and the East Coast

Nov 6, 2026 · Jessica Marschall

By Jessica Irving Marschall, CPA, ISA AM President, MAS LLC November 6, 2026

Introduction

The map for Opportunity Zones 2.0 is finally drawn. On November 5, 2026, the U.S. Department of the Treasury and the Internal Revenue Service announced the new Qualified Opportunity Zone designations for all 50 states, the territories, and the District of Columbia (IR-2026-132). A total of 6,576 census tracts will carry the designation beginning January 1, 2027, and each will keep it for ten years.

Over the past year, I wrote three articles on this program: a July 2025 overview of Opportunity Zone incentives and Qualified Opportunity Funds, an October 2025 complete guide to OZ 2.0, and a November 2025 deep dive on the new era of community investment. In that last piece, I predicted the stricter 2.0 criteria could bring the national count down from roughly 9,000 tracts to about 6,000. The final number landed at 6,576. This update takes what we now know, with a particular focus on Virginia and the East Coast, and translates it into planning steps for investors, developers, and the communities that will host this capital.

What is exciting to me, as a Fredericksburg-based CPA, is that this round was built from the ground up with local input. Virginia localities ranked their own eligible tracts and documented zoning, feasibility, and investor interest before a single nomination went to Richmond. That is a meaningful departure from 2018, and it gives our region a real chance to do this right.

What Treasury and the IRS Announced

Every tract that a governor (or the Mayor of the District of Columbia) nominated was accepted. The numbers tell the story of how much narrower OZ 2.0 is than the original program.

Source: IRS, IR-2026-132.

A few points deserve emphasis:

• Rural share. Roughly 39 percent of the new zones (2,594 of 6,576) are rural, and investments in those tracts may qualify for the enhanced rural incentives, but only when the investment itself satisfies the Qualified Rural Opportunity Fund (QROF) requirements. Under OZ 1.0, rural tracts were about one quarter of zones and drew less than 10 percent of investment.
• Smaller footprint. The original program designated 8,764 tracts. The new map is about 25 percent smaller, consistent with the tighter 70 percent of area median income test and the elimination of the contiguous tract rule.
• Ten-year life. The new designations take effect January 1, 2027, and remain in place for ten years, with the next redesignation cycle to follow (Accounting Today).
• Track record. In its November 5 announcement, Treasury credited the program with more than $110 billion in private-sector investment since 2017.
• Where to look. The official list and map are posted by the CDFI Fund, and tract-level poverty rates and median family incomes are on Treasury’s data page.

The criticism has not gone away. Accounting Today notes that the original program was faulted for funding projects in neighborhoods that were already gentrifying. In my view, the 2.0 design (stricter income targeting, no contiguous tracts, and new reporting) is the direct answer to that criticism, and the reporting piece is where practitioners will feel it most.

A Refresher: How OZ 2.0 Works Under the One Big Beautiful Bill Act

The new map only matters because of the new rules attached to it. For investments made after December 31, 2026, the One Big Beautiful Bill Act (OBBBA, which Treasury now refers to as the Working Families Tax Cuts) provides the following:

Two housekeeping notes for readers of my earlier articles. First, my October 2025 guide used the 80 percent income threshold in one table; the final statute and Treasury’s eligibility list use the tighter 70 percent standard, as I described in November. Second, that guide projected a July 1, 2027 effective date for new zones. The new zones are in fact effective January 1, 2027, and run through December 31, 2036 (Faegre Drinker on Notice 2026-40).

Virginia: 153 New Zones, Half of Them Rural

Governor Abigail Spanberger announced on November 6 that Treasury approved all 153 tracts her administration recommended (CBS19; Governor’s release via Sussex County). That is down from 212 zones under OZ 1.0, a reduction of about 28 percent.

How Virginia chose. In June, the Governor set four investment focus areas: housing development, downtown revitalization, business-ready investment, and regional asset development. Localities then ranked their own eligible tracts and documented development activity, zoning alignment, community support, feasibility, and investor interest. The Department of Housing and Community Development (DHCD) and the Virginia Economic Development Partnership (VEDP) jointly reviewed the submissions, and the Commonwealth filed its nominations in October.

The numbers. Of 611 eligible Virginia tracts, the Commonwealth nominated 153, the maximum allowed under the 25 percent cap. Roughly half (77) are rural, which is well above the national rural share of 39 percent (OpportunityZones.com, Virginia profile). These tracts may support investments eligible for the enhanced rural Opportunity Zone incentives, including the 30 percent five-year basis increase for qualifying investments in Qualified Rural Opportunity Funds and the reduced substantial improvement threshold for qualifying rural property. Eligibility depends on satisfying the applicable statutory requirements, not merely on the property’s location within a rural tract.

Where they are. The new zones reach every region of the Commonwealth: Hampton Roads (Norfolk, Portsmouth, Newport News, Hampton, Chesapeake, Virginia Beach, Suffolk), Greater Richmond (Richmond city, Henrico, Chesterfield, Petersburg, Hopewell), Northern Virginia (Fairfax, Prince William, Alexandria, Arlington, Loudoun, Manassas), Southside (Danville, Martinsville, Pittsylvania, Halifax), and Southwest Virginia (Wise, Lee, Russell, Tazewell, Buchanan, Smyth). In Central Virginia, CBS19 reports five zones in Charlottesville and Albemarle County, plus zones in Buckingham, Fluvanna, Louisa, and Orange counties.

Close to Home: The Fredericksburg Region

For our own clients, here is what a third-party compilation of the new designations shows in and around the Rappahannock region. Each tract below is listed as rural in that compilation. These GEOIDs and classifications are preliminary until reconciled to Treasury’s official designation file, and a rural classification alone does not establish eligibility for enhanced QROF treatment.

Source: OpportunityZones.com tract listing, a third-party compilation not yet reconciled to Treasury’s official designation file. Confirm any specific parcel against the official CDFI Fund list and map or the Commonwealth’s interactive map before relying on it.

A practical caution: the two Fredericksburg city tracts designated in 2018 (51630000200 and 51630000500) do not appear on the new list. Census tract boundaries were redrawn after the 2020 census, so a property that sits in an OZ 1.0 zone today may or may not sit in an OZ 2.0 zone in January. The same compilation shows no newly designated tract in King George County, which should also be confirmed against the official list. Parcel-level verification, using the Census Bureau’s Geocoder and Treasury’s official designation file, is now step one of any local OZ engagement.

The East Coast Snapshot

Across the 17 East Coast and Mid-Atlantic states and the District of Columbia, the zone count falls from 2,842 to 2,308, a reduction of approximately 18.8 percent, which is gentler than the 25 percent national decline. Virginia and Pennsylvania took the steepest cuts in the region, while most of the smallest jurisdictions remained at 25, reflecting the special nomination allowance for jurisdictions with fewer than 100 eligible tracts. That allowance permits up to 25 nominations; it does not guarantee 25 designations, and Vermont, for example, has 24.

Source: OpportunityZones.com, Opportunity Zones by State, compiled from Treasury designations. West Virginia is included as a Mid-Atlantic neighbor.

A few regional observations:

• North Carolina received certification for 204 tracts, drawn from 807 eligible tracts under the 2020 to 2024 American Community Survey data, after a public comment period that generated 340 nominations (NC Department of Commerce; NC Political News). Governor Stein’s administration gave housing creation significant weight in the selection.
• Maryland delegated nominations to its Department of Housing and Community Development, which built an eligibility map layering transit-oriented development sites and Enterprise Zones on top of the eligible tracts (Maryland Association of Counties). That layering approach is a model for incentive stacking.
• The Washington metro area is now a three-jurisdiction OZ market: 25 zones in the District, 114 in Maryland, and Northern Virginia zones in Fairfax, Prince William, Alexandria, Arlington, Loudoun, and Manassas. Sponsors with regional funds should map all three before raising capital.
• New York and Florida remain the largest East Coast OZ markets by count, at 430 and 342 zones respectively.

Timing Is Everything: The Next 60 Days and the 2027 to 2028 Overlap

With fewer than eight weeks left in 2026, the calendar now drives most of the planning decisions.

1. OZ 1.0 investors face a tax bill on December 31, 2026. Any gain deferred into a QOF before 2027 is recognized on December 31, 2026, unless an earlier inclusion event occurs. Deferred gains required to be recognized on December 31, 2026 generally enter the investor’s 2026 taxable income. For calendar-year individual taxpayers, the original 2026 federal income tax return deadline is April 15, 2027. Applicable filing deadlines, estimated tax obligations, and payment requirements depend on the taxpayer’s entity classification and circumstances. Clients should confirm the five-year 10 percent basis increase for investments made by December 31, 2021, and plan liquidity for the payment, because the QOF interest itself is usually not liquid (Forvis Mazars).
2. Evaluate the timing of 2026 gains before making a QOF investment. The transition to Opportunity Zones 2.0 creates an important planning opportunity for taxpayers recognizing eligible capital gains during 2026. Investments made after December 31, 2026 may qualify for the new five-year rolling deferral regime, provided the investment satisfies the applicable statutory requirements, transitional guidance, and 180-day investment period; Notice 2026-40 indicates that gains realized before January 1, 2027 can be eligible on that basis (EisnerAmper). However, taxpayers should not automatically postpone investments until 2027. The correct investment date depends on when the gain is recognized, when the applicable 180-day period begins, whether special pass-through entity rules apply, and whether the investment qualifies under the new regime. Each transaction should be evaluated individually to avoid inadvertently forfeiting an otherwise available tax benefit.
3. Identify the correct start of the 180-day period. For an individual selling directly, the investment period generally begins on the date of the sale. Gains realized on or after July 6, 2026 generally have a 180-day investment window extending into 2027. For partners, S corporation shareholders, and other qualifying pass-through investors, special rules may provide alternative starting dates. The default period for pass-through gains generally begins on the last day of the entity’s taxable year, but the regulations permit an election to start on the date the entity recognized the gain, and an alternative start date tied to the entity’s return due date may also apply. The applicable start date should be settled before any investment decision, because missing the window by a single day eliminates the benefit.
4. Two maps, two years. OZ 1.0 zones remain in effect through December 31, 2028 (December 31, 2027 in Puerto Rico), while OZ 2.0 zones begin January 1, 2027 (EY Tax News; Baker Tilly). Notice 2026-40 previews proposed regulations for this overlap, including working capital safe harbor requirements for assets in OZ 1.0 zones after 2026, but those regulations are not yet final. For new capital, I continue to recommend what I said last November: favor tracts that qualify under the new map, and treat OZ 1.0 only tracts as a higher-risk choice until Treasury finalizes the transition rules.
5. Virginia conformity. Under House Bill 29 (Chapter 7 of the 2026 Acts of Assembly), signed February 20, 2026, Virginia conforms to the Internal Revenue Code as it existed on December 31, 2025, which brings in most of the 2025 federal legislation. Virginia Tax Bulletin 26-1 lists the specific deconformity items (qualified production property expensing, domestic research and experimental expensing, the increased expensing limits for depreciable assets, and a reduced business interest subtraction), and the Opportunity Zone provisions are not among them. Because Virginia has returned to fixed-date conformity (EY Tax News), any later federal amendments or technical corrections to the OZ rules will require General Assembly action. Investors filing in other states should confirm their own state’s conformity.

Action Items

For investors with capital gains

• Confirm whether any existing QOF investment triggers recognition on December 31, 2026, and reserve cash for the April 2027 payment.
• Calendar the 180-day deadline for every 2026 gain, including gains reported on 2026 Schedules K-1.
• Evaluate each 2026 gain individually: an investment made after December 31, 2026 may qualify for the rolling five-year deferral, but only if it also falls within the applicable 180-day period.
• Model a qualifying QROF investment alongside a standard QOF; the 30 percent basis increase, where the QROF requirements are met, can materially change after-tax returns.

For fund sponsors and developers

• Verify every target parcel against the official CDFI Fund map, not the 2018 list.
• Build systems now to comply with the expanded Opportunity Zone information-reporting requirements, taking into account the applicable effective dates, taxpayer-specific obligations, and forthcoming final regulations.
• In Virginia, align projects with the Commonwealth’s four focus areas; those priorities shaped which tracts were selected and will likely shape local support.
• Plan for the 2027 to 2028 overlap and document any reliance on OZ 1.0 tracts.

For localities, nonprofits, and community partners

• Publish a short prospectus for each designated tract describing zoning, infrastructure, and shovel-ready sites.
• Pair OZ projects with workforce partners, community colleges, and training programs, which I continue to believe is the missing ingredient from OZ 1.0.
• Stack incentives deliberately: Enterprise Zones, historic tax credits, and housing programs can complement OZ capital.

Looking Ahead

Opportunity Zones 2.0 is no longer a statute waiting for a map and as of January 1, 2027, there will be 6,576 designated communities nationwide, 2,308 on the East Coast, 153 in Virginia, and a handful right here in the Fredericksburg region. The program is smaller, more targeted, and more rural than the version I first wrote about, and that is exactly what was hoped to be accomplished. The communities Virginia selected were chosen because local leaders could show readiness, not simply because they qualified on paper.

For investors, the planning window is open now, even though the new zones are not yet effective. The decisions made between today and the first quarter of 2027 (when to recognize, when to invest, and where) will determine whether a client captures the full value of the rolling deferral, the basis increase, and the ten-year exclusion.

At MAS LLC, we help clients evaluate Opportunity Zone investments, structure Qualified Opportunity Funds, track 180-day deadlines, and manage the reporting that comes with them. If you have a 2026 gain, an existing QOF investment, or a property in one of the newly designated tracts, please reach out to our office at Info@marschalltax.com or (414) 217-0147.

Disclaimer: This article provides general information about the Opportunity Zone provisions of the One Big Beautiful Bill Act and the November 2026 designations. It does not constitute tax, legal, or investment advice. Opportunity Zone investments involve significant risk and complex tax considerations. Tract information should be verified against official Treasury and CDFI Fund sources. Consult qualified professionals before making investment decisions.

Sources

• Internal Revenue Service, Treasury, IRS Announce Opportunity Zones Designations for Over 6,500 Communities Across America (IR-2026-132, November 5, 2026)
• Michael Cohn, IRS and Treasury designate thousands of opportunity zones, Accounting Today (November 5, 2026)
• Eric Souza, Treasury renews Opportunity Zone program, designates 6,576 census tracts, Scotsman Guide (November 6, 2026)
• CBS19 News, Treasury approves dozens of Opportunity Zones across Virginia (November 6, 2026)
• Office of the Governor (via Sussex County), Governor Spanberger Announces Designation of 153 Opportunity Zones Across Virginia (November 6, 2026)
• NC Department of Commerce, Governor Stein Announces New Opportunity Zone Designations (November 5, 2026)
• Maryland Association of Counties, Webinar Recap: What Counties Need to Know About Opportunity Zones 2.0
• com, Opportunity Zones by State and Virginia profile
• CDFI Fund, Opportunity Zones list and map; U.S. Treasury, Qualified Opportunity Zones data
• Virginia DHCD, Opportunity Zones and Virginia’s Opportunity Zones map
• Notice 2026-40 commentary: Faegre Drinker, EisnerAmper, EY Tax News, Baker Tilly, Forvis Mazars

Jessica I. Marschall, CPA, prior MAS LLC articles: July 2025, October 2025, November 2025