House Passes Budget Bill: What’s Next For OZs?

On this month’s live episode of OZ Office Hours, OpportunityZones.com founder Jimmy Atkinson explains what’s next for Opportunity Zones legislation after the House passed their 2025 budget bill. Plus, Jimmy takes live OZ questions from the audience.

Join Jimmy the first Monday of every month at 3:00 PM Eastern Time, to get your Opportunity Zones questions answered live.

Featured OZ Questions On This Episode

  • What’s going to happen with the EB-5 program, given Trump’s announcement of the new “Gold Card” program?
  • Is tax on deferred capital gains still due in 2027?
  • What is OZ Pitch Day and how can I register?
  • Is there no advantage that can be derived from an OZ investment on personally owned land?
  • If I’m an existing property owner in an opportunity zone how can I benefit if I develop it myself?

Featured On This Episode

About The Opportunity Zones Podcast

Hosted by OpportunityDb founder Jimmy Atkinson, The Opportunity Zones Podcast features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in the Opportunity Zones industry.

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Transcript Summary

In this edition of OZ Office Hours, Jimmy Atkinson discusses the latest developments on Opportunity Zone legislation following the passage of the House’s 2025 budget bill. This marks a key step toward extending the OZ program, but there is still a long process ahead. The episode covers what this means for investors, the legislative roadmap, and potential changes to the program.

House Passes 2025 Budget Bill

Last Tuesday night, the House narrowly passed the Republican Party’s budget plan for 2025 with a vote of 217-215. Initially, it seemed the votes weren’t there, and Speaker Johnson considered delaying the vote. However, after last-minute negotiations, enough members were swayed to secure passage.

This budget bill is a broad fiscal blueprint that outlines $4.5 trillion in tax cuts over the next ten years, but it does not include specific details about Opportunity Zones or other tax provisions. Instead, it serves as the foundation for the actual tax legislation that will be drafted later this year.

What Comes Next for OZ Extension?

Now that the House has passed the budget framework, the bill moves to the Senate, where revisions may be made before returning to the House for approval. After that, Congress will begin drafting the actual tax legislation.

There are two possible legislative strategies:

  1. Two separate bills – One focused solely on tax legislation and another dealing with non-tax priorities like border security and defense.
  2. A single comprehensive bill – This would combine tax reform with other major policy items in what Trump has called a “big, beautiful bill.”

Trump has indicated his preference for the second approach, which could speed up the process but also make negotiations more complex.

Likely Timeline for OZ Legislation

The passage of the budget bill is just the first step in a months-long process. The tax package, which is expected to include OZ extension, could take until late 2025 to be finalized.

  • Best-case scenario – Legislation passes by July or August 2025.
  • More likely scenario – The process extends into December 2025, as Congress typically delays major tax legislation until year-end.
  • Worst-case scenario – No tax bill passes, leaving OZs to expire in 2026.

While the extension is likely, it is not guaranteed. Investors and fund managers should remain aware of the risks.

Potential Changes to Opportunity Zones

Several changes to the OZ program could be included in the tax package:

  • Extending the tax deferral period – The deadline to pay taxes on deferred gains is currently December 31, 2026. A two-year extension would push this to December 31, 2028.
  • Reauthorizing OZ designations – Governors may be allowed to nominate new Opportunity Zones for another seven to ten years.
  • Making OZs permanent – A renewal mechanism could be introduced, allowing new designations every few years rather than requiring Congress to pass new legislation.

If all three measures are included, it would provide long-term stability and expansion for the OZ program.

Investor Questions and Key Insights

Will capital gains taxes on past investments still be due in 2027?

Most likely, yes. Even if the tax deferral deadline is extended to 2028, it is unclear whether this would apply retroactively to all prior OZ investments or only to new ones made after the legislation passes. Investors should plan for a 2027 tax payment but remain open to potential changes.

Will the tax bill reinstate the 5% and 10% basis step-ups?

Previous OZ legislation allowed investors who held their investments for five to seven years to receive tax reductions on their deferred capital gains. A new proposal suggests bringing back these step-ups with a six-year holding period, but it is still under discussion.

Will QOFs be allowed to invest in other QOFs?

This “fund of funds” provision has broad bipartisan support and is expected to be included in the final legislation. It would provide greater flexibility for investors and fund managers.

Will non-capital gains be allowed in OZ investments?

Industry groups have proposed allowing ordinary income and after-tax dollars to be invested in QOFs, but this may face opposition due to budget concerns. While widely supported, it is uncertain whether this change will be included.

Upcoming OZ Pitch Day

OZ Pitch Day on March 6, 2025, will feature expert discussions on OZ legislation and investment opportunities. Panelists include:

  • Emily Lavery (Fulcrum Public Affairs) – Former advisor to Senator Tim Scott, providing insights on OZ policy.
  • Peter Lawrence (Novogradac & Company) – An expert on tax legislation and Opportunity Zones.

The event will also showcase various OZ investment opportunities, including multifamily, self-storage, and energy projects.

Conclusion

  • The House’s budget bill is an important step toward OZ extension, but much work remains.
  • Congress is likely to consider OZ legislation as part of a larger tax package, with a final vote expected by late 2025.
  • Key changes under discussion include extending the deferral period, reauthorizing OZs, and making the program permanent.
  • Investors should prepare for potential tax changes while staying informed on legislative developments.
  • OZ Pitch Day will provide further insights into policy updates and investment strategies.

For the latest Opportunity Zone news, visit OpportunityZones.com and register for OZ Pitch Day at OZPitchDay.com.