How States can Maximize Opportunity Zones

(The Governance Project)


The Tax Cuts and Jobs Act of 2017 provides a new incentive— centered around the deferral of capital gains taxes—to spur private investments in low-income areas designated as Opportunity Zones. Given the significant interest among investors, it is possible that this new tax incentive could attract tens of billions of dollars in private capital, making this one of the largest economic development initiatives in U.S. history.

This policy brief lays out a plan of action for states to realize the full economic and social potential of this unique tax incentive. Governors have already played a critical role by selecting Opportunity Zones in their states from an eligible group of low income census tracts in accordance with the law. But state involvement should not begin and end with designation. States can play multiple roles to enhance the attractiveness of Opportunity Zones for market capital and ensure that social benefits within and beyond these communities are maximized.