High-earning investors face upcoming tax bill on deferred capital gains from Opportunity Zones
Investors who have used Qualified Opportunity Funds to defer capital gains taxes will soon owe those taxes, as the deferral period ends at the end of 2026. These funds were established under the Tax Cuts and Jobs Act of 2017 to encourage investment in economically distressed areas known as Opportunity Zones. According to a Treasury Department working paper, $75 billion in deferred gains was reported by the end of 2024. Early investors who contributed before certain deadlines received additional tax benefits such as a step-up in basis, reducing their eventual tax liability. However, those who missed these windows will not receive any extra relief beyond deferral. The typical investor has an adjusted gross income exceeding $738,000 and is likely to be impacted significantly by the upcoming tax obligations.
Topics: Capital Gains Tax Opportunity Zones Qualified Opportunity Funds Tax Cuts and Jobs Act