Opportunity Zones are the focus of a new IRS request for comments on how amended tax rules will apply to qualifying investments made after December 31, 2026.
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Opportunity Zones Update
Notice 2026-55, published October 13, 2026, asks taxpayers, investors, businesses and other interested parties to identify areas where additional guidance is needed under the Opportunity Zones provisions of the Internal Revenue Code.
The notice does not create final regulations or change tax treatment immediately.
Instead, it gives the Treasury Department and the IRS technical questions to consider as they develop additional guidance following changes enacted in Public Law 119-21, commonly known as the One, Big, Beautiful Bill Act, including changes affecting Opportunity Zones.
IRS sets November 23 deadline for comments
Written comments on Notice 2026-55 should generally be submitted by November 23, 2026.
The IRS said it may consider comments received after that date if doing so does not delay the issuance of future guidance for Opportunity Zones.
Comments may be submitted electronically through the federal rulemaking portal by searching for docket number IRS-2026-1156.
They may also be submitted by mail to the IRS office identified in the notice.
The agency is asking commenters to describe transaction structures, factual situations and technical problems that could produce uncertain results under the revised law.
What changes after December 31, 2026
The Opportunity Zones program allows eligible gains to be invested through a qualified opportunity fund, or QOF, in exchange for tax benefits that can include deferred recognition of the invested gain and favorable treatment of later appreciation.
The statutory amendments described in the notice establish a different framework for qualifying Opportunity Zones investments made after December 31, 2026.
For those later investments, deferred gain generally must be included in gross income no later than five years after the qualifying investment date, unless an earlier inclusion event applies.
An inclusion event can include a transaction or other event that ends the taxpayer’s deferral under the applicable rules.
The five-year timing rule is separate from the long-term holding rules that govern potential basis adjustments and the treatment of appreciation.
Investors and advisers will need to distinguish between the date an eligible gain is invested, the date the QOF acquires qualifying property and the date an investment is sold or otherwise disposed of in connection with qualifying transactions.
Basis increases will depend on the type and length of investment
For an investment held for at least five years, the amended rules generally provide a basis increase equal to 10 percent of the deferred gain.
The increase can rise to 30 percent when the investment is made in a qualified rural opportunity fund, subject to the statutory requirements.
Basis is important because it generally affects the amount of gain recognized when property or an investment is later sold.
The IRS is seeking comments on how these increases should be calculated, documented and reported in different Opportunity Zones ownership structures.
Those structures can include partnerships, corporations, pass-through entities and investments held through multiple levels of ownership.
The notice also asks whether additional rules are needed when debt-financed distributions, debt-financed losses or other transactions affect the amount of deferred gain that must eventually be included in income under the applicable provisions.
Ten-year election and 30-year valuation limit
The amended law also addresses investments held for at least 10 years.
When the statutory election is available, the basis of a qualifying investment generally may be determined by its fair market value on the date of a sale or exchange.
For investments made after December 31, 2026, the notice explains that the fair-market-value treatment is subject to a 30-year limit for Opportunity Zones investments.
If the investment is sold before the date that is 30 years after the investment date, the relevant basis generally is tied to fair market value on the sale or exchange date.
If the investment has not been sold by the 30-year date, the law provides for a fair-market-value basis determination at that time.
The IRS is asking for input on valuation methods, substantiation requirements, the timing of the election and how later appreciation or depreciation should be treated under the revised rules.
The agency also wants comments on how the rules should work when a QOF is organized as a partnership or when assets and interests are held through pass-through entities.
IRS seeks guidance on businesses, housing and working capital
Notice 2026-55 requests comments on the rules governing qualified Opportunity Zones businesses, or QOZBs.
One question concerns whether additional guidance would help operating businesses use qualified opportunity zone business property, including inventory, while satisfying the program’s requirements.
Another area involves the working-capital safe harbor and how spending affects the requirement that at least 70 percent of a QOZB’s tangible property be qualified opportunity zone business property.
The IRS is also examining whether special guidance is needed for businesses developing and selling single-family homes in designated zones.
The notice references a federal executive order directing the Treasury Department and the Department of Housing and Urban Development to evaluate ways to align federal programs and incentives with tax incentives for single-family construction.
Among the issues under consideration are whether income from the sale of housing inventory should receive a form of interim deferral and what reinvestment, holding-period, basis and anti-abuse requirements would be appropriate.
The notice does not establish an interim-gain rule for housing businesses in designated zones.
It asks the public whether such a rule should exist and, if so, how it could be administered.
Rural, Tribal and Alaska Native communities included
The amended Opportunity Zones law provides enhanced benefits for qualifying investments in rural areas, including the potential 30 percent basis increase for qualifying rural opportunity fund investments.
The IRS is seeking comments on how the incentive has been used in Tribal and Alaska Native communities participating in the program.
It also wants suggestions for clarifying investment rules involving qualified opportunity zones on Tribal lands, Alaska Native lands and other related areas.
That request follows earlier IRS guidance addressing the definition of a rural area and a reduced substantial-improvement threshold for certain property in a qualified opportunity zone made up entirely of a rural area.
The IRS has separately issued procedures for states to nominate census tracts for zone designations that take effect January 1, 2027.
As a result, investors evaluating post-2026 investments may need to consider both the amended tax rules and the status of the underlying census tract.
What taxpayers should know now
Notice 2026-55 is a request for public input, not a final tax rule for the program.
Taxpayers should not treat every question in the notice as an announced IRS position or assume that a proposed approach has been adopted.
Existing investments and gains may be governed by different transition rules depending on when the gain was recognized, when the investment was made and whether the investment is in a previously designated zone or a newly designated zone under the program.
The IRS has already issued separate transitional guidance for investors and businesses whose transactions span the December 31, 2026, transition date.
Investors considering a QOF should preserve records showing the date and amount of the eligible gain, the date of the qualifying investment, the fund’s certification and the fund’s underlying assets.
They should also consult a qualified tax professional before relying on a tax deferral, basis adjustment or fair-market-value election involving Opportunity Zones.
The most immediate action available to the public is submitting detailed comments by November 23, 2026.
Comments that identify a specific transaction, explain the uncertainty and propose administrable language may be more useful to regulators than general statements supporting or opposing the program.
Frequently Asked Questions
What is Notice 2026-55?
Notice 2026-55 is an IRS request for public comments on how amended Opportunity Zone rules should be implemented for qualifying investments and qualified opportunity zone businesses.
When is the deadline to comment on Notice 2026-55?
Written comments should generally be submitted by November 23, 2026. The IRS may consider later comments if doing so does not delay future guidance.
What happens to deferred gain for investments made after December 31, 2026?
Under the amended rules described in the notice, deferred gain generally must be included in gross income no later than five years after the qualifying investment date, unless an earlier inclusion event applies.
What basis increase may be available for Opportunity Zone investments?
An investment held for at least five years generally may receive a basis increase equal to 10 percent of deferred gain, with a potential 30 percent increase for qualifying investments in a qualified rural opportunity fund.
Does Notice 2026-55 create final tax rules?
No. The notice requests comments and identifies issues for future guidance. It does not itself establish final regulations.
Fact-Checked: Key details were independently checked against IRS Notice 2026-55, Internal Revenue Bulletin 2026-42 and current IRS Opportunity Zone guidance on October 13, 2026.
Disclaimer: This article is for general informational purposes and is not tax or investment advice. Opportunity Zone rules can depend on individual facts and transition provisions.
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