The 2025 Tax Cuts & Opportunity Zones 2.0

Capitol Hill is moving toward a permanent Opportunity Zones program, but the fine print matters. In this OZ Pitch Day panel, Jimmy Atkinson is joined by Blake Christian and Jim Lang to unpack the Senate’s draft OZ 2.0 bill. They explore the proposal’s major reforms, potential pitfalls, and what developers and investors need to know right now.

Guests: Blake Christian and Jim Lang

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

In this special Opportunity Zones Podcast episode, recorded live at OZ Pitch Day on June 19, 2025, host Jimmy Atkinson moderates a panel with two of the foremost OZ experts in the country: Blake Christian, tax partner at HCVT, and Jim Lang, tax attorney at Greenberg Traurig. Together, they break down the latest Opportunity Zone legislative developments in Washington and offer detailed analysis of what a potential “OZ 2.0” could look like under the Senate Finance Committee’s draft tax package.

What’s in the Senate’s Draft?

The panelists provide an in-depth look at the Senate Finance Committee’s June 2025 draft, which would dramatically reshape the OZ incentive starting in 2027:

  • Permanent Program: The current 2026 sunset would be replaced with a perpetual program, with new Opportunity Zones re-designated every ten years.
  • New Basis Step-Up Schedule: Instead of the current 10% and 15% basis step-up cliffs, the new structure offers smaller annual bumps over a six-year timeline (1% per year in years 1–3, 2% per year in years 4–5, 3% in year 6).
  • 30-Year Exit Option: A second step-up would apply at the 30-year mark, allowing tax-free exits through 2057 and beyond.
  • Impact Reporting: New reporting mandates would require detailed data collection on OZ investors, job creation, and local economic impact.

Rural Carveouts and the House vs. Senate Divide

The Senate draft diverges from the House bill in its treatment of rural OZs. While the House version mandates that one-third of newly designated zones be rural, the Senate takes a more flexible approach:

  • No Hard Cap: No strict rural quota, but rural projects that devote 90% of assets to qualifying tracts receive bonus treatment.
  • Special Perks: Rural projects may qualify for a 30% basis step-up and a lower 50% substantial improvement threshold—making deals in these areas more financially attractive.

Timing Trouble: Why the 2027 Start Date Is a Problem

One of the biggest concerns raised by both panelists is the proposed effective date of January 1, 2027. As currently written, the new OZ program would not begin until then, creating a potential “dead zone” in 2025 and 2026:

  • Capital Freeze Risk: Investors may hold off on realizing capital gains until new zones are in place, drying up capital for existing QOFs.
  • Smaller Sponsors Could Suffer: Without fresh capital flow, many emerging fund managers may be forced to pause or wind down.
  • Artificially Low Impact Data: The first year of mandatory reporting may reflect minimal investment activity, weakening political momentum.

Both panelists advocate for an earlier effective date—ideally tied to bill enactment—with a clear regulatory transition framework to keep projects alive during the map shift.

Additional Reforms Under Consideration

Blake and Jim also weigh in on a number of other improvements the industry is pushing for:

  • Fund-of-Funds Structures: Allowing QOFs to invest in other QOFs would improve diversification and capital efficiency.
  • Interim Gains Reinvestment: Enabling temporary gains within QOFs and QOZBs to be reinvested without triggering tax events.
  • Non-Gain Investment Expansion: Relaxing or removing the $10,000 lifetime cap on non-gain dollars receiving OZ treatment.
  • Debt Incentives: Considering OZ-specific lending perks like tax-exempt interest to help deals pencil in today’s high-rate environment.
  • Workforce Housing Flexibility: Easing the substantial improvement requirement for operating businesses and housing renovations.

Broader Tax Package Context

The Opportunity Zones reform is just one piece of the broader tax bill currently moving through Congress. Key components include:

  • 100% Bonus Depreciation Retroactive to Jan 1, 2025
  • Permanent New Markets Tax Credit Authorization
  • Low-Income Housing Tax Credit (LIHTC) Enhancements
  • SALT Cap Adjustments and QBI Extensions
  • Estate Tax Threshold Increases

Key Takeaways

  • OZ Reform Is Happening: Both chambers of Congress are engaged, and final legislation could pass in 2025.
  • The 10-Year Benefit Is Still Available Now: Capital gains triggered in 2024 or 2025 are still eligible for the existing 10-year step-up.
  • Effective Date and Zone Designation Will Be Pivotal: Watch closely for how Congress resolves the 2027 start date and transition plan.
  • Engagement Matters: Developers and investors should stay involved and advocate for sensible implementation, especially around rural treatment, interim gains, and fund structure flexibility.

Whether you’re a fund sponsor, investor, or policy advocate, this panel delivers timely and technical insight into the future of Opportunity Zones—and what it will take to make “OZ 2.0” a success.