OZ Office Hours: Which Census Tracts Qualify For OZ 2.0?

The data that will define Opportunity Zones 2.0 is finally here—and it points to a materially smaller, more targeted map heading into the 2026 designation round.

In this February 2026 episode of OZ Office Hours, Jimmy Atkinson walks through the newly released 2020–2024 American Community Survey data, explains how Treasury is expected to use it to determine census tract eligibility, and previews what the next generation of Opportunity Zones is likely to look like as states prepare for the upcoming nomination window.

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About The Opportunity Zones Podcast

Hosted by OpportunityZones.com 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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Episode Summary

The February 2026 edition of OZ Office Hours focuses on the newly released 2020–2024 American Community Survey (ACS) data and what it reveals about eligibility for the upcoming Opportunity Zones 2.0 designation round.

Jimmy Atkinson walks through his full analysis of the data, explains how census tract eligibility is determined under the new statutory rules, and previews how the Opportunity Zone map is likely to change heading into the 2026 nomination window.

The episode also includes a live Q&A covering rural Opportunity Zones, margin of error issues in census data, state nomination discretion, and how existing OZ 1.0 investments will be treated going forward.

The 2020–2024 ACS Data Release and Why It Matters

Jimmy opens this special Groundhog Day episode by explaining that the U.S. Census Bureau has released the five-year ACS dataset covering 2020 through 2024. This dataset includes updated median family income and poverty rate data for every census tract in the country and is expected to govern eligibility for the next round of Opportunity Zone designations.

For the first time, this data allows practitioners to see which census tracts qualify for nomination under the OZ 2.0 rules ahead of the formal Treasury release. Jimmy emphasizes that while this dataset is what the industry expects Treasury to use, it is not the official Treasury eligibility list. Treasury may interpret or apply the data differently and is expected to publish its official list later in February 2026.

Jimmy also notes that the Treasury Department is partially affected by a government shutdown at the time of recording, though he does not expect meaningful delays to the designation process.

Expected Reduction in the Number of Opportunity Zones

Jimmy reiterates a headline figure he has discussed previously: he expects roughly a 25% to 25.5% reduction in the total number of Opportunity Zones nationwide in the OZ 2.0 round.

Under OZ 1.0, there are currently 8,764 designated Opportunity Zones. Based on the new ACS data and statutory changes, Jimmy anticipates approximately 6,544 zones in the next round.

He identifies two primary reasons for this reduction:

First, Puerto Rico will no longer be allowed to designate all eligible tracts as Opportunity Zones. Under OZ 1.0, Puerto Rico designated 863 tracts. Under OZ 2.0, Jimmy expects that number to fall to 178, representing an approximately 80% reduction.

Second, the definition of a low-income community has become more restrictive. Under the original designation round, a census tract qualified if its median family income was 80% or less of the applicable area or statewide median income. Under OZ 2.0, that threshold has been reduced to 70%, meaning tracts must be more impoverished to qualify.

As a result, the total pool of eligible tracts nationwide has shrunk to just over 25,000.

How Census Tracts Qualify Under OZ 2.0

Jimmy explains the two primary pathways for census tract eligibility under the new rules.

A tract qualifies if its median family income is 70% or less of the applicable benchmark, which is either the metropolitan statistical area median family income or the statewide median family income, depending on whether the tract is metropolitan or non-metro.

Alternatively, a tract may qualify based on poverty rate. If the poverty rate is at least 20% and the tract’s median family income does not exceed 125% of the applicable benchmark, it may still qualify even if it does not meet the 70% income test.

Jimmy walks through examples from Alabama showing how some tracts qualify under the income test while others qualify based on poverty rate alone.

State-by-State Nomination Limits and Examples

Jimmy reviews his state-by-state summary showing how many eligible tracts each state has and how many Opportunity Zones each state can nominate.

Most states may nominate up to 25% of their eligible tracts. For example, Arizona has approximately 500 eligible tracts, meaning it can nominate up to 125 Opportunity Zones, down from 168 under OZ 1.0.

Larger states see more pronounced reductions. California, with nearly 2,500 eligible tracts, would be capped at approximately 618 Opportunity Zones, down from 879 previously.

Smaller states are affected differently due to minimum thresholds. Each state may nominate at least 25 Opportunity Zones even if it has fewer than 100 eligible tracts. Alaska, Delaware, and the District of Columbia fall into this category. If a state has fewer than 25 eligible tracts, it may nominate all of them. Vermont, for example, is expected to have only 24 eligible tracts.

Jimmy also notes that some states may see modest gains due to demographic changes. Louisiana is expected to increase from 150 to 155 Opportunity Zones, and Mississippi from 100 to 101.

Margin of Error in Census Data

A major theme of the episode is the margin of error associated with tract-level median family income data. Jimmy explains that every ACS income figure includes a margin of error, which can be substantial.

He highlights examples where the margin of error exceeds 50% and notes that the average margin of error for tract-level median family income in this dataset is approximately 26.37%.

Jimmy speculates that Treasury may consider margin of error in close cases, particularly where tracts narrowly miss eligibility thresholds. He emphasizes that this is speculation and that Treasury did not allow such discretion in the first designation round. However, he suggests the increased attention on the program may prompt Treasury to issue guidance or allow states to submit explanations in edge cases.

OZ 2.0 Eligibility Map and Data Tools

Jimmy introduces a new OZ 2.0 eligibility map available on his website, along with downloadable datasets in Google Sheets and Excel formats. The map allows users to search by address or census tract number and view eligibility status, median family income, applicable benchmark income, and poverty rate.

He demonstrates how to use the map by examining census tracts in the Dallas–Fort Worth area, New York City, and Chicago, noting that some tracts qualify based on poverty rate even when median family income data is missing.

Rural Opportunity Zones Explained

In response to a listener question, Jimmy explains how rural Opportunity Zones differ from standard zones.

Rural Opportunity Zones receive two additional benefits. The first is already in effect: a reduced substantial improvement requirement. For assets located in rural Opportunity Zones, the substantial improvement threshold has been reduced from 100% of the building’s value to 50%.

The second benefit takes effect on January 1, 2027. Investors who defer gains into Qualified Opportunity Funds that invest in rural Opportunity Zones will receive a 30% basis reduction after five years, compared to the standard 10% reduction. A $1 million deferred gain would be recognized as $700,000 instead of $900,000.

Treatment of Existing OZ 1.0 Investments

Jimmy confirms that assets and businesses established in OZ 1.0 zones will continue to qualify even if their locations are not designated as OZ 2.0 zones. Treasury regulations explicitly allow OZ assets to retain their status even after a zone designation expires, provided the investment was properly made while the designation was in effect.

Open Questions and What Comes Next

Throughout the Q&A, Jimmy addresses unresolved issues, including whether states with fewer than 25 eligible tracts will receive special treatment, whether census data can be disputed, and whether gains recognized at the end of 2026 can be reinvested into OZ 2.0 funds.

He emphasizes that many of these questions remain unanswered and depend on forthcoming Treasury guidance, which he expects later in February 2026.

Jimmy closes by previewing upcoming OZ Insiders programming, including monthly Masterclasses, networking dinners, and an upcoming session focused on maximizing OZ 1.0 deals during the transition period.