Overview
- Qualified Opportunity Zones shift to a decennial redesignation cycle beginning July 1, 2026, with post‑2026 investments recognizing deferred gains at year five and receiving a permanent 10% basis step‑up, plus rolling 30‑year periods for the 10‑year gain‑exclusion rule.
- The law adds a Qualified Rural Opportunity Fund category that offers a 30% basis step‑up after five years and a reduced 50% substantial‑improvement test, while tightening tract eligibility by lowering income thresholds, repealing the contiguous‑tract rule, and ending Puerto Rico’s special status after 2026.
- Qualified Opportunity Funds must file new annual information returns for tax years beginning after July 4, 2025, with penalties up to $10,000 per return or $50,000 for funds over $10 million.
- OBBBA makes 100% bonus depreciation permanent for qualified property acquired after January 19, 2025, restores the Section 163(j) limit to an EBITDA base, and makes the Section 199A qualified business income deduction permanent.
- The package raises the SALT deduction cap to $40,000 starting in 2025 with a phasedown at higher incomes, increases 9% LIHTC allocations and eases the 4% bond threshold to 25% after 2025, relaxes the REIT TRS cap to 25% starting in 2026, introduces a time‑limited expensing election for certain manufacturing facilities, and phases out Sections 179D and 45L after June 30, 2026.